How to get the biggest bang for the buck when you donate to good causes: Effective altruism

How to get the biggest bang for the buck when you donate to good causes: Effective altruism

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Bang for the buck? We like to donate money to good causes. It gives us a “warm and fuzzy” feeling when we do something that helps those less fortunate than ourselves. But we rarely pause to consider whether our contribution is truly beneficial. We mean well, but there is no guarantee that the outcomes will match our expectations.

Here are some examples of unintended consequences.

  •  Too much of a good thing: When natural disasters such as earthquakes and tsunamis are widely publicized, a large amount of money and resources can pour in. But, the state of affairs at the scene of the event may not be adequate enough to put these to good use. A lot of good intentions go to waste.
  • Selfish altruism: Many of us split our donations into small amounts and give them to many different organizations. We’re called “warm glow givers.” Small sums of money can often cost more in processing charges than the amount donated.

Enter, effective altruism

In the past few years, effective altruism has come to be seen as a new way to think about giving.

“. . .a philosophical and social movement that advocates using evidence and reason to figure out how to benefit others as much as possible, and taking action on that basis.” – Wikipedia

The profile of an effective altruist

Data, not emotion: Effective altruists use a data-driven approach to do good. They prefer to donate money or give their time to causes that have the largest impact. In a sense, it follows the ethical philosophy known as utilitarianism.

How can one go about becoming an effective altruist?

  • Choose a career in which you make the most income, not with the intention of living affluently but so that you can do more good.
  • Choose a modest lifestyle in which you can donate a portion of your income to the most effective charities without putting yourself through discomfort or wearing a hair shirt. Guilt should not be a driving force in the decision.
  • Spend time researching organisations. The key question is: “Is the organisation working on important issues and are they doing it with a frugal, cost-conscious approach?”
  • Disseminate the message through various channels, including conversation, public speaking, and social media.

How do you know where your donations will be most effective?

GiveWell, is a not-for-profit organisation that has been working since 2007 to answer this question. Their data and resources are available online to anyone at http://www.givewell.org.

Emotions get in the way of charitable giving

Utilitarianism is not practical for most of us; it offers no room for emotions. However, we are largely driven by emotion when we give to good causes. Here are some of the mechanisms that work at stopping us from giving.

  • One over many: People experience a more positive effect when helping a single identified individual than when helping many. We will consistently choose family and friends over strangers and citizens of our own country over those of other nations. People’s responses to the suffering of others do not scale in a linear fashion but diminish as the number of affected individuals increases, a phenomenon that has been referred to as ‘compassion fade’ or ‘psychophysical numbing’.
  • Does it really reach the needy? In many places, corruption and local politics suck away donations. The needy don’t get them. We are concerned that donations made to such places might actually be supporting and promoting corruption.
  • Evolution rules: In the past, when the rules of evolution held sway, three fundamental motives helped solve key challenges: parochialism, status, and conformity. All of them are barriers to sharing and giving. Society has evolved to the point where these factors no longer hold good in day-to-day lives. Yet, evolution is a hard thing to shake off and can continue to create psychological barriers to effective giving.

Our moral boundaries can be examined by sound reasoning. Effective altruism tries to look closely at the results of charitable acts to make sure that money is spent in the best way possible.


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