The following is a conversation between Elie Hassenfeld, co-founder and Executive Director of GiveWell, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer WNYM in New York City.
Denver: So, suppose you made some money and wanted to make a contribution to a nonprofit organization where that donation would have the greatest impact to improve people’s lives. Where would you begin to look for that information? Well, that is a dilemma that faced my next guest, and all he did is start an organization to help answer that very question. He is Elie Hassenfeld, the co-founder and executive director of GiveWell. Good evening, Elie, and welcome to The Business of Giving.
Elie: Thanks for having me. Great to be here.
Americans collectively give more than $300 billion every year to charity, and we knew from personal experience that information to help guide those decisions wasn’t available. We started GiveWell to be the resource that we were looking for when we were in the private sector.
Denver: You started GiveWell to address this gap in the market that you and your co-founder had identified. Share that story with us if you would.
Elie: We went to work at a hedge fund right after graduating college. After being there for a couple of years, we wanted to give to charity. We had made enough money that we had some savings, and we wanted to give a little back. We wanted to bring the same type of analytical approach to charitable giving that we did in our work lives, that we had making other decisions. And we thought we’d be able to go out and get great information about what charities do and how well they work. When we went to look for that information, we found that there was almost nothing available. There was information that said how much do CEOs make, or how much charities spend on administrative expenses versus their programs.
But that didn’t tell us how well the programs were working. Just to give one example. If you imagine a charity that digs wells in Africa. If it spends all its money digging wells, but then the wells fall apart the next year; it hasn’t accomplished any good. When we saw how little information was available, we found ourselves incredibly interested in this question of: how can we give most effectively, and frustrated that the information didn’t exist.
Americans collectively give more than $300 billion every year to charity, and we knew from personal experience that information to help guide those decisions wasn’t available. We started GiveWell to be the resource that we were looking for when we were in the private sector.
Denver: Not only did you identify a need, you really liked doing this, didn’t you?
Elie: When I was working in finance, I loved my job. But I was never up on the weekends reading about the bond market. All of a sudden, it’s Saturday night at three in the morning, and I’m reading papers about diarrhea in Africa, which is one of the leading causes of child mortality. At that point, I knew that this might be something that we should try to turn into a career.
Denver: You have four criteria, Elie, that you examine for evaluating organizations. Share with us what those are.
Elie: In brief, those criteria are: Evidence of effectiveness, cost effectiveness, what we call “room from our funding,” and then transparency. I’ll just go through those each one by one. For evidence of effectiveness, our question is, What impact does this program have on people’s lives? There’s a lot of programs that we see around us. They can be educational programs, job training programs. The question is, What effect do these programs have on the outcomes of the people who go through them? Shockingly, very few of these programs have been carefully evaluated to show what impacts they have. We look for programs that have been rigorously evaluated often, though not always, with randomized control trials. This is the standard of evidence used in medicine, where you take a group of people and you randomly divide them into two. You give some the program, and some, you don’t give others the program, and then the only difference between the two groups should be whether or not they receive the program… allowing you to figure out whether or not the program is effective.
Because many programs have not been studied; or when they have, they’re found to be ineffective, we look for programs that can demonstrate via this rigorous evidence that they’re having an effect. For example, one of the programs we support is malaria net distribution to protect against the mosquitoes that transmit malaria in Africa. This program has been studied through more than 20 randomized control trials that demonstrate: when you give out nets, people use them. It reduces cases of malaria and saves children’s lives. That is the exception rather than the rule for most charitable endeavors.
Our second criterion is cost effectiveness, and that is very simple. We just want to maximize the impact that our dollars have. We would prefer to give to an organization that can save someone’s life for $2,500 than to give to an organization that costs $25,000 to accomplish the same goal. Therefore, we are looking carefully and making that type of assessment. Our third criterion, which we call “room from our funding” is trying to understand what an organization would do with the additional donations that it receives. Organizations often have funding in hand that they can put to use, but what a donor cares about is what they will do with the additional money that they give to the organization.
Denver: Give us an example of an organization that’s doing great work but doesn’t really have a need for additional funding.
Elie: I think a common charitable program that people know about is performing surgeries in low-income countries. In order to perform surgeries, obviously a charity needs to have surgeons that it can pay to go and perform surgeries. In many low-income countries, the supply of surgeons is constrained. A charity could invest in training and educating – that’s a very long-run, difficult process. But a charity may not be able to use its funds to pay for more surgeries if the supply of surgeons is constrained. Another way in which this criterion plays into our analysis is, an organization might be choosing to go into a country with lower rates of a disease. If the malaria rate in one country is much higher than it is in another country, its malaria-focused program will be more cost effective.
Finally, our last criterion is transparency, which just means that organizations need to be ready and willing to share information with us. The vast majority of information about charitable organizations is not public, and therefore, we can’t do our research if organizations don’t want to share substantive information.
Denver: Having used this filter, you ended up by really focusing exclusively on global health and development. Why was that the case?
Elie: The thing that philanthropists, people giving charity, can bring that others don’t have is their money. That’s what we’re giving. The biggest difference between overseas and places closer to home is the difference in how much money is available to the people who need it. So, there is poverty. There is significant poverty here in the US. But we focus overseas because of how much greater the need is there. Kids die overseas for lack of access to basic medicines like antibiotics to treat pneumonia. People don’t have basic nutrition. Because a dollar goes so much further overseas, we’ve chosen to focus in those regions.
Denver: Give us an example of one. Why don’t we take the Malaria Consortium, and walk us through the process that you went through with them. And what made them so exceptional that they have made your list of recommendations?
Elie: They’re an organization that implements a program called seasonal malaria chemoprevention. That’s a long name but what it means is that they give preventative malaria treatment to children under five during the four months of the year when malaria is most prevalent in the areas that they focus on in Northern Africa. This program was studied through multiple randomized control trials, which show that when you give treatments to children, it prevents cases of malaria and averts deaths that they otherwise would have had from malaria.
The first step in our process was identifying and reviewing that evidence and seeing that this program had a substantial effect. These treatments are very cheap– They cost approximately five dollars to deliver the treatment– and then monitor it after the fact to determine that it has been effectively delivered. and all in this organization. It costs this organization approximately $2,500 to avert the death of a child. The reason it costs five dollars to deliver a treatment and $2,500 to avert a death is that most children who get malaria don’t die. But it is such a prevalent disease that so many people do eventually get malaria, and then some portion of them die; so it’s a very cost-effective way to save people’s lives.
We have to make the best judgement we can about how to weigh an increase in income against a reduction in mortality. Now, we are going out, and we’re trying to ask. We’ve funded some research where a research group goes out, and it asks people in the countries that we’re serving: How would you trade off between some increase in income and some improvement in health? And we want to incorporate that into our research process. But ultimately, if you only have $1,000 to give, you have to make a choice about how to trade off between these two values. Our goal in our research is to make the information about what choices donors are making publicly available, so that anyone can make this choice for themselves about how they trade off between these two potential outcomes.
Denver: Let me ask you the apple and orange question… and taking the Malaria Consortium and saving a person’s life, which could be the ultimate result of helping support them… How do you compare that with an organization like GiveDirectly, which gives direct cash transfers to help a family raise their standard of living? How do you look at that?
Elie: We try to compare these two things directly, and we recognize that we’re trying to direct money to two very different types of outcomes. We have to make the best judgement we can about how to weigh an increase in income against a reduction in mortality. Now, we are going out, and we’re trying to ask. We’ve funded some research where a research group goes out, and it asks people in the countries that we’re serving: How would you trade off between some increase in income and some improvement in health? And we want to incorporate that into our research process. But ultimately, if you only have $1,000 to give, you have to make a choice about how to trade off between these two values. Our goal in our research is to make the information about what choices donors are making publicly available, so that anyone can make this choice for themselves about how they trade off between these two potential outcomes.
Denver: One of the things I love about GiveWell is that you don’t just only collect this information, but you really go out there and make some very specific recommendations on organizations that make a lot of sense for donors to fund. Just give us a couple of the others.
Elie: We recommend another malaria organization called the Against Malaria Foundation. They distribute malaria nets to protect against the mosquitoes that transmit malaria. We recommend four organizations, all of which focus on an area called deworming, which is treating children for parasitic infections. We recommend a program that Helen Keller International runs focused on vitamin A supplementation. Some children in low-income countries have very high rates of vitamin A deficiency, and there is very strong evidence that giving children under five supplements on an either annual or semi-annual basis significantly reduces child mortality. Finally, we recommend GiveDirectly. It’s an organization that just hands out cash and lets people decide for themselves about where they can put it to the best use.
Denver: You have, up until this point in time, focused on organizations that have a direct impact. But I know you’ve also been thinking about some that have an indirect impact–perhaps advocacy organizations that lobby to change policy or regulation. Where do you stand with that?
Elie: Our goal is to find the charities that have the most impact per dollar. One way that you can have more impact is by changing the laws that governments have that can affect people’s health and their well-being. In our work, we’re focused entirely overseas. In many cases, there are laws that we’ve passed in high-income countries that would have a significant improvement on people’s health in lower income countries. I think a good example of this: Some of the laws we passed around tobacco use in the United States have had a big impact on tobacco use, and there’s room to have similar legislation passed in low-income countries to reduce tobacco use there and improve people’s health. This is an area that we’re at the very earliest stages of exploring. It is much harder to determine whether or not an advocacy-oriented organization had impact than one that is just delivering a health commodity, and we are still in the process of figuring out how to apply the conceptual criteria we have: What’s the evidence? How cost effective is it? And what would they do with more money? We know how to apply those to the malaria organizations – the ones I mentioned. We’re still in the process of how to apply them effectively to advocacy organizations.
Denver: A brave, new world. I’m glad you’re going there. Also, it’s hard to isolate what their impact is with everything else that’s going on around it, and how much did they do, and how much all these other forces do with it.
Speaking about impact, Elie, how do you go about measuring your own impact?
Elie: There are two major areas that we need to evaluate to know how we’re doing. The first is the quality of our research. This is something that there’s no objective way to assess – how good our research is. This is why we put so much work into making our research public and transparent. If you go and read one of our reviews, you can understand exactly why we decided what we’ve decided. You can find footnotes to support every single fact that we state on our website, and we work very hard to make our research legible to outsiders and vettable by anyone who wants it.
We sometimes get people emailing us, telling us about typos… and footnote 121 in one of our reviews. We really like that because it means that someone is looking closely at the work we’re doing. On the other hand, the other part of our impact is the amount of funding that we direct to the organizations that we recommend. We’re ultimately not interested in doing this work just because it’s interesting. We want to improve people’s lives, and the number of lives we improve is a function of how much money we’re able to direct. So, we carefully track the amount of funding that donors give as a direct result of our research, meaning a donor who says,” I’m not sure where to give,” they find GiveWell, and they give to one of our recommendations. We call this our money moved, and it’s the key objective metric by which we assess our progress. In 2017, the last year that we’ve collected all the data so far, we directed more than $130 million to the organizations we recommend as a direct result of the research that we do.
Denver: That’s very impressive. Of that $130 million, and I know this is a bit of a guesstimate, how much of it is new money – people who would have never given otherwise, but because of your recommendations, started to give; as opposed to moving it from one organization to another organization? And in the case of the latter, what organizations do they usually move it from?
Elie: We’re certainly not sure about the answer to this question. We would guess that it’s roughly 50/50 between people giving more than they otherwise would have, or giving when they otherwise wouldn’t have. The type of stories that people tell is, they’ll say, “I was always really skeptical that charities were having an impact. But then I found GiveWell, and GiveWell is bringing the same sort of skepticism to charity, and then recommending these organizations as having high impact, and that gave me confidence to give more.” For the people who are moving their money from one organization to another, the most common shift is from big international organizations. So there’s no single one that’s the most common, but organizations like Doctors Without Borders, UNICEF, Oxfam, World Vision – household name-big charities – to our recommended charities. Then a smaller portion, maybe a quarter, is reallocating from other domestic social service organizations to our recommendations.
We see great opportunities in global health and development and are really excited to keep working there. We are hopeful that by being so public, others can follow our model and set up a similar organization focused in other areas.
Denver: Do you ever think of doing anything in the domestic market at some point in time?
Elie: I think it’s not the best fit for us and our staff. We see great opportunities in global health and development and are really excited to keep working there. We are hopeful that by being so public, others can follow our model and set up a similar organization focused in other areas. One good example of this is a group called Animal Charity Evaluators, which takes a very GiveWell-like approach. I would say that they are in many ways GiveWell-inspired to cover a cause that we weren’t going to cover, and we would love to see that type of dynamic happen in other sectors.
Denver: They have had tremendous success. You also have an incubation program where you help fund startup organizations who might one day make the GiveWell-recommended list. Tell us how that works, and tell us some of the organizations that you help seed.
Elie: The idea there is that GiveWell starts by saying to an organization, “What is your track record? What is your evidence? Can you already demonstrate that your program works?” And organizations need funding to get to the point where they can demonstrate that their program works. They need funding to start up. They need funding to gather evidence and complete monitoring. So, we want to support outstanding opportunities where there are organizations that are close to becoming a top charity, could be a top charity, but don’t have that funding along the way.
One organization we supported is called New Incentives. They provide conditional cash transfers to families in Nigeria to encourage them to come and follow the basic immunization schedule. These are areas of Nigeria where the current immunization rates are very low, and the notion is that a small cash transfer could incentivize families to bring their children in when they should to get the immunizations that they need. We don’t know whether or not this program will work. So, in combination with our giving this organization startup funding to run its operations,we’ve also directed funding to it and a research organization to evaluate how well this is working, or if it is working at all via a randomized control trial. We expect those results sometime next year, and then we’ll be able to make a decision whether to recommend further funding to them.
Denver: Very cool. You’re based in San Francisco. Describe your corporate culture and what it’s like to work at GiveWell. And what do you think makes it an exceptional and distinctive place to show up every morning?
Elie: Three of the values that I think GiveWell holds that are different than other places and force us to make some difficult tradeoffs. We are a place that really values openness, first. We are kind to each other. We care about each other. But we are trying to do something very difficult, and that requires a certain level of openness about what we need to do, what’s going well, what’s going poorly, so we can succeed and improve.
Denver: Any particular way that manifests itself, or any kind of procedure or process that that openness is almost baked into the culture?
Elie: We use Slack as our internal chat program, and we have a channel for mistakes. If someone makes a mistake, they go in there, and they say, “I screwed up. I did this thing wrong.” I recently sent out an email to a big donor with a typo in it. I screwed up. Not a catastrophic mistake, but certainly a mistake. And we celebrate those because we want people to understand that everyone makes mistakes. We know we do; let’s be open about that fact, and then learn how to improve.
Denver: I can feel the peer pressure already of getting to Slack and announcing my mistake before somebody else finds it out.
Elie: Definitely. I think a second core tenet of ours is that we’re truth-seeking. Ultimately, the core goal of what we do is trying to get better answers than already exist. And we believe that through hard work and deliberate thought, we can get better answers about how to help improve lives of people in other countries as much as possible. That’s really an overriding drive for people at GiveWell; it’s this interest in getting the right answer, or a better answer to questions, and I shouldn’t say the right answer because the questions don’t have right answers in the way that math problems do. But we can get better answers.
…we are trying to maximize the impact that we have on beneficiaries. What we are trying to do is improve the lives of people in low-income countries as much as possible. That’s an overriding goal of ours. The way in which that interacts with our other values is, we sometimes say we don’t know the answer, and we’re not going to try to get a better answer because it won’t make a difference to what we do. And we are responsible for allocating a significant amount of money every year, and if we need to do that as well as possible, we can’t be distracted by interesting academic questions that won’t actually matter to anyone’s lives.
Denver: Never satisfied with the answer you currently have and always be looking to get it better.
Elie: Exactly. Then finally, we are trying to maximize the impact that we have on beneficiaries. What we are trying to do is improve the lives of people in low-income countries as much as possible. That’s an overriding goal of ours. The way in which that interacts with our other values is, we sometimes say we don’t know the answer, and we’re not going to try to get a better answer because it won’t make a difference to what we do. And we are responsible for allocating a significant amount of money every year, and if we need to do that as well as possible, we can’t be distracted by interesting academic questions that won’t actually matter to anyone’s lives.
Denver: Speaking about openness, you actually take recordings of your board meetings and put them online.
Elie: We want to be an example to the nonprofit sector. We’re not… in the for-profit sector, companies are in competition with each other. In the nonprofit sector, we’re not in competition with anyone. We are working together. If someone could create a better GiveWell and do our job better than we do, we should go out of business. That would be great. That wouldn’t be bad. We want to put as much information out there in public to both help other organizations be more effective, but also to demonstrate that transparency is a better way for the nonprofit sector to operate because it will make it easier for all of us to accomplish our goals more effectively.
Too many people think, “I have a great idea! I see a problem. I should go start an organization,” instead of just supporting the organizations that already exist.
Denver: Couldn’t agree with you more. Let me close with this Elie. Having examined so many organizations and in such depth, what two or three steps would you encourage nonprofits to take to become better and to become more effective?
Elie: I’ll give you three things that come to mind that I think not every organization does as well as it should. The first is, What gap are you filling? Are you redundant with another organization? Or do you have a unique added value to bring to the world? Too many people think, “I have a great idea! I see a problem. I should go start an organization,” instead of just supporting the organizations that already exist.
Too many organizations start things and do things without ever having a mechanism for figuring out whether or not what they’re doing is actually working.
Denver: You’re exactly right.
Elie: The second is, Do you know if you would fail? Too many organizations start things and do things without ever having a mechanism for figuring out whether or not what they’re doing is actually working. The question we ask when we look at all of the monitoring reports we see from charitable organizations is: if this program had been a disaster, if it had failed, would they have known? Or was the evaluation set up only to find success? If you want to improve, the only way to do it is to be able to identify failure and then move in a better direction. And I think the best things that we have done internally at GiveWell is set up processes for identifying problems and then moving in a better direction.
Too many nonprofits get in a situation where they have to struggle just to find the funding to pay their staff. That means the executive staff focuses on fundraising rather than implementing programs, and staff aren’t paid well enough, which makes it hard to attract really talented people. Knowing where that funding is going to come from is essential to running an effective organization.
Denver: Very good! Because I know what you do is you rationalize those failures, and you somehow pretty much talk your way out of them and see what you need to do. But sometimes there are some absolute criteria that this thing should not be continued. It failed. And the third one?
Elie: The third one is: Have a notion of where funding is coming from. Too many nonprofits get in a situation where they have to struggle just to find the funding to pay their staff. That means the executive staff focuses on fundraising rather than implementing programs, and staff aren’t paid well enough, which makes it hard to attract really talented people. Knowing where that funding is going to come from is essential to running an effective organization.
Denver: Elie Hassenfeld, the co-founder and executive director of GiveWell, I want to thank you so much for being here this evening. Tell us more about your website and how you would suggest listeners go about navigating it.
Elie: Our website is at www.givewell.org. On our website, you can see our top charities list, and you can easily donate to any of the organizations, and you can also click through, as I said before, for all of the underlying information, footnotes, papers, and spreadsheets that support those recommendations.
Denver: It’s all there. Thanks Elie. It was a real pleasure to have you on the program.
Elie: My pleasure. Thank you so much.
Denver: I’ll be back with more of The Business of Giving right after this.
The Business of Giving can be heard every Sunday evening between 6:00 p.m. and 7:00 p.m. Eastern on AM 970 The Answer in New York and on iHeartRadio. You can follow us @bizofgive on Twitter, @bizofgive on Instagram and at www.facebook.com/businessofgiving.