The business of giving
Who could not love Batkid?
More than 10,000 volunteers lined the streets of San Francisco to fulfil a 5-year-old cancer patient's superhero dream. There was a call for help from the city's police chief, a damson in distress to rescue, the Riddler and the Penguin to fight off and black Lamborghinis with Batman logos. The newspaper even changed its name to Gotham City Chroniclefor the day.
And then along came grinch Peter Singer. "Heart-warming causes are nice, but let's give to charity with our heads," ran Singer's opinion piece in The Washington Post.
It's hard to imagine a worse cause to use as a launching pad for a lesson in ethics. But it does illustrate the necessarily brutal decisions at the heart of the Effective Altruism movement, which the philosopher explores in his new book, The Most Good You Can Do.
The book examines why we make irrational, sentimental decisions about where we put our money. His argument is that the average US$7500 cost of realising a Make-a-Wish Foundation dream would be better spent saving lives by providing mosquito nets to families in malaria-prone regions or helping to protect 100 children from losing their sight.
He's not the only one who thinks altruism is in trouble. Here in New Zealand, Trade Me founder Sam Morgan believes philanthropy is fundamentally broken and that most charity is simply wasted. And arts patron Sir James Wallace worries that his generation of big givers is not being replaced.
A professor of bioethics at Princeton University, Singer has been talking about ethical giving since the 1970s. In the past five years he's witnessed the transition from intellectual puzzle to practical blueprint for life.
In a world with few opportunities to help the far-off poor and a narrow divide between super-rich and breadline, it might have been acceptable to think that ethical life meant not being horrible to people. Now, with 1 billion people suffering extreme poverty, there's a moral duty to try to bridge that gap, Singer argues.
"If we just say, well, as long as I don't harm anyone that's fine, we're overlooking the fact that we're very lucky and other people are very unlucky and we're not doing anything about it."
Just how much you should give is debatable. In his last book, The Life You Can Save, Singer advocated a sliding scale, starting at 1 per cent of what you earn. The resulting website thelifeyoucansave.org will estimate a fair sum based on your income.
But as far as Singer is concerned, the sky is the limit. His book highlights some extreme examples – couples who give half their income, choosing to take public transport rather than own a car. There's even a woman who resolved not to have children as the money they would cost could buy more lives in developing countries. (She later changed her mind when she realised her stance was making her miserable.)
Singer and his wife give 30 to 40 per cent of their income to causes ranging from Oxfam to an organisation preventing parasitic worms in children and a charity repairing fistulas which devastate the lives of women with birthing difficulties. He is donating all the author royalties from The Most Good You Can Do to charity.
He doesn't see it as a sacrifice. "It makes us feel better about enjoying the comfort we still have".
Entrepreneur turned philanthropist Sam Morgan says philanthropy is fundamentally broken because most charitable giving is wasted. Photo: WAYNE DROUGHT/NZPA
HEAD VERSUS HEART
"Philanthropy is broken," declares Trade Me founder Sam Morgan, whose Jasmine Charitable Trust gave out grants of $4.4 million last year. "It is not superficially broken, it is fundamentally broken and the vast majority of charitable giving is wasted... Charities make you sad to get your money. It is an emotional purchase, not a rational one. People who give don't do their homework."
Go on, admit it – that glum-faced kid in the charity mail-out is more likely to inspire you to open your wallet than a bunch of facts and figures about need and outcomes. In fact, research shows that often the greater the need, the less we give, as we instinctively want to solve a problem, not simply reduce its size. It was no accident that charities devised the sponsor-a-child formula for bringing in funds – donors identify with other individuals, not nameless crowds.
A 2005 study, The Identified Victim Effect, compared the responses of donors offered the chance to help one or many children. One group was shown a photo of a single child, told her name and age and that she needed $300,000 for a new, lifesaving drug. The other group was shown photos of eight children, given their names and ages and told that the same sum would save all of their lives. Those shown the single child gave more than those shown the group of eight.
The key to effective altruism, Singer says, is discarding emotion and focusing instead on getting the best value for your giving. And to do that, you need to know what impact your dollar is having.
"I would love for these warm fuzzies to be transferred to the kinds of cases where it's much cheaper to do good."
Morgan approaches philanthropy like business investment. He looks for talent, momentum and the ability to efficiently scale up ideas.
Both Singer and Morgan decry as misguided the common focus on a charity's administration costs. What's important, says Morgan, is evidence that the charity actually works. What are the results and how much does it cost per measurable impact? And it's not enough just to say you've designed and delivered flash new water filters. Morgan needs to know whether people are actually using them a month later and have instances of diarrhoea fallen as a result.
"Most people spend more time working out what wine to buy than how they give their charitable dollars," Morgan says. "In the end, they give money to marketers and don't invest the efforts to understand the basics of what they're funding.
"The most fundamental problem in philanthropy is that the charitable donations or grants do not demand accountability. We all just give money and hope the goat turns up."
Morgan acknowledges that analysis takes time, effort and expertise – a luxury most amateur givers cannot afford. While there are charity evaluators, such as Give Well, he advises amateurs to give to something simple and local whose effectiveness they can evaluate for themselves.
Fundraising Institute New Zealand chief executive James Austin strenuously denies that charities lack accountability and says marketing and brand awareness campaigns are critical to charities to keep money coming in.
EARNING TO GIVE
Matt Wage doesn't sound like an effective altruism poster boy. He turned his back on a promising academic career to earn megabucks working on Wall Street. He figured he could do more good earning a high salary and donating a six-figure sum to charity every year than as a psychology professor. As an academic he was largely replaceable; as a donor he was not.
Singer uses Wage to illustrate the challenging concept of earning to give – the idea of trading a low-paid but ethically motivated job, such as charity work, for a higher salary that enables you to give more.
It's not the best use of everyone's skills, Singer says. And there are limits – a low-paid journalist with some public influence doubling their pay working in public relations for a tobacco firm would, for example, be counterproductive.
Arts patron Sir James Wallace argues philanthropists need to feed the mind as well as the body. Photo: JASON OXENHAM/FAIRFAX MEDIA
ANIMAL, VEGETABLE, MINERAL?
A long-time animal welfare advocate, Singer admits it's difficult to compare efforts to reduce human suffering with those to reduce animal suffering.
He does not equate the life of an animal with that of a human but does believe giving to animal causes can be justified, even using effective altruism's rigorous measurements.
Charities reducing meat consumption, for example, are wins for both humans and animals as they reduce animal suffering and reduce greenhouse gas emissions from keeping farm animals, he says.
The arts, however, are left out in the cold.
"In a world in which a billion people are living in extreme poverty, 6 million children dying before their fifth birthday from poverty-related preventable diseases, I don't think we should be donating to the arts."
Don't tell that to long-standing New Zealand arts patron Sir James Wallace. The normally media-shy philanthropist has hit out at the country's new brand of super-wealthy for being "blind to the necessity of giving back to their community once they've made so much".
He does give to charities helping eliminate poverty in Africa and worries that not enough is being done to bridge the ever-widening gap between New Zealand's richest and poorest inhabitants. But there is room, he believes, to nurture both brain and body.
"You have to be balanced between basic sustenance of the body and basic sustenance of the mind. If your mind is not sustained with culture, it might as well be dead. That means you're only half a person."
Every day, about 840 generous Kiwis give an average of $84 each to a cause on fundraising website givealittle.co.nz
Some causes are campaigns run by registered charities and some are set up by altruists undertaking feats of endurance for their charity of choice. The vast majority, however, are individual pleas for cash for everything from alternative cancer treatment in Germany to money to give a dog two new hips. Almost all would fail the effective altruism test of accountability and best bang for your buck.
Peter Singer is cautious in his criticism. Some of that money will go to needy people. And charity revenues have increased despite the growth of crowd-funding sites, suggesting the funds are not coming from existing donors. However, the high cost of the causes and the usual lack of evidence of their impact mean your money could go a lot further elsewhere, Singer says.
"It's pretty much impossible for the individual to sort out which are the genuine cases and which are not, so I don't recommend using them. And a lot of them are not very effective uses of funds. I think it's much better to look at the charities that have been properly vetted and examined and donate to them if you want to help people. I'm not saying it's a bad thing, I'm just saying it's not the best thing."
Philanthropist Sam Morgan disagrees. He acknowledges that Givealittle causes fail his test of accountability, effectiveness and low cost per impact. However, he believes the website fulfils a need to allow amateur givers to support something worthy but whose impact is difficult to measure, such as a soccer club for underprivileged kids.
"If you're going to shoot in the dark it might as well be local, where you should be able to form a somewhat informed opinion yourself as to whether it works," Morgan says.
The debate is set to intensify as Givealittle and similar sites grow exponentially. Kiwis donated $6.4 million to Givealittle in the three months to July – more than half last year's annual total.
That included the April Nepal earthquake, which spawned 132 new fundraising pages. As well as an appeal by registered charity Himalayan Trust, which has raised more than $362,000, there were pleas from single Nepalese families, Nepal friendship societies and mountain climber Mal Haskins, who was caught in Nepal at the time.
The $75,000 Haskins raised went into his personal bank account, raising obvious alarm bells. However, he has set up a website detailing how much he has spent and on what. Most of the pages fundraising for Nepal have provided no account of how the money was used.
While Givealittle has had only one fraud case in its seven-year history, recent cases have raised further concerns about crowd-funding accountability.
Givealittle last month refunded $4600 raised for the funeral of 5-year-old Leon Jayet-Cole, who died in hospital in May after suffering a serious head injury. ACC had covered the funeral cost and Givealittle denied the request of Leon's mother, who has been charged with failing to seek medical treatment for him, to release the funds to enable her to take her other children on holiday and buy items for a newborn baby.
Serious concerns have also emerged about money raised for baby Leo. Aucklander Samuel Forrest asked for $60,000 on international crowd-funding site Go Fund Me to allow him to care for his Down syndrome son full time as a solo dad, after his Armenian wife allegedly abandoned the boy. The cause raised $600,000 and concerns have been raised about how that money has been spent. Forrest is also reported to be reconciled with his wife, negating the fund's original purpose.
While setting up a Givealittle page is free, as it is funded by Spark's charitable arm the Spark Foundation, other sites skim off a percentage of donations as a fee – in baby Leo's case that amounted to about $40,000.
Givealittle's rules state that the Spark Foundation is not responsible for ensuring that donations are used in any particular way. However, it can refund donations if the purpose or intention of the fundraising has been misrepresented.
Spark Foundation general manager Lynne Le Gros says there are checks and balances. Every page is moderated to ensure the story of why the fundraiser needs money and what the cash will be used for is as complete as possible.
"But we aren't the police. We're not asking people to confirm they are dying."
Pages are only opened to public donations after three different people within the fundraiser's immediate network have supported the cause. The foundation also verifies the beneficiary's bank account.
In September, to improve transparency, the site began publicly identifying the page owner and whose bank account the money would be going into, Le Gros says.
Crowd-funding platforms rely on crowd power not only to raise money but also to expose dodgy behaviour, she says. Every page includes a "report this page" option and her team fields concerns about pages on a weekly basis.
She remembers two occasions on which pages have been removed, once after a page owner refused to make required changes and once when it became clear that a page would not actually help its supposed beneficiary.
Le Gros believes that's a pretty good record for a site taking on 1000 new pages a month.
"By and large, hopes and dreams and targets are realised and people benefit."
However, she acknowledges that recent bad publicity has motivated the foundation to explore ways to further shore up confidence in the system.
RECENT GIVEALITTLE CAUSES
$173,000 raised to pay for treatment and repatriation for Paul Lupi, who was left in a coma after a scooter accident in Phuket on July 6. He did not have travel insurance. He arrived back home on July 28.
$75,000 raised by mountain guide Mal Haskins for Nepal earthquake recovery. Haskins and his wife Sophie were caught in the earthquake and began immediately taking supplies to outlying areas. The funds raised went into his personal account, but he has set up a website detailing how much has been spent and on what. The page remains open as Haskins plans another stint helping with the rebuild.
$94,562 raised for Wellington costume designer Claire Prebble. She had run out of traditional treatment options after being diagnosed with melanoma and wanted money to travel to Germany to undertake alternative hyperthermia, and intravenous ozone and vitamin C treatments. She exceeded her original $80,000 goal and the page remains open to further donations, although she has completed the treatment.
The last Giving in New Zealand report, in 2011, found New Zealanders gave $2.67 billion to charitable and community causes. Fifty-eight per cent of giving came from personal donations, followed by 36 per cent from trusts and foundations. The rest came from business.
New Zealand has 26,989 registered charities with an income of $16.33 billion.
In the three months to July, Kiwis gave $6.4 million to causes on crowd-funding site Givealittle.
Peter Singer will speak at Word Christchurch on September 7 at 6pm at the TVNZ Festival Club. Tickets are $20.