Wednesday, December 30, 2009

2009: The Year Microfinance Died

If  microfinance was born in 1976 with Muhammad Yunus' $27 loan, 2009 was the year it died.

Ok, not really, but it did catch a lot of flak. Once heralded by some as a "silver bullet" to end poverty, this year people got real about what microfinance is and isn't and owned up to the limitations.

This reality check was fueled mostly by the release of several studies on microfinance, which used randomized controlled trials for the first time to measure microfinance's impact on its clients. The results were not so hot; with no study illustrating the transformative change people expected.

Then, not shortly after these studies were released, Kiva, the largest microfinance proselytizer in the US, took a fall from grace (at least in the blogosphere), admitting that its microfinance loans did not actually create a "person to person" connection. Since then, GiveWell, a powerhouse of a charity evaluator, has unrelentingly pounded against the microfinance ivory tower and recently discouraged people from donating to Kiva and other US microfinance charities, including the Noble-Peace-Prize affiliated Grameen Foundation.

Microfinance certainly has taken a hard fall, but I'm not sure if that's its own fault. I think we've built it up too much and overreacted to the recent detractions from the typical rosy narrative. Abhijit Vinayak Banerjee, Esther Duflo and Dean Karlan, three professors who worked on the aforementioned studies, recently wrote a guest post on Nicholas Kristof's blog about the microfinance critiques and the response. They concluded:
[A]s we see it, microcredit seems to have delivered exactly what a successful new financial product is supposed deliver—allowing people to make large purchases that they would not have been able to otherwise. The fact that some people expected much more from it (and perhaps they are right, may be it will just take longer), is perhaps inevitable given how eager the world is to find that one magic bullet that would finally “solve” poverty. But to actually blame microcredit for not promoting the immunization of children is no different from blaming immunization campaigns for not generating new businesses.
I think that sums up the whole year in microfinance perfectly. Microfinance only does what normal loans do: gives access to credit. It provides a service where there was none before. (For a broader perspective on the effects of the microfinance sector on development, see David Roodman's forthcoming book.) This certainly can't hurt, but it might not help as much as people expect.

If you are still interested in investing in finance-related programs (as I am), you do not need to admit defeat. Remember, microfinance isn't limited to microcredit--it can encompass all financial sectors, including savings, which actually might create more transformative change than microcredit.  If you want to improve the economic situation for the underserved, look for organizations that provide services beyond one type of finance, like the Village Enterprise Fund, which gives business training on top of their start-up grant capital. A combination of services might have a larger effect than just microcredit alone.

Of course, they might not. We will see just have to see what the next year brings.

(Edit: If you are serious about investing in microfinance, check out this guide from Good Intentions are Not Enough.)

Thursday, December 17, 2009

Putting my money where my blog is

I have a confession.  For as much as I talk about it, I've never actually made a social investment. So, I decided to own up and finally do it. After much deliberation, I chose the Village Enterprise Fund to support. 

I chronicled how I came to VEF for Yes! Magazine. I laid it out as a simple three-step guide to social investment, so if you have never done it before, or if you are a casual donor interested in taking the next step with your donations, check it out.  I hope my example can help.

Frequent readers of this blog will notice I don't use the same language in the article as I do here. I don't actually even mention the word "investing" once. Some people are uncomfortable with business-y terminology and I didn't want to exclude through word choice. As long as people are doing it, it doesn't matter what they call it.

Personal thanks to Holden at GiveWell for talking through this process with me.

Monday, December 14, 2009

Generosity Abounds

or: How I Learned to Stop Worrying and Love Emotions

I recently had a (kind of) discussion with Sasha Dichter about his proposal for a month-long "Generosity Experiment," where he decides to give to whomever asks him, whether they be family, friends, organizations, or just people on the street. My initial reaction was "AHH! NOO! STOP!" I was able to recompose myself and offer this more timid and respectful response:
I’m not sure if I support this. What would you say to someone who told you to buy anything anyone offered you? Your generosity experiment is the same concept, but instead of buying a product, your donations are going to a service: change within the charity’s area of focus.
I don’t want most of the products out there and I don’t want to support most of the charities out there. I have no issue with other people supporting those charities, assuming that they have a good reason to. I just don’t think “because they asked me” is a good enough reason.
Basic social investment stuff. Dichter responded with this:
Jeff, solid points all, and aligned with why I try to be very discriminating most of the time. What about the personal angle of generosity as a practice?
I was not placated. I responded with this:
I think being generous as a practice is a wonderful thing, be it personal, professional, or casual, but we have to remember who is being helped by our giving. I feel like its irrelevant what we learn about ourselves through giving when looking at the broader goal in mind, i.e., helping others. If our donation to the homeless man on the street could have been better used at an organization that provides services to the homeless, then our money should go there. If it is actually better spent by giving it to the homeless person, then it should go there. But determining that takes discernment and thought, and not indiscriminate generosity.
This discussion (as well as the other comments on the post) represent the tension between giving with your head and giving with your heart, or as I've usually thought about it, the difference between social investments and giving. I think I've always had a knee-jerk negative reaction to anyone who claims emotional reasons for his or her giving, because it's hard to work towards efficiency and build systems of accountability when people are just motivated by "doing a good thing," rather than "getting something done." I am not interested in people who are looking to "feel good" or for "personal growth" through service or giving, because ultimately, the people in the position to give are usually not the ones who need the help.

But that does not mean the emotional side of giving (or social investing) should be ignored. I think I've always assumed emotions have no place in effective philanthropy and anyone motivated by their emotions must be a do-gooder who doesn't understand what it takes to get things done. But emotional connections can be used to increase giving and to make connections between donors and organizations. And you can't dismiss the emotional toil that comes from seeing and working to change an imperfect world.

I think Philanthropedia's philosophy of “choosing a social cause with one’s heart, but choosing an organization with one’s mind” is the best way to combine the emotional side of giving with the scrutiny needed for social investments. It recognizes the emotions that are a part of any motivation to create change while still leaving room for accountability and effectiveness. It separates those out who are motivated by their emotions from the ones who act solely based on them.

I now realize that the heart does have a place in social investments. I don't know why I did think that before. Maybe its because, deep down inside, I'm afraid of my own feelings, or maybe its because I'm a cold-hard capitalist underneath it all. I still don't agree with Dichter's "Generosity Experiment" in practice, mostly because I don't have the income to support that, but in theory, it helped me see that emotions are a key part of social investments.

Tuesday, December 8, 2009

Something good has begun

Late at night, when I can't sleep, my thoughts turn to the good things to come. I think about what the future social investment market will look like. Will it, I wonder, look anything like the current investment market? What will change? Obviously, it will not be a one-to-one transfer: We can't trade dividends on social change or purchase futures in the numbers of lives saved. What will be the differences between a social investor and a traditional investor?

I don't know enough about philanthropy or traditional investments to tell you. But two organizations are shaping that future social investment market today.

Philanthropedia has created a "mutual fund" for social investors. Using a panel of experts, it constructs a list of organizations working within a certain cause (right now they have climate change, education and Bay Area homelessness) that a person can divide their donation amongst for maximum impact. Each organization is weighted within the mutual fund based on their effectiveness.

The Social Impact Exchange has created a sort of "stock market" of non-profits. Its Investment Clearinghouse (free registration required) has a list of high impact and effective non-profts for investors to scrutinize. Sean at Tactical Philanthropy says that this Clearinghouse serves as a sort of non-profit stock market not because you can watch the shares go up and down, but because it lets charitable organizations "go public" and reveal information to individual investors in the hopes of gaining more support. (Edit: For more info on the Social Impact Exchange, read one of its founders' response on Tactical Philanthropy.)

I think that this quality--accessibility of information--will be key to any sort of future social investment market and its resulting "investment products." Philanthropedia offers a neat way to get people thinking about social investment, but the concept of a mutual fund might cause people to just take the advice and not think critically about their donations. Philanthropedia does provide reviews of the organizations within the funds, but most of them are just basic information combined with quotes from their experts. I would prefer to see more information on the organizations to allow the donors to make their own decisions on who to give to.

The Social Impact Exchange, on the other hand, does offer more room for critical thinking. It provides an almost-overwhelming availability of information on its "public" non-profits as well as resources for scaling social initiatives. (It's a "Knowledge Center" as well as a Clearinghouse.) I prefer this wealth of information to Philanthropedia's method, which isn't much more than a marketing technique to encourage donors to invest. Clever marketing isn't a bad thing, but I am not sure that a mutual fund is actually something the social investment market can support, as individuals are getting social returns, not monetary. Diversifying a "portfolio" will not get you greater returns that fully supporting one organization, especially for small donors.

Evaluation based on impact and effectiveness should never be discouraged, regardless of its packaging, but information access must always remain at the foundation of any evaluation. Anything that gets good information out to donors helps create the reform needed. I don't know what the future social investment market will look like, but I do know that without information allowing individuals to think critically about their donations, that market may never arise.

(Thanks to Sean at Tactical Philanthropy for pointing me to both these organizations. To read his more detailed, more eloquent vision for the future, see his 2008 Financial Times column.)

BIG EDIT: Philanthropedia responded. They make an excellent point, saying that they do not include too much information in their reviews so they don't overwhelm people (I would say the Social Impact Exchange is currently guilty of that, but their market also isn't causal donors.) I would like to see every individual behave like a serious investor, but that probably isn't likely, and Philanthropedia's method and marketing meets them half way, like the post says.

Also, the post includes a great quote from one of Philanthropedia's founders, saying that its philosophy is about “choosing a social cause with one’s heart, but choosing an organization with one’s mind.”

Good stuff, all around.

Saturday, December 5, 2009

Boycotts or positive reinforcement?

As promised, this is the follow-up to my last post to lay out my issues with one of the major alternative charity evaluating sites, GiveWell.

First, I want to say that I greatly admire what GiveWell has done. In my last post, I said that the book on modern philanthropic reform will start on December 1st, 2009, but if I write it, it will probably start with GiveWell's founding. What they decided to do was truly revolutionary and their amazing blog opened up a world to me that I didn't know existed.

GiveWell aims to direct donors to the most effective charities to get the most out of their money. Their in-depth research is ongoing, but so far they've been able to identify a short list of top rated charities. I do not take issue with their selected charities or the methodology they use, I just wonder if directing people towards organizations already complying to the criteria of accountability and transparency is the best way to encourage other organizations to hold themselves to the same standards.

In a recent post, Holden Karnofsky, of GiveWell's co-founders, asked this question: If we have no information on a charity, and no way to determine its effectiveness, should we assume the best or the worst about its effects? I think the answer is neither: we encourage the organization to prove its effectiveness and let us, as the social investors, decide. I think this is were GiveWell falls short. Instead of encouraging and rewarding charities who are taking steps towards the end goal (transparency and accountability) they reward those already achieving that goal and leave the others behind.

Now, GiveWell's critical voice alone could be enough to whip other charities in to shape, but I am doubtful. It comes down to a question of if you think it is better to create change from the inside of a system (like say through shareholder activism) or from the outside (like say with a boycott.) I think it is better to work from within to encourage (assuming the system has avenues for change) rather than resist it as a whole. GiveWell's dismissal of any organization without programmatic evaluation will cause confusion, possibly resentment or even the reactive dismissal of GiveWell's concept of accountability and effectiveness.

GiveWell is a charity evaluator, not a reform organization. It is trying to get a message out to consumers, not change an industry. But I would hope that they realize that all the effective change organizations in the world are not limited to their 10 top-rated charities and that they would want to see other organizations share their fundamental ideas about philanthropy. I hope they can start to share their expert knowledge with other charities and help them become as effective as they should be.

Tuesday, December 1, 2009


Today was a big day. If anyone ever writes a book about modern philanthropic reform, December 1st, 2009 will be the day the story begins.

Philanthropic actors issued a joint press release today urging people not to donate based on a charity's financial overhead, but on its effectiveness. This critique is nothing new, but the release is important because Charity Navigator,  a major charity evaluation site that ranks charities solely on overhead costs, was one of the co-signers. Essentially, Charity Navigator conceded that its method is wrong and joined the other major charity evaluator (GuideStar) and three other alternative evaluation sites (GiveWell, Great Nonprofits and Philanthropedia) in calling for a better system of evaluation based on effectiveness and accountability.

GuideStar and Charity Navigator endorsing the work of the alternative evaluators would warrant a post by itself, but Charity Navigator stepped up this call to action with some actual action. In conjunction with the joint press release, Charity Navigator announced a complete overhaul of their ranking system, set to go up by Spring of 2011. They will not change their four star system, but instead expand their analysis to include three criteria:
  1. Financial health – Is the nonprofit sustainable? Does it have robust financial strength to survive in good times and bad? Is the overhead not at the extreme end of the continuum?
  2. Accountability – Does the organization have ethical practices, good governance and transparency? Is it accountable to its constituents?
  3. Outcomes – Can the nonprofit supply information about meaningful and lasting change in the communities and lives of the people it serves? Can they show evidence that these changes are as a result of their efforts? Do they have systems and processes in place to effectively manage their performance?

Ken Berger, CEO of Charity Navigator, said that the new definition of the four star rating will relate to the level of risk of investing in a nonprofit: "[A] zero star nonprofit would be a very high risk social investment and a four star would be low risk."

The evaluation alternatives of GiveWell, Great Nonprofits and Philanthropedia are good starts towards a better evaluation system, but they are not perfect (as GiveWell notes). I take issue with their methods: GiveWell seems to punish the lack of accountability rather than encourage (more on this later), Great Nonprofits seems to be nothing more than a place where people tell each other about how great their nonprofit is, and I am not sure if Philanthropedia's model has much room for expansion (also more on this later).

Charity Navigator's methodology probably has its flaws, just like the other evaluators, and Berger does not lay out a lot of details. (Mostly because they don't have any. With the help of its team of advisers, Charity Navigator hopes to have a first draft of the methodology done in Spring 2010.) But Charity Navigator's (and Berger's) commitment to evaluating based on accountability and effectiveness, combined with the company's resources and scope (the site gets 3 million unique users each year, according to Berger's post) could be the start of far-reaching reform.

Berger says that this is the "battle for the soul" of the nonprofit industry. I agree with him. Regardless of Charity Navigator's eventual methodology, the battle can't be won unless individual donors use evaluation resources and think critically to make the smart decisions for better social returns. Start as soon as you can.

Sunday, November 29, 2009

Can Ashton Kutcher save philanthropy?

For some reason, the winter issue of Fast Company landed on my doorstep last week, with a cover story about Ashton Kutcher's social media venture, Katalyst. While I neither own nor work for a fast company of any kind, the allure of celebrity and Kutcher's face (see left) was too much to resist. I devoured the article.

From what I understand (again, no fast-company experience), Katalyst tries to advertise and brand products through social media like Facebook, Twitter and YouTube. As the ultimate information-sharing method, social media has been heralded as a way to spread the good word of charities and leverage lots and lots of individual donations.

Kutcher did just that with Malaria No More, raising money through a Twitter campaign with a simple message: "Every 30 seconds, a kid dies of malaria. Nets save lives." A $10 donation to Malaria No More can buy a net and the Katalyst campaign was able to raise enough for 90,000 nets, or $900,000.

However, Malaria No More does a lot more than buy nets. Their website says that "your donation supports our entire effort to protect every family at risk," not just by buying nets, but also advocacy work. Using donations seemingly given for a specific item for other means isn't necessarily a bad thing, but Kataylst's partnership with Malaria No More makes me wonder if social media can encourage social investments, or the inherent superficial nature of it (Twitter posts can only be 140 characters long) will create deceptions and illusions about what donors are actually contributing to.Without engaging people beyond a few clicks, social media will just allow people to think that they are supporting "good work" and not encourage them to look for effectiveness.

Not much information of substance about a charity can be gleaned from a tweet or a Facebook wall. Disseminating charitable information through personal connections makes people focus on the positive and not ask critical questions. Both GuideStar and GreatNonProfits allow people to review charities they have worked with and almost all profiled have near-perfect reviews.

Social investments will not be effective without transparency and accountability and social media does not have the capacity to support the discussions needed for those requirements. The only way I could see a social medium helping is if it points to more in-depth information about an organization, like Kiva has done (although that tweet greatly oversimplifies the issues.)

The benefits from social media for non-profits are mediocre at best and its effects on donors could actually be detrimental. As we can see from Kutcher's involvement with Malaria No More, I think social media will ultimately be used to mobilize feel-good donations and not the critically-thought-out social investments needed.

Wednesday, November 25, 2009

Your One t-shirt doesn't help anybody

The ONE Campaign recently launched this year’s “ONE Campus Challenge,” a nationwide contest to see which college’s student body is best at fighting poverty. The competition includes tested poverty alleviation tools like dressing up your dog in ONE gear, getting people to spell out “ONE” with their bodies and, of course, signing more people up for the ONE Campaign.

The ridiculous “actions” ONE rewards in the Campus Challenge show how disconnected they are to their overall goal of ending poverty. ONE’s foundation is its saturated logo and celebrity sponsorship, all to propagate engagement and awareness, which will theoretically lead to advocacy, which will theoretically lead to change. But most of what they offer for action just points people back to ONE—such as signing more people up to the campaign. For those who want to go deeper into poverty alleviation, the Campaign can’t offer much besides a few more bracelets or a few more petitions to sign.

The Campus Challenge, arguably ONE’s largest engagement effort, isn’t any different than their broader actions. They don’t go further than offering prizes and incentives in exchange for spreading the ONE word around campus. Last year, 27,000 students competed for a grand prize trip to Kenya. Five students won the honor and went on what appeared to be a glorified cultural tourism vacation, with dancing, school visits and even the once-in-a-lifetime opportunity to view an HIV/AIDS test. All five were insistent that they were helping to end global poverty, but I sure can’t tell how.

Instead of rewarding students for artificial tasks like posing for pictures in branded merchandise, ONE should use their large base to connect interested people to internships or volunteer opportunities in the development areas that can actually make differences in the lives of the global poor. Instead of continually asking Congress and world leaders to spend more money on lower-income countries, the ONE Campaign should embrace the complexities of foreign aid and expand their scope to include all poverty alleviation techniques. ONE has a lot of resources and it’s a shame that they aren’t being used effectively.

The ONE Campaign essentially functions as an easy way for normal people to feel like they are ending global poverty. It lets people think that by wearing ONE goods (and similar products, like the Product(red) series) or by signing up on a mailing list, they are doing their part. In reality, ending poverty will take more than engagement and money. It will take innovation, mutual empowerment and generations of people doing many different things.

And buying T-Shirts or following Angelina Jolie around Africa doesn’t count.

Monday, November 23, 2009

A movie about social investing!!!!!!!!!

This is awesome. I can't wait. (If you have comments for the producers, post them on Tactical Philanthropy, where I originally saw this.)

Sunday, November 22, 2009

Kiva illusions continue

Last night I was watching Bones on Hulu and this ad popped up in between the action:

Kiva is not, as the ad claims, "the world's first person-to-person microlending website." That was brought into public light over a month ago. Kiva has made changes to dispel this myth, but obviously has not overhauled their advertising campaign completely.

In the past, I've been more sympathetic to Kiva's mode of advertising, but seeing this old ad again, despite their attempts at retribution, makes me question Kiva's commitment to full transparency and wonder if the huge outcry against their deception has actually changed anything.

The controversy and the illusion are not over. It will not end until people understand how Kiva actually works and this ad isn't helping.

(Of course, people might not even care how Kiva actually works. See Tim Ogden's post on this for further discussion.)

Thursday, November 19, 2009

Why can't I get paid enough?

Last week I was up at the fall retreat for the East Coast Lutheran Volunteer Corps, which set me up with a non-profit communications gig that pays $105 a month on top of room and board. We were in a vocational workshop discussing the work we do in our respective non-profits when I got bored. Without much else to do (I can't afford an I-phone), I started doing some calculations to determine the amount of donations it would take to to elevate myself and my friends from stipended volunteers to fully-paid employees.

Since we are all recent college grads, I figured we'd be thrilled with $30,000 a year. Thirty thousand times 40 (the number of volunteers on the east coast; there's about 100 throughout the country) equals $1.2 million.

That's a lot of money, I thought. Assuming a $100 donation per person, it would take 12,000 people to support all of us annually, not including benefits.

Not too encouraging. Twelve thousand people is a lot to coerce into supporting the work of 40 non-profit sector go-getters. But, I thought, what if everyone in the country gave? Assuming a $100 average donation, that would be over $30 billion! Enough to support a work force of 1 million people! And probably most people give way more than $100! More money for me (and for all the services non-profits provide)!

My dreams of a living wage while changing the world were saved, as long as we could just get more people to donate. I started to feel better and tuned out the rest of the workshop, thinking about all the I-phones I could afford with my soon-to-be salary. If people would just give more to charities, or simply start giving,  more resources could flow into so many different areas; programing would increase, range of services would increase, and peace on earth would soon follow.

I went online to back up this inspiration with some numbers when my dreams immediately crashed down around me once again. Turns out, about 70-80 percent of American households already give to charities each year and the average household gives around $1000 annually, for a total of about 300 billion overall. Only a third of donations go to churches, not a majority like I assumed. The non-profit sector already employs around 10 million people, many more than the 1 million I thought would result from increased donations.

How could I have been so wrong? With all this money--the civil society sector amounts for about 7 percent of the US's GDP--how can there be such big problems in the philanthropic sector? And why am I making so little?

I had fallen into the "big push" mentality of many others.  I assumed that more money would fix a problem. But, as I found after a quick Google search, the philanthropic sector is not in need of more resources. Not to say it couldn't use them, but of greater concern is how to use the resources it already has. (If you are skeptical of the problems in the non-profit sector, read "The End of Charity," also linked above.)

More effective use of resources will solve problems before an increase in resources will. We shouldn't expect more money to fix a broken system. We need to look to accountability and efficiency to keep the good non-profits in business and let the ineffective ones fail. By weeding out the bad ones, donations will shift to organizations that have proven success or great potential.

Of course, these effective charities might not use their increased revenue on salaries, but at least I can keep on dreaming.

Tuesday, November 17, 2009

Patient Optimists for Incremental Change

Tim Ogden at Philanthropy Action just wrote a great manifesto for patient optimists, contrasting the impatient outlook of those like Bill and Melinda Gates. He states that a patient optimist understands that change comes in increments, not as a "silver bullet" solution or a giant social push that ends poverty and solves all the world's problems. (The "silver bullet" in vogue right now seems to be microfinance.)

Ogden says:
Patient optimists...have lowered their expectations of any particular program or intervention, but not their belief in a better world over the long term. If we’re going to succeed in making the world a better place, we need to convince more people to lower their expectations, too. Then we can get about the work of trying, failing, learning, improving—and truly making the world a better place.
While I might use "realistic expectations" rather than "lower expectations," the point is well taken that social investments must be made for the long term. It is easy to think that your individual contribution--whether that be time or money--can create transformative, society-spanning, poverty-ending change, in reality it is just a small part of the collective action needed. That does not diminish your contribution, but it does extend the time-frame out a little bit further.

We'll just have to be patient.

Sunday, November 15, 2009

Kiva's method isn't that bad

I wanted to follow-up on Friday's post. While I think Kiva misleading their donors about how they actually operate is problematic, their mode of operation is not cause for alarm. When you make a loan to an entrepreneur on Kiva's site, your money most likely isn't going to that specific entrepreneur, but to his or her microfinance institution for a future loan. Instead of supporting an individual, you are supporting an organization.

This "fungibility" of resources is used in all person to person connection organizations, like Heifer International or Save the Children.  While person to person connections might increase donations, ultimately they are costly and inefficient to maintain. Because of this cost,  donations seemingly marked for an individual are used for greater support of an organization, sometimes causing ethical and procedural concerns. (An organization close to my heart, the Social Entrepreneurs of Grinnell, is currently dealing with some of these concerns.)

In theory, this fungibility should not be a problem. If the organization you are supporting is compentent and effective, they will know how to use your money better than you do. That is why you give it to them. In practice, fungibility becomes a problem when the recipient organization is not competent or ineffective and wastes the money earmarked by you for another purpose.

That it is why it is your job, as a social investor, to make sure your donations are being put to good use. Even if they aren't going to a street vendor in Cambodia like you thought, as long as it is still making real change in someone's life, it doesn't matter. But it is up to you to figure out where your money goes and what impact it has. You can start with some online resources (GuideStar, GiveWell or Charity Navigator) and then look more into the organization's internal documents.

Aside from its method, determining if Kiva and microfinance in general are actually an effective use of resources will take a lot more work.

Friday, November 13, 2009

Remember Your Audience

If you haven't read the NYTimes article about the recent Kiva transparency issues, check it out. Basically, David Roodman posted somewhat of an expose on his blog, illustrating how Kiva doesn't actually operate the way it claims. (My contribution to this debate was posted on Gumball University.) A whole big mess followed, including Kiva revamping its "How Kiva works" page. If you are a Kiva user, this issue is something to be aware of. If you are someone interested in non-profit accountability and transparency, it's a good case study. (To be fair, Kiva is comparatively pretty transparent.)

Sasha Dichter made a poignant comment about the NYTimes piece, saying that the article barely scratched the surface of the issues brought to light by Roodman's original post and the subsequent conversations. For most people, and more importantly, most of the almost 600,000 Kiva users, this article will be the primary source of knowledge about Kiva's transparency issues.

Dichter concludes his post saying:
Blogging and tweeting all have a role to play, and for some things it’s clearly where the deeper conversations happen.  But we also can fool ourselves into thinking that just because everything we read is talking about something, then everyone knows about it.
I think the work of all the philanthropy-focused bloggers is essential to reforming the industry, but I hope they keep in mind Dichter's warning. While we may discuss important issues and try to work towards increased accountability and effectiveness in change organizations, that discussion will only be successful if all participants in the philanthropy industry will listen.

The majority of those participants are quickly becoming normal people with 50-100 dollars to spare. We need to make sure we reach out to everyone, not just those interested in the nuances of microloans or aid effectiveness, because everyone has the potential to be a stakeholder in philanthropic reform. If normal people don't start thinking about how their small donation might not actually be going to the entrepreneur it is supposed to fund, or the child it is supposed to sponsor, or the chickens it is supposed to buy, then reform will never happen.

Wednesday, November 11, 2009

Right to accountability

Tim Ogden of Philanthropy Action wrote an interesting guest-post on Aid Watch, filling in for William Easterly while he travels around Africa. He discussed the concept of rights-based development, an approach Easterly has been critical of, calling for the world's poor to sue the NGOs that ineffectively serve them.

While it fooled me for a while, Ogden's post was satirical. I was majorly bummed, being excited at the prospect of class-action lawsuits that I realize now will never happen. What the post did illustrate, though, were the problems that go along with thinking about development and poverty alleviation as a human right's issue.

Essentially a moral argument, rights-based development argues that the world's poor have a right to better services and more resources. Critics argue that a rights-based approach creates a political struggle over what are the most important "rights" and shifts programs away from more pragmatic solutions--i.e., focusing on AIDS because it is a more destructive disease, rather than something simple like diarrhea, which kills more children in African than AIDS, malaria and measles combined. Ultimately, because rights are harder to define, they are not a good standard to hold organizations accountable to, and as Ogden says, can be abused.

While human rights may not be the standard needed to hold development organizations accountable, that does not mean accountability is not essential to effective change, just harder to define. It is easy to say there is a human right to water or education, but harder to prove an organization has increased education enrollments by so much or provided clean water for a certain amount of people, and that those actions improved the constituents' well-being.

When thinking about the charities you want to support, look for pragmatic, proven solutions. These come with their own issues, but it is easier to look for results than to figure out if organization's solutions adhere to a complex doctrine of human rights.

Tuesday, November 10, 2009

Introducing Change Charity

Philanthropy is changing. Charity is changing. It is clear that we are in the Second Wave of Giving, where donations are not directed by the Carnegies or the Rockefellers, but by individuals interested in making a difference.

These individuals want results. The ease of access to information and resources allows people to find the most effective charities to give to and exposes those which do not meet those standards. Consulting firms, publications, blogs and social networking groups have all been started to hash out the issues in this new realm of philanthropy. But in all the discussions, people still focus around the fundamental component of the First Wave of Giving of the early 20th century: Giving.

If donors want their contributions to be used effectively and their money to be used efficiently, then they need to start thinking about their donations not as handouts, but investments. Current philanthropic debates still center around the concept that people are giving their money away, rather than making a social investment. The Second Wave of Giving will only reform philanthropy and create sustainable change if people realize that their donations are not handouts, they are not self-sacrifices, but actual investments in a better world. Instead of a Second Wave of Giving, we should try to create the First Wave of Social Investment.

The return on these investments will be based on the effectiveness and efficiency of the non-profits and other change organizations that people invest in. This blog aims to help people think of their donations and involvement with change organizations not as sacrifices for a greater good, but investments in society's future. It will also try to show individuals how to get the biggest return on their investment, in whatever form that investment takes.

I previously wrote for the college social entrepreneurship blog, Gumball University. I will continue my work from there on this site and expand it to encompass the philanthropic sector, but still focus on areas of global poverty, as it is my personal interest.

I hope you enjoy the subsequent posts. I will try to update thoroughly and regularly.