One of my tasks from 1992 to 1995 was to figure out how to intelligently allocate the $70,000 that I endowed the Gumption Trust with. I considered many uses for this money, everything from spending it on fund-raising to investing in basic research. Out of all the possibilities, the one I came to focus on was contributing money to philanthropic organizations that will use it more efficiently than I could. So during those years, in addition to educating myself about the state of the world, I also researched philanthropic organizations, trying to identify ones I wanted to support and that I want to encourage other people to support.
Rather than just up and give away tens of thousands of dollars, I wanted to get my feet wet first, by looking at lots of different types of philanthropic organizations, making some small contributions, and getting a feel for what they bought.
In January 1992, I made $100 donations to 23 organizations supporting a wide variety of causes I'm sympathetic to. I asked each organization for a financial report, and kept track of the results. I looked at the size of each organization, the timeliness of their replies, the portion of their budget spent on overhead and fund-raising, the portion spent on membership services, and the portion spent on actual public service programs. The results were interesting. The sizes of the organizations varied more than I expected-all the way from Media Watch, which runs on about $20,000 per year, up to Amnesty International, which runs on $30 million a year-representing more than a thousand-fold difference from smallest to largest. Responsiveness also varied. The most responsive organizations were third party political campaigns, which took only a few days to acknowledge my contribution, and which provided detailed financial information within a week or two. The least responsive organization was the ACLU, which took 31 days to cash my check, 42 days to thank me for it, and never sent me a financial report, despite repeated requests. Surprisingly, two of the organizations refused to send me financial reports without knowing why I wanted them-I immediately dropped them from consideration for further funding. As for the cost of overhead, fund-raising, and membership services, across the 23 organizations these items ranged from 0% to 80% of the total budgets. I looked for some pattern between these factors of size, responsiveness, and budget focus; to my surprise, I found almost no correlation among the three.
| Exercise | Send me e-mail about your experiences with philanthropic organizations. Tell me about the most interesting and unusual ones you've found. Recommend one or two I really ought to learn more about. |
At that point I wanted to select a handful of good organizations for larger contributions. I decided on six characteristics to look for in these organizations:
Root Problems
The first characteristic I looked for was an emphasis on
addressing problem roots rather than specific problems. For
example, I looked for organizations striving to reduce population
growth rather than organizations acting to counteract the effects
of population growth by saving endangered species or lobbying
against incinerators. See World
Problems for a discussion of root problem types.
Tangible Results
Secondly, I looked for organizations with an emphasis on
producing immediate, tangible results, like saving a person's
life or preventing a pregnancy, rather than organizations working
to pass laws, raise public awareness, or take other indirect
action intended to eventually lead to tangible results.
NCIB approval
The third thing I looked for in candidate organizations was
approval from the National
Charities Information Bureau (NCIB), a non-profit corporation
that evaluates philanthropic organizations and publishes
summaries of their findings.
Public Service Focus
Next I looked at the budget breakdowns of the candidate
organizations. I steered clear of organizations that spend lots
of money on fund-raising, overhead, or donor services. I looked
for organizations that focused primarily on public service.
International Focus
The fifth characteristic I sought was an international focus. For
example, I'd rather support an international family planning
effort than the local chapter of Planned Parenthood. I have three
reasons for this preference. The first is simple economics-money
goes further in developing countries than it does here in America.
For the same amount of money, a family planning clinic in Nigeria
can hire more staff and buy more contraceptives than a clinic in
California. Secondly, I think that in general any international
trade or international aid effort tends to promote cooperation
between workers in different countries, increase cultural
exchange, and help fight nationalism and tribalism. And lastly,
if we all think globally but act locally, then regions that are
fairly well off will remain fairly well off, and regions deeply
in need of aid will remain in need of aid-so it's important to
think globally and act globally.
Cost Effectiveness
The last characteristic I looked for was good, old-fashioned cost
effectiveness. I wanted to find the organization which could use
the money to achieve the most positive impact on the global
system. I want to realize the most prevented suffering per dollar
of my philanthropic contributions. In fact, this criteria is
really at the heart of the preceding five criteria, and it's the
one that's of overriding importance to me. Compared to my desire
for cost effectiveness, I have no particular preferences
regarding what sort of suffering is prevented: I don't care where
or when the suffering is prevented, or what the race, sex, or
religion of the beneficiary is.
Midway through the year it became clear to me that international family planning organizations are particularly well matched to the above criteria -- they focus on a root problem, they produce tangible results, they have a strong public service focus as well as an international focus, and they are tremendously cost effective as a result of generally focusing on prevention rather than relief work.
Controlling unwanted population growth is the main benefit I see coming from family planning work, but there are many other benefits as well. Family planning helps to insure all children are born into a home where they are wanted and can be cared for. In developing countries especially, family planning work often improves living conditions for women, and helps women to have more freedom and more control of their lives, opening new options and opportunities. Many family planning programs are creatively integrated with synergetic programs that provide women with opportunities for education, employment, and financial assistance. Family planning programs can also help provide a framework for women to network and organize, leading society to more egalitarian relationships between men and women. Family planning helps to prevent the need for abortion, which pro-choice and pro-life advocates both view as tremendously important in a world where women undergo tens of millions of abortions a year, many of them unsafe. Family planning also provides much needed basic health care services in a world where one million women die each year from preventable reproductive health problems, and one hundred million women per year suffer from illness and injury arising from complications during pregnancy and childbirth.
The Bottom Line
Making a couple dozen "experimental" donations in 1992
helped me settle on a set of characteristics to look for in
philanthropic organizations. Ultimately I settled on
international family planning as the general area of activity
that best matched my criteria for selecting philanthropic causes.
