How to be great at doing good

What is the purpose of charity?I've been thinking about that question since coming across a fascinating observation about the purpose of government and the purpose of business, and how often we confuse the two. It came from an October 1990 opinion column by a journalist named Donald Kaul, and it was cited recently in Tim Taylor's Conversable Economist blog. Kaul wrote:

We have come to rely upon capitalism for justice and the government for economic stimulation, precisely the opposite of what reason would suggest. Capitalism does not produce justice, any more than knife fights do. It produces winners and energy and growth. It is the job of government to channel that energy and growth into socially useful avenues, without stifling what it seeks to channel. That's the basic problem of our form of government: how to achieve a balance between economic vitality and justice. It is a problem which we increasingly ignore.

He's right, I think, but we'll leave that discussion for another day. His observation led me to wonder about where charity fits in. Broadly speaking, it seems safe to say that the purpose of charity is to make the world a better place, to alleviate suffering and enhance well-being. We can agree on that, can't we?Keeping that goal in mind, let's assume that we want our charity work--as donors, volunteers or staff members--to succeed as much as possible. Less suffering is better than more.Those two premises--uncontroversial, at first blush--are at the heart of an excellent book by Nick Cooney titled How to Be Great at Doing Good? Why Results Are What Count and How Smart Charity Can Change the World (Wiley, 2015, $26). But before long, they lead Cooney to argue persuasively that we are getting charity all wrong. Few donors aim to do the most good they can when they give away money. Nor do charities, as a group, focus on maximizing their impact."The unfortunate reality," Cooney writes, "is that most charitable groups fail to even define a bottom line, let along make decisions around one."By the time he's done, Cooney has effectively skewered such well known charities as Habitat for Humanity, The Make-A-Wish Foundation, The Cystic Fibrosis Foundation and Heifer International, as well as virtually all nonprofits that support the arts.Consider Habitat for Humanity International, the largest of a network of hundreds of nonprofit affiliates around the world. Its vision is "a world where everyone has a decent place to live." Its bottom line, presumably, is to provide as many people as possible with decent places to live.But if that were the case, Cooney writes, the organization would steer far more of its resources to building and renovating homes overseas--where construction costs are far cheaper--and less to work in the US.In fact, Habitat spends more of its money in the US, where it will does less good. In its 2015 Annual Report, Habitat says it spent about $119 million on program services to its affiliates in the US, where it served about 30,000 people with new and rehab construction or home repairs. By comparison, it spent about $66 million on program services to its international affiliates, which together served about 300,000 people with new or rehab construction, incremental construction or home repairs.All of those funds can't be easily shifted overseas--some come with strings attached, while others are raised locally to be spent locally--but couldn't Habitat shift some, maybe a lot, of those dollars out of the US? As Cooney writes: "It could probably double, possibly even triple the number of people it's providing with decent housing--all without spending one penny more on programs." Even if its fundraising dropped off as a result, a smaller Habitat with a more international emphasis would do more good.Habitat, by the way, is better than most nonprofits because a substantial share of its money flows to places like Haiti, rural India and sub-saharan Africa where the needs are greatest. It's far superior to, say, the Make A Wish Foundation, which grants wishes to children with life-threatening medical conditions, but at an enormous cost--many times what deworming charities like the Schistosomiasis Control Initiative (SCI) spend to alleviate the lives of children suffering in Africa, Asia and South America. What's more, SCI's impact lasts for a lifetime. If Make-A-Wish wants to improve the lives of sick children as much as possible, it could create a "wish to be well" program for kids in poor countries and devote perhaps 10 percent of its budget to it, Cooney suggests.He writes:

As disrupting as it can be to the way we do charity work now, and as loathe as we are to realize we could be doing something better, if we want to succeed, there is nothing more important than a single-minded focus on the bottom line. Until nonprofits choose to to adopt such an approach, or are compelled to do so by donors, the people, animals and ecosystems they are trying to help will always be short-changed.

I met Nick Cooney the other day at a coffee shop near his home in Silver Spring, MD.. Cooney, who is 34, is director of education at Mercy For Animals, a farm-animal protection charity, and the founder of The Humane League (which I wrote about here). This is his third book. Previously, he wrote Veganomics: The Surprising Science on What Motivates Vegetarians, from the Breakfast Table to the Bedroom and Change Of Heart: What Psychology Can Teach Us About Spreading Social Change. In all his books, he told me, he tries to explain how the insights of social psychology and decision science can be used to drive social change. "Psychology has always been an interest of mine," he said, citing the influence of such writers as Chip and Dan Heath, Dan Ariely, Malcolm Gladwell and Daniel Kahneman. (Peter Singer is another obvious influence.) Cooney would like to see  people approach charity "with the logic and rigor it deserves," but he's clear about the fact that most people don't make decisions--and particularly decisions about charity--entirely from the head."We're driven by habit," he says. "We're driven by what makes us feel good."Very few donors do any research before writing a check. If they did, no one would be persuaded to give by the "chuggers," i.e., charity muggers, who stop passers-by on street corners of every big American city.Changing the way people give to charities is hard. Most people give to the same charities every year. We're all shaped by a cognitive bias for the status quo.

“No one likes to think that what they’re doing isn’t the best possible thing to do,” Cooney says.

This casual attitude on the part of donors is the best explanation for why charities aren't more effective. Donors have taught charities that they need not strive to do as much good as they can. Many foundations are shockingly casual about the way they measure impact.

"The sad reality is that there is no financial incentive for nonprofits to focus on the bottom line," Cooney says.

That's a slight exaggeration. A growing number of donors, particularly those affiliated with the Effective Altruism movement, are paying close attention to the bottom line. That's exciting because it means that we have the power to change things. If we keep in mind that the purpose of charity is to reduce suffering as much as possible--and then act accordingly--we can shake up the nonprofit sector and do an enormous amount of good.