Art Carden  

Consuming Resources Isn't Success: On Charity and Development Aid

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Earlier today, I read an article trumpeting the "success" of a charity drive that received a lot of donations and that raised a lot of money. I'm not going to link to the article because I don't want to single out one particular endeavor, but I'm sure you can find a ton of examples of this kind of thinking without a whole lot of Googling effort.

As William Easterly, Christopher Coyne, and others have pointed out, we tend to measure the "success" of a charitable endeavor or an aid project in terms of the resources consumed. Only slightly better are metrics that tell us something like the number of meals served or schools built or children enrolled in different programs. These aren't "successes," though. At best, they are steps toward an outcome like human flourishing. It's a huge leap, and one not particularly well-supported by the evidence, from "we enrolled a bunch of kids in a program" to "their lives are demonstrably better" (Lant Pritchett discussed this in a recent EconTalk on "Education in Poor Countries").

In Summer 2012, I attended a "Helping Without Hurting" workshop with my pastor. If you believe, as I do, that we have an obligation to steward our resources wisely and to help those who aren't as fortunate as we are, then we can't stop at pleasant-sounding announcements about how we collected 100 toys or served 1000 meals or what have you. As Steve Corbett and Brian Fikkert discussed in When Helping Hurts and as Robert Lupton explains in Toxic Charity, well-intentioned attempts to intervene in others' lives have an unfortunate tendency to backfire. A lot of our charitable undertakings consume resources, but just because we've consumed resources doesn't mean we've created value.


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COMMENTS (6 to date)
Himanshu Sanguri writes:

I agree with the thought that "just consuming the resources do not mean that we have created the value". But unfortunately, many of the charity programmes going across the globe do not understand this basic premise. The one who donate, the one who organize and the one who plan, they all should address this objective before charity initiation. A prefect example is when we watch television advertisements which ask us to buy their product because a fraction of the cost will go for charity.

Seth writes:

I think many charities do create value...for the givers. It gives them the warm glow of having helped, essentially giving them a chance to selfishly demonstrate their unselfishness.

Further demonstrating the giver's selfishness is their apathy in even considering the unintended consequences of their 'unselfish' actions. They got their "I gave" sticker, so don't question their generosity.

Art Carden writes:

@Seth: that's a great point. Too many charities are selling the lie that you're better than other people.

Thomas DeMeo writes:

I would agree with the observation, but it's more than a little ironic that an Economist is making it.

Maximum Liberty writes:

This is one of the reasons that I like the charity ModestNeeds.org. I don't intend this as an endorsement -- I just think they are a very interesting approach to charity.

They take donations that they use to help individuals overcome one-time needs. They validate the needs with documentation and, if needed, phone calls. (E.g., I use my car to get to my job, my car broke, I need $200 for repairs, I can't afford it.) They usually pay directly to a service provider, landlord, etc.

They only give specific types of grants, listed here: www.modestneeds.org/about-us/anual-reports-201112.asp. Intuitively, these seem to be the types of grants that would have large long-term benefits. (E.g., because I couldn't drive to work, I lost my job and now I'm on welfare.)

They recently announced a study that they had done into the effect of the aid they provided. A summary is here: www.modestneeds.org/features/newsletter/. The summary is confusing, but the size of the differences is large. I'll be interested when they publish the full study.

To @Seth's psychological point above, they do make a greater connection between the donor and the recipient by putting a lot of stories on their website. The stories tend to focus on the recipient, not the donor. If you make a donation, you can make it with a recommendation that your money helps a specific story. (There is something of a disconnect between the two because of tax laws. It isn't automatic.)

Max

Mark V Anderson writes:

Charity giving is certainly in the Dark Ages in terms of effectiveness. The best guides to charitable giving talk about percent spent on administration or fundraising, conflicts of interest, and the like. These are important issues, but don't raise the most important issue, which is the benefits the charity creates as a ratio to its spending. I think the charities in this country could be several times as effective if there were better guidelines as to what was effective and if charities competed with each other to be the most effective.

What I really detest are those who think that such cost accounting is somehow distasteful. I've heard from many a person who thinks that giving money to charity is good in itself, regardless of the results of this giving. I can't understand such an attitude.

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