Charitable Giving: From the Heart or the Mind? Discuss.

by | Mar 27, 2018 | Al's Observations | 8 comments

Marc Gunther and I had never met until about 10 days ago, when we found ourselves at the same meeting in Boston. But we’ve been long-distance pals for a while. We found one another on Twitter, we’ve talked by phone on a few occasions, and we’ve exchanged emails. Marc spent four decades as a reporter covering politics, media, and business before starting to write about philanthropy and nonprofits in 2015. As you probably know, I worked for three decades in the nonprofit world before starting my own consulting practice in 2012.

Marc and I share common values. But when I posted my article, “Affairs of the Heart,” in February, Marc had what my Aunt Hilda would have called “a conniption fit.” Marc disagreed strongly with my assertion that people generally give from the heart — and that that’s totally fine with me. In his riposte, Marc rubbed salt in my wound by suggesting — egad! — that donor-advised funds could help donors be more thoughtful and effective.

Being reasonable men, Marc and I entered into a dialogue on the subject. He went first:

Marc: What got us going, Al, was a blog post where you wrote: “I give from my heart – and my observation is that most other donors do the same thing. There’s absolutely nothing wrong with that.” You’re right that most donors give from the heart. But there’s a lot wrong with that. It’s one reason why we have so many ineffective and inefficient charities. Nonprofits don’t have a financial incentive to measure and report on their impact because donors don’t take the time to try to figure out which nonprofits are really making a difference. It’s odd: Many of us set aside time to research our investments and plan our vacations. We look for reviews and ratings before going to a movie or restaurant. Shouldn’t we be as thoughtful and intentional when giving to charity?

Al: Well, Marc, first, let’s not belittle the role of emotion in making important decisions. The most important decision of my life was getting married to Pat, and I didn’t sit back and do research and analysis before falling in love. (By the way, 35 years later, and we’re doing great.) People connect emotionally with charitable organizations, too — and they develop bonds with their leaders. There’s truly is nothing wrong with that — and it drives vastly more charitable giving (generally, a good thing) than intellectual dissection of financial statements and impact measures.

But second, I’m highly skeptical of nonprofit reviews and ratings. The best-known evaluation outfits, Charity Navigator and Charity Watch, work from offices half a continent away from the organizations they’re judging. They pull information from the charities’ Form 990s, draw conclusions about their efficiency and effectiveness, and slap on a rating — three stars, B-, whatever. (I wrote about this a while back in The Chronicle of Philanthropy.) You have to realize, Marc, that it’s frighteningly easy to game the 990s and make your organization look more efficient than it is. These evaluators presume, too, that spending on “overhead” — administration, fundraising, finance — is by definition bad, and spending on “program” — the direct costs of service delivery — is good. That’s a wildly over-simplistic and dated model for judging nonprofit effectiveness. And, finally, whenever evaluators get into measuring actual program impact, they find that it’s nearly impossible, so they fall back on painful jargon about “theories of change” and “logic models” that frankly make my teeth hurt, and that mean virtually nothing in the real world.

Marc: OK, we agree on a few things: First, I, too, didn’t rely on metrics when I got married. That worked out fine: Karen & I have been together for 37 years.

We can also agree that ratings from the likes of Charity Navigator and GuideStar have very limited value. They help screen out wasteful or fraudulent charities but they do not measure impact. So long as they try to evaluate hundreds or thousands of nonprofits, it will be all but impossible for them to do so. To their credit, they have been trying to bury the overhead myth for years. But without anything to put in its place, that’s hard. One of my first posts for this blog was headlined Evaluating nonprofits: If not overhead, then what? There’s no clear answer yet.

Finally, we can agree that the decision to help others is an emotional. My heart tells me to give. But it can’t tell me where or how to give and, as someone who identifies, more or less, as an effective altruist, I want to do as much good as I can with my money. To figure out how, I set aside my emotions and use my brain.

Can we also agree, as the Gates Foundation likes to say, that all lives have equal value? If so, we should help the world’s poorest people, whose needs are greatest. To that end, most of my own giving is guided by GiveWell, which seeks out the best giving opportunities.

Al: Well, first of all, let’s hear it for long and happy marriages!

I respect GiveWell, Marc. They really do find the biggest bang for the buck in terms of saving lives. I get that, and the charities they recommend do remarkable work and save thousands of lives, mostly in sub-Saharan Africa. I can’t knock your following their advice.

That said, GiveWell has a list of only nine charities in the whole world on their top recommendation list, plus another 20 or so that they find worthy and cost-effective. In terms of saving the most lives for the penny, I think that’s a great list. But the focus is incredibly narrow. If you want to support anything helping people with low incomes in the US, you’re out of luck. (I’ll remind you that we have some 43 million “food insecure” people in this country. Sending money to an American food bank or free health clinic may not save as many lives per dollar as in the developing world, but it still supports people who need help.) And GiveWell’s list does not deal with environmental organizations, including those that are fighting climate change, a force that is disproportionately affecting the very people GiveWell wants to help. And I have to say that arts and education are worthy charities, too — what’s the world without beauty and intellectual engagement? Are those kinds of causes off limits because they’re not purely about saving lives?

Marc: I’m with you, sort of, on climate change. I used to make the bulk of my donations to environmental groups, but stopped because (1) they aren’t making much headway on the climate crisis and (2) most won’t embrace the world’s No. 1 source of low-carbon power, i.e., nuclear energy. As for education, if I knew of a nonprofit with a great track record of helping poor kids succeed, I’d consider donating. Do you have any recommendations?

You lost me at the arts, though. Given a choice between saving the art in the National Gallery or the people who visit the museum, I’d have to choose the people; the reality is that money we donate to the arts, or most anything else, instead of giving to alleviate poverty or disease means letting people suffer.

I wish we had the equivalent of a GiveWell for important causes like the environment and education, as well as localized ratings for cities or communities around the US. You used to work at a community foundation, Al. Could they take on the role of vetting and recommending the best nonprofits in their cities or regions?

What I really want to see is what some have called a “market for good”– a way to reward the best nonprofits, penalize the worst and ignore the rest. But first we need to know which is which.

Al: I think your big-city bias is showing, Marc. I live in a small city, Concord, New Hampshire (population about 45,000), not Washington or New York. When I say “the arts,” I don’t think about the National Gallery or Lincoln Center. I think about the Concord Community Music School, which teaches the joy of music (and a sense of community) to kids, adults, seniors, immigrants, children with disabilities, many of them with no money and at no cost. Or I think of Oklahoma Humanities, a group I’ve worked with, which leads book discussion groups in state prisons. These are “arts” groups, but giving to them is not gilding the lily at some major museum catering to rich people.

As for giving to education, donating to Harvard or Stanford is about the most inefficient form of charity imaginable, and it reaches beneficiaries who generally don’t need it. (Malcolm Gladwell skewers giving to the richest universities brilliantly in his podcast, “My Little Hundred Million.”) But giving to schools that serve working-class kids, especially if the money is spent on direct service and not hoarded in endowments, can be a very wise use of funds. So don’t dismiss giving to the arts and education out of hand. You should think about institution itself, the people it serves, and how the money will be used.

Two last thoughts:

First, you have asked me about how you can know about an organization’s quality and impact. Well, to quote Yogi Berra, “You can observe a lot by watching.” And by asking people who benefit from the work. In my original post that set you off, I talked about my respect for a group working on children’s literacy. Yes, I’m fond of the leader. I trust him. But I also have heard great things about their work, not simply from their staff and from their materials, but from other organizations in the community serving kids from families with low incomes. One of the groups is a very gritty Boys and Girls Club that I know does great work, and the literacy group I highlighted collaborates with them — and the kids there simply love them. So too a program for kids at high risk where I’ve been a board member: the literacy group comes to their summer camp, and it’s one of the best days of the year. You may dismiss these efforts, because they don’t literally save lives, and a dollar spent on a book for a kid in New England would undoubtedly go further in helping prevent malaria in Africa. I get that. But my heart and, yes, my mind tells me that a group helping kids who have never really interacted with books to love reading is a great thing that’s worthy of my support.

Having delivered the de rigueur quote from Yogi Berra, I’ll close by quoting sociologist William Bruce Cameron: “Not everything that can be counted counts, and not everything that counts can be counted.” We’ve learned from the obsession with test scores in public schools over the last two decades that focusing too much on measurable outcomes actually distorts and spoils the mission — and inspires cheating, too. And there’s a reason some of the best nonprofits don’t do a very good job of evaluating themselves and communicating their impact. It’s because they’re busy delivering programming. They’re counseling vets, feeding the hungry, sheltering the homeless, and, yes, teaching art to kids. Some of the most effective organizations I know don’t do nearly as good a job at blowing their own horns and accounting for their achievements as some other groups that, frankly, aren’t all that great at meeting mission.

Marc: Some great points, Al. I agree that local charities do good and important work in education and the arts. The trouble is, it’s hard for many donors to identify them. One approach might be to set aside a share of giving for groups that work nearby – and give them time as well, if possible – and then devote the rest to helping those whose needs are most pressing. No doubt we should give from the heart, but I hope more people will use their heads as well. And thank you for using both!

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