\n<\/p>\n
For the past decade, Giving Tuesday<\/strong> has been a way for everyday Americans to donate <\/strong>their money, or time<\/strong>, to charities and causes that help collectively make the world a better place. Whether it\u2019s a little or a lot, we\u2019re encouraged to give what we can<\/strong> to bridge the gap between those that have so little and many of us that have so much. But how do you know a charity or organization is using your donation accordingly?<\/strong> How can you spot-check to see if your dollars are being used for those in dire need?<\/p>\n We brought on Elie Hassenfeld<\/strong>, GiveWell co-founder and CEO, to help us navigate the tricky subject of giving to worthwhile charities<\/a>. Elie knows a thing or two about validating which charities are worth donating to. At GiveWell, he spends his days researching thousands of charities<\/strong> for hundreds of millions of donatable dollars<\/strong>, helping those of us that are too busy to find a home for the donations that we are willing to give.<\/p>\n In just six tips, Elie will give you the framework for finding a worthwhile <\/strong>charity<\/strong><\/a> or organization to give to, so you know that your dollar is being stretched the farthest it can. We also touch on whether or not high administration costs are a red flag<\/strong>, whether it\u2019s better to give goods rather than money<\/strong>, and how to truly measure an organization\u2019s impact to see how many lives they\u2019re saving or improving with each dollar donated. If you\u2019re still on the fence about where to give this Giving Tuesday, head over to <\/strong>GiveWell.org<\/strong><\/a> to know your dollar is making a difference!\u00a0<\/strong><\/p>\n Mindy: Elie: Mindy: Scott: Mindy: Scott: Mindy: Scott: Mindy: Scott: Mindy: Scott: Mindy: Elie: Mindy: Elie: Scott: Elie: Scott: Elie: Scott: Elie: Scott: Elie: Scott: Elie: Scott: Elie: Scott: Elie: Scott: Elie: Mindy: Elie: Scott: Elie: Scott: Elie: Mindy: Elie: Scott: Elie: Mindy: Elie: Scott: Elie: Mindy: Elie: Scott: Mindy: Elie: Scott: Elie: Scott: Elie: Scott: Elie: Scott: Elie: Scott: Elie: Mindy: Elie: Mindy: Elie: Mindy: Scott: Mindy: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes<\/a>\u00a0by leaving us a rating and review! It takes just 30 seconds.\u00a0Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Check out our\u00a0<\/i>sponsor page<\/a><\/i>!<\/i><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
Welcome to the Bigger Pockets Money podcast, bonus Giving Tuesday edition where we interview the founder and CEO of GiveWell, Elie Hassenfeld, and talk about maximizing the impact of your charitable donation.<\/p>\n
I think it\u2019s also really important to be open-minded about what you\u2019ll support. If you\u2019ve already focused in on a single organization and you don\u2019t want to consider any others, you just have fewer opportunities and fewer options of what you might find. And the more flexible you can be, the better. Once you\u2019ve got to the organizations that you want to consider, I think it\u2019s a great idea to press them a bit for how do they know their program works? Or maybe a better question is, how would they know if it weren\u2019t working?<\/p>\n
Hello. Hello. Hello. My name is Mindy Jensen, and with me as always is my very generous cohost, Scott Trench.<\/p>\n
Thank you to my very charitable cohost, Mindy Jensen.<\/p>\n
Scott and I are here to make financial independence less scary, less just for somebody else to introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you are starting.<\/p>\n
That\u2019s right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business, or give generously to the highest possible impact cause we\u2019ll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams.<\/p>\n
Scott, today is the 10th anniversary of Giving Tuesday, an idea that was formed in 2012 as a day that encourages people to do something good. Every act of generosity counts, and everyone has something to contribute toward building the better world we all want to live in. Today we\u2019re speaking with the CEO of GiveWell, an organization that is devoted to researching charities to find the highest impact evidence-based charities. And during the show, Elie gives some great tips for doing your own research, but he also has this whole organization that does the research for you. I don\u2019t know about you, Scott, but I\u2019m busy. Are you busy now that you have a baby? Or is life just all sunshines and rainbows, because you got all this time in the world?<\/p>\n
Used to have free time.<\/p>\n
Have two, you\u2019ll have so much more free time. But Elie shares some tips for doing research on your own as well. I think this is such a great show. Number one, be proactive. Don\u2019t necessarily respond to solicitations for money when somebody reaches out to you and says, \u201cHey, would you give me some money?\u201d Look for ways that you want to impact your local charities, your local environment, a concept that you want to support. Their big one is malaria. They are committed to combating malaria. Don\u2019t wait for the malaria charities to reach out to you. Go out and look for charities that support the kind of research that you\u2019re looking for.
Be open-minded about what you want to support. That goes against what I just said about look for specific charities. Be open-minded about the kind of charities you will support. Press the organization about their successes and how they will know when their system isn\u2019t working. That\u2019s a really good tip.
Number four, what will you do with additional funding? That\u2019s a great question to ask them, because if they don\u2019t have an answer why should you give them additional funding? Find somebody who has a great answer. Give money rather than goods, and give with no strengths attached.<\/p>\n
Yeah. I think those are a great framework that Elie provided for us. We\u2019ll get into that of course as we get going. I do want to highlight one issue that we discussed around finding a local charity, or something that is directly in line with a mission you might want to support, is hard work. I would equate it to finding a real estate investment property. You got to go and do a lot of research to find one good deal. You maybe analyze 15 or 20 or 50 or 100 properties before you\u2019re going to find a really good one that\u2019s going to produce a really good ROI.
I think the same may be true in the charitable giving space, to find an organization that is actually providing a good impact per dollar invested in them in a cause that you want to support. I think there\u2019s a process. My recommendation for folks this holiday season is to begin that process in the local community. Give or not give this year. But go out and find something that you\u2019re aligned with that you feel like is doing really good work.
And then also consider giving with an organization like GiveWell that has done research at the aggregate level to find the most effective way to send the next dollar you invested. You can either give directly to GiveWell, or you can give to an organization that they\u2019ve uncovered as a highly effective organization. And you can give the dollars directly to the organization. This holiday season I plan to do both. I plan to give to an organization that I have worked with for a long time and that I found through a process that\u2019s very similar to what Elie recommended. I also plan to give to GiveWell and allow them to allocate those dollars to the next best opportunities to save lives.<\/p>\n
I think that\u2019s awesome, Scott. Shall we start the show?<\/p>\n
Let\u2019s do it.<\/p>\n
Okay. Before we bring in Elie, let\u2019s take a quick break. And we\u2019re back. Elie Hassenfeld is the CEO of GiveWell, a nonprofit dedicated to finding outstanding giving opportunities. Elie, welcome to the Bigger Pockets Money podcast.<\/p>\n
Oh, it\u2019s great to be here. Thanks so much.<\/p>\n
I\u2019m so excited to talk to you today.<\/p>\n
Yeah. Well, I\u2019m excited to be here and share some of what we\u2019re doing.<\/p>\n
Awesome. Well, Elie, would you mind giving us an overview of giving an investor, or how you like to think about the challenge? I know that as an investor, I want to make sure that any donations that I\u2019m going to give are going to actually have the impact that I want them to have. Is there a process? Or maybe you could help frame the art of giving effectively in a way that would be helpful here?<\/p>\n
Yeah. I\u2019ll start real high level and can dig in as far as you want. At the big picture level, GiveWell tries to maximize the impact that donations are having, so what we look at is metrics that we think will show that someone\u2019s giving is doing as much good as possible. For example, when we do research on charities we look at things like how much does this organization have to spend to save the life of someone in need? Metrics that are the ones that we\u2019re focused on.
Just to give a little bit of context on what GiveWell does and how we focus on the world of charitable giving, because it\u2019s really large, we focus on organizations that are helping people in some of the poorest parts of the world. So that often means working on diseases in Africa, or reducing poverty in Africa. The metrics we use, the research we do is focused on trying to achieve those outcomes that are ultimately fairly measurable and can demonstrate that the donations are going real far.<\/p>\n
What is the key metric that you guys are looking at?<\/p>\n
I wouldn\u2019t say there\u2019s any metric that is the be all and end all, so to speak. We largely look at organizations that are improving health, and there we\u2019re mostly looking at organizations that avert death. So we\u2019ll say how much does it cost to avert the death of someone who otherwise wouldn\u2019t have died? And then on the other hand, how much does it cost to increase someone\u2019s income by a certain amount, reducing poverty? There\u2019s a lot of other things that someone could look at, and I don\u2019t want to give off the impression that those are the only metrics, but at least as a starting point those are two of the high level outcome that we\u2019re really focused on.<\/p>\n
Awesome. Could you give us an example of disparities between groups, two groups that might claim to both help people but might have very different economic outputs in terms of that aid?<\/p>\n
Yeah. I think there\u2019s a lot of different types of comparisons that one could make, but I\u2019ll start just comparing a group working overseas to one working at home, just to give a sense of why we\u2019re so focused on overseas giving. Just as a quick historical note, when GiveWell got started we weren\u2019t just focused overseas, we also looked at groups working in the United States. But after seeing how far a dollar goes overseas, we decided to focus entirely on overseas organizations.
To dive into it, one of the organizations we\u2019ve recommended for a long time is a group called Malaria Consortium. One of the programs they provide is preventative medicine that, if you give it to children over the course of the malaria season, it reduces cases of malaria by a huge amount. Malaria\u2019s still a really big problem. It\u2019s not something that we talk a lot about in the US, but roughly speaking, 1,000 children every day are dying from malaria globally. This is a really big problem.
We estimate that it costs around $5,000 to save a life from malaria. At the same time, if you look at an organization working in the US on a program like education it might cost $1,000 to $2,000 per student per year to put a child through a better charter school education program. I want to be clear, those are great programs too. They\u2019re doing a lot of good. But when we compare $5,000 to save a life against, let\u2019s say, $2,000 for a year of schooling it seems to me that the former, the death averting charity, is doing more with the funds that it\u2019s receiving.<\/p>\n
Awesome. Can you walk us through the mechanism by which one would avert malaria deaths?<\/p>\n
Yeah. I\u2019ll give a slightly different example, because I think it\u2019s a little bit easier to understand. I\u2019m going to talk about another organization called Against Malaria Foundation, which we also recommend. They fund the distribution of insecticide treated nets. These nets are valuable, because they protect against and kill the mosquitoes that transmit malaria. Mosquitoes tend to bite most frequently in the evening hours when these nets are up and they\u2019re covering the people who are sleeping. It prevents cases of malaria, and then subsequent deaths from malaria. We know that this is the case both from many randomized control trials, so the gold standard of evidence that demonstrates that a program is working, many randomized control trials over the years that show that distributing nets results in fewer cases and fewer deaths. And then also ongoing data collection and surveys that demonstrate that when nets are distributed the people who get them don\u2019t always but mostly tend to use them, they use them consistently, and it leads to falling malaria cases over time.<\/p>\n
So would it be fair to say that you have done an exhaustive amount of research in trying to figure out how to stretch a dollar to its absolute most benefit to society using a metric of human lives saved, or death subverted, if you want to invert it for this? And that putting on these nets for folks that are sleeping in Africa, for children in particular, is the best bang for your buck that you\u2019ve been able to validate fully or close to it? Is that another way of putting this?<\/p>\n
Yeah. i would say that nets in Africa is one of the four or five best things that we\u2019ve been able to find to date. One of those things that you could donate to tomorrow with more money to groups that are running these programs will be able to do more of it. Nets aren\u2019t the only ones of the ones that we recommend. There\u2019s programs that encourage parents to bring their children for childhood immunizations, distributing vitamin A supplementation to kids who are vitamin A deficient, which also reduces deaths in childhood, other malaria programs. And then a program that we recommend focused on deworming, which is treating children for parasitic infections. And of all the groups that we\u2019ve looked at in GiveWell\u2019s 15 year history, those are the ones that we see as having the best bang for your buck today.<\/p>\n
Walk us through GiveWell\u2019s process for actually validating those things. Have you been on the ground and seen these operations? Do you do analyses of the companies? How do you actually feel confident in giving us the numbers you\u2019ve given us?<\/p>\n
There\u2019s a few different parts of our process. I\u2019d say it starts with trying to cast a wide net and making sure that we\u2019ve found all the organizations that we could consider. We\u2019ll get information on organizations from tax forms. Every large registered charity has to file a tax form with the IRS, that\u2019s publicly available data. I myself have gone through thousands of those, just trying to get them into our pipeline. Have also been through thousands of organizations\u2019 websites as a starting point.
The next thing that we\u2019re trying to do is figure out which programs are having a big effect. A program might be distributing malaria nets. Most charitable organizations don\u2019t have the resources or the capability to assess their own programs and determine how well they\u2019re working. Often the demonstration that their programs are working comes from academic evidence. There\u2019s a whole field of experts who\u2019ve been working for years trying to determine what programs will improve public health the most in low income countries, or what programs will reduce poverty the most in low income countries. We are not reinventing the wheel, we\u2019re leaning on this giant body of academic evidence to determine the programs that we want to prioritize.
We have this big list of organizations, big list of programs. We\u2019re looking for the programs that have the biggest effect. And then we filter down the organizations to the ones that are implementing those great programs. At that point we need to talk to the organizations themselves, and that involves both getting information from them on their budget, meaning how much does it cost for them to deliver a malaria net using this example. Also, how do they know that when they\u2019re delivering the nets they\u2019re actually reaching the intended recipients that people use them over time, that they\u2019re replacing them when they wear out? Again, in our example, nets, they wear out. We use all of that to arrive at an estimate of how much it costs for an organization to deliver a net, and subsequently how much it costs the organization to avert the death from something like malaria.
And then we also do site visits where we\u2019ll go to the organizations and visit them on the ground, see things in person. Aside from, I don\u2019t know, the high level 50,000 foot view of the organization actually being there and seeing things in person as a way of both gut checking what we\u2019re getting in paper, but also really seeing things on the ground, which often raises new questions that we hadn\u2019t thought of before.<\/p>\n
Let\u2019s say that folks do want to make an impact here in the US, or even in their local community, is there a toolkit that you would suggest, or that Google provides, on how to do that effectively?<\/p>\n
Yeah. The honest answer is, I think it\u2019s real hard, because it\u2019s difficult to do this work in one\u2019s spare time. We\u2019d love to just run through the main tips that I\u2019d give people to keep in mind as they\u2019re trying to make these decisions. I think the number one most important tip is be proactive. And by that I mean, you should go out and you should try to find the organizations that you\u2019re interested in rather than just responding to solicitations that come in the mail or over the phone. You\u2019ll do much better if you take that first step rather than waiting for someone to come to you. I think it\u2019s also really important to be open-minded about what you\u2019ll support. If you\u2019ve already focused in on a single organization and you don\u2019t want to consider any others, you just have fewer opportunities and fewer options of what you might find. And the more flexible you can be, the better.
Once you\u2019ve got to the organizations that you want to consider, I think it\u2019s a great idea to press them a bit for how do they know their program works? Or maybe a better question is, how would they know if it weren\u2019t working? You often will not get a good answer to this question, and I think that\u2019s telling. But for the organizations that have great answers, I think that takes some work, but it\u2019s a really great way to know that they\u2019re worthy of support.
A question I love is, what will you do with additional funding? Ask them essentially, \u201cHey, I\u2019m a donor. I\u2019m planning to give you more. What do you think is going to be different because I gave you money rather than you\u2019re not getting the money?\u201d And that that\u2019s great both because it gives you a sense of what they might do, but also gives you the opportunity to come back a year later and check in and see how things went. Whether they went relative to plan, whether they\u2019re on track. And if not, why?
And then finally, when you actually do give, strong recommendation is to give money rather than goods. And then give with no strings attached. And by that I mean, once you found an organization that can answer these questions well trust that they know more than you do about their space. Donors can really make mistakes when they want their funds to support programs instead of overhead. And that can really cripple charities and their ability to build the type of strong sustainable organizations that are necessary to tackle some of the problems that they face.<\/p>\n
I think that\u2019s fantastic. To give an example, my personal life, I think it\u2019s important to give time and money to organizations in the local community because of what I do that work with financial literacy and financial empowerment, helping people escape poverty in those types of situations. It\u2019s a process. I must have volunteered with five or 10 different organizations that each didn\u2019t align necessarily\u2026 Either I didn\u2019t feel that the donations were effective in resolving\u2026 Giving someone 200 bucks in a time of crisis, for example, with one organization is great work, not an argument with it. It just wasn\u2019t aligned with my values of teach a man to fish and help that person lead their own journey out of poverty. And then other organizations have one off events.
It just took me several years to find an organization that actually had a process and a social ROI as they calculated that I believed was having an effective impact, and to give money and time to that organization as opposed to some of the other ones. It\u2019s like finding a real estate deal. We talk about it, it\u2019s a lot of work that goes into finding these things, unless you\u2019re willing to invest in the stock market or one of these things that are index funds or something. Would be fair to say that GiveWell is the index fund easy button automatic option, you\u2019re going to probably have a good bang for your buck in terms of a good impact through your organization?<\/p>\n
Yeah. I love that analogy, because I think it\u2019s right. I think a lot of the people that GiveWell serves are folks who come to the end of the year, they want to give generously and they don\u2019t know what to do. They\u2019re not going to spend the time to find the opportunity on their own, so GiveWell\u2019s the place they can give and feel confident that their donation is doing a lot of good, it\u2019s having a lot of impact.<\/p>\n
On your top charities list, I love this, you have a phrase, \u201cDonate based on evidence not marketing.\u201d I think that so many people, I don\u2019t want to say get sucked in because that sounds mean, but I\u2019m sure I\u2019ve gotten sucked into marketing as well. Marketing is there to give you money. I\u2019m wondering what money is being spent on marketing that could be directed towards the actual charitable work if they would just do that. I think it\u2019s very interesting that two of your top four charities are malaria charities. I can\u2019t believe that malaria still exists. It\u2019s 2022. Why have we not found a cure for malaria yet?<\/p>\n
Well, I think with malaria, we know it works. Unfortunately, the people that it affects are just some of the poorest people in the world. It\u2019s really a case where for those of us who are fortunate enough to live in a high income country, we don\u2019t even imagine what it\u2019s like to not have the ability to purchase a $5 malaria net, and a $5 malaria net can be the difference between life and death at that age. That\u2019s really what we\u2019re about, trying to say let\u2019s reward organizations and donate to organizations based on the impact that they have rather than their success in marketing.
I think all too often in the charitable world, basically because\u2026 There\u2019s this weird fact about charities that the ultimate beneficiary of their activity, it\u2019s not the customer, it\u2019s not the person who\u2019s paying the money the way it is with when we buy a product at the store, if we don\u2019t like it we won\u2019t buy it again, but with the charity it\u2019s the donors who pay the money. Ultimately, nonprofits are aiming to serve those donors. They serve them by making them feel good about their donations, not necessarily by demonstrating impact. And that\u2019s why I think some of the organizations we have on our list just tend to be less successful at marketing, but we think some of the best in the world at the impact that they create.<\/p>\n
Now, the way it works for your company is you go to givewell.org, and then it looks like your preference is for folks to donate to your flagship fund. And then presumably you allocate those donated dollars to the highest and best use charities that according to that year\u2019s calculations or analysis?<\/p>\n
Yeah. Our number one choice is that people give to us and we reallocate, but I want to be very clear, we\u2019re perfectly happy for someone to come to our website and go right to any of these organizations and donate. The website and all the information there is free of charge. If anyone is wondering why should I send my money through this third party, go ahead, donate right to these organizations. That would be amazing.
The reason we like when people donate through us is it just allows us to aggregate up donations and then give to the organizations that have the biggest needs at any point in time. We\u2019re in close contact with them, we know what their needs are, we know where they plan to go next. By having the funds aggregated, we can be a little bit more efficient in the reallocation. We don\u2019t take any cut of those donations, any fees on the donations so 100% just goes through to the charities. But like I said, we\u2019re perfectly happy for people to also to go directly and that\u2019s why all that info is up there free of charge.<\/p>\n
I know that this is a myth, or incorrect, but I want to pose the question anyways. Playing devil\u2019s advocate here. I\u2019m a potential donor and I\u2019ve heard somewhere, can\u2019t remember exactly the place where it is, that you shouldn\u2019t donate to organizations that have marketing budgets, or that have high amounts of overhead. You want your donation to go directly to the person that you\u2019re serving with that. You\u2019ve touched on this earlier where no, don\u2019t give them stipulations with that. Why is that a bad idea? What is healthy in the context of expenses that are not directly related to the mission of the charity, like salaries?<\/p>\n
Yeah. The bottom line is charities are like any other business where you need to spend on overhead and fundraising or marketing in order to survive as an entity. So what could that overhead spending mean? It means paying people salaries that enable you to recruit talented people. It means investing in technological infrastructure so you can work efficiently. When donors try to starve organizations of that sort of funding, it leads organizations that are maybe able to direct a little bit more money in the short term, but certainly less successful in the long term. I think that just tends to be a big mistake.
Instead of focusing on overhead, there\u2019s something that\u2019s much better to focus on, which is how much impact do they have? You can just focus on the thing you care about directly. One of the examples I always loved is no one would ever say decide whether or not to invest in Apple stock based on how much it spends on overhead. That doesn\u2019t even make any sense. That\u2019s not how we would think about it. We\u2019re trying to think about how valuable the stock is relative to its future, or what it will be in the future. That\u2019s a much better way to assess that opportunity than to think about something like how much did it spend on servers and is that too much? We really don\u2019t focus on it at all. I think it\u2019s a mistake to.
Even more practically just the numbers themselves, it can vary a lot based on the nature of the activity an organization does. So if you have one organization that\u2019s collecting a lot of in kind donations, so let\u2019s say products that they\u2019re distributing out, they\u2019ll have a really low overhead number because they\u2019re largely a regranter. And another organization that relies more heavily on people might have a higher number. I think it\u2019s hard to say as a rule of thumb what\u2019s good versus bad. And I said, I think if you went to organizations and asked them the sorts of questions that I laid out earlier, you\u2019d avoid the ones that are scams and you\u2019d end up focusing on ones that are really effective.<\/p>\n
Are there any red flags that I should be looking out for when I am doing my own research?<\/p>\n
I think first and foremost, yeah, I mean I think you will avoid a lot of the worst outcomes by being proactive in the first place. If you\u2019re starting and you\u2019re saying I\u2019m trying to find, let\u2019s say, the best organizations in my community and, I don\u2019t know, you go online or you talk to friends and family to get some recommendations, that\u2019s a much better place to start than the group that\u2019s calling you on the phone that you\u2019re responding to reactively. That goes really far. Yeah. That\u2019s basically it. I think you should ask questions, and if you get good answers you should feel pretty good. You\u2019ll never know for sure, but that\u2019s a great place to start.<\/p>\n
I also love what would you do with another 50, 100, some number that\u2019s large enough that is actually meaningful, 50, $100,000 in charitable gifts. It\u2019s amazing how many organizations I ask that question to who have no idea what they would do, what the next 50 or $100,000. That\u2019s really important because I intend, hopefully over the course of my life, to give a significant amount of money. And if I give to somebody who doesn\u2019t have a plan, that\u2019s a problem as well. I loved all of your questions there. I think that those are the key elements.
You want to have a cause you want to support, find organizations, don\u2019t let them come to you, that you want to support with them. Be open-minded, because they can take you on a path that\u2019s not exactly where you wanted to go, that\u2019s much more effective because these people are doing it full time, and many of them are very, very good at it. Let them run with the donation, I think is how you articulated that. And get them to talk about what they\u2019ve done and why they know it\u2019s working or why they know it isn\u2019t working. I love that it\u2019s not live saves, it\u2019s death subverted. I love the way your mind works on some of these problems. I think that\u2019s right. And then what are you going to do as you scale the vision, or as you scale toward that vision? What will the next incremental dollar get us in terms of impact or good? That\u2019s giving like an investor, I think.<\/p>\n
Yeah, totally. I think one distinction I want to draw, which I think is somewhat challenging here. I do think that there\u2019s a difference between what someone can do on their own in a relatively small amount of time versus what we\u2019re trying to do at GiveWell with our full-time staff. I think these tips work really well to go from I don\u2019t know really where to start to get you somewhere, but it\u2019s just real hard to make progress on your own.
The place that I really saw that was in the way that what led my co-founder and me to found GiveWell 15 years ago. We were in this position. We were working in the finance sector. We wanted to give to charity. We evolved. We were proactive, open-minded. We asked organizations for their case effectiveness. But after going through that for a few months, we largely found that we were getting marketing materials more than substantive answers on how do the organizations know that their programs are working. It was really that frustration that led us to found GiveWell and just try to create this resource that we hoped other people in a similar position would be able to use. So instead of having to reinvent the wheel, they could rely on us to decide where to give.<\/p>\n
A moment ago you said that GiveWell takes no percentage of the proceeds from the donations, 100% of what\u2019s donated to GiveWell goes to the charities. How do you fund your research?<\/p>\n
We have donors who are really interested in supporting our operations directly, so they give to us, that funds our salaries. Therefore, the donations that other donors are making are going right to the charities themselves. For those donors that are supporting us, I think their mindset is it\u2019s a good deal to support this GiveWell research project that is then creating this resource that enables tens of thousands of donors every year to give more effectively than they otherwise would\u2019ve.<\/p>\n
Seems like a pretty effective donation for them.<\/p>\n
Yeah. Well, I hope so. We\u2019re doing our best.<\/p>\n
Okay. Now cheeky follow up question, Elie. What would GiveWell do with an extra 50 or $100,000 donated directly to them?<\/p>\n
We get donations of two kinds. One is unrestricted, so that means donations that we could spend on our operations if we had a use for it. The other is money that we talked about before that goes to one of our funds and we can send directly to organizations we support. If we got extra money into our unrestricted fund, right now we would just be passing it along to other organizations. That\u2019s because where we currently are, at the amount of funding we\u2019ve raised and the amount of savings that we have, we think the best use of that money is sending it on to another organization that is going to put it directly to use and help people immediately.
To give some context, we expect to raise about $600 million in 2022, but we\u2019ve found $900 million worth of outstanding giving opportunities. One of our big focuses is trying to close as much of that $300 million funding gap as we can. So if we took in extra money that could be used for GiveWell operations or could be sent along, we\u2019re sending it along because that just helps us move down the path towards closing more of that gap that we need to and helping more people in need.<\/p>\n
That\u2019s an incredible amount of money.<\/p>\n
Yeah. That makes me feel really good about GiveWell, because I did a bike ride once where, I went the next year, but the year before I went the organization hired some charitable company to run it and they took 90% of the donations to put the ride on. It just seemed like such a waste. Why don\u2019t I just give you the 10% directly and then not do the ride? But the ride was what I wanted to do. It seemed like it was such a letdown to see that. And then the next year they didn\u2019t use the same company. There\u2019s a lot of companies out there that don\u2019t do that, that would take all of the money given to you unrestricted and just keep it. I really like that you guys don\u2019t.<\/p>\n
One of our aims is to be very transparent with the outside world. The one thing we say is, our business is your business. To that end, we have this policy that I just mentioned where at a certain threshold we are just not going to keep money for ourselves, we\u2019re going to grant it out. We don\u2019t want to build up a big GiveWell endowment. That doesn\u2019t make sense. We want to keep doing great research over time and donors should keep supporting us. And if they don\u2019t believe that we are, then they should stop. We shouldn\u2019t be able to keep going after that.
Similarly, we put our board documents online. You can certainly see our tax forms and our audited financials, but you can read the materials we share with our board. We put them up on our website for anyone to see because we think that so often in charity there\u2019s not enough transparency. With more transparency comes trust and can enable people to understand why we\u2019re doing what we\u2019re doing and believe that you have all the information you need to decide whether or not you want to trust us.<\/p>\n
Who\u2019s on staff at GiveWell besides yourself?<\/p>\n
It\u2019s people from eclectic backgrounds. We have people who are with advanced degrees in economics on the research team, people with fundraising background on the outreach team. I think one common thread between many of our staff, and now Give Well\u2019s been around for 15 years, is often our staff were donors before they ever came to apply to a job at GiveWell. Often the common thread is that they were very excited about the idea of research driven, transparent, charitable giving. They started donating, and then eventually found their way to working for us. That\u2019s been a great pipeline of folks coming to join the team over the years.<\/p>\n
What else should we know about GiveWell, or the organization? Look, we have transparency, we\u2019ve got a great thesis here, we\u2019re going to optimize for human life or social good here and we\u2019re going to find quantitative ways to back that up and be highly confident in that. We\u2019re going to do this to the tune of $600 million, maybe $900 million soon. We\u2019ll see how long it takes you to get there. What you just came in with was this swagger, \u201cHey, people believe in us so much that they take care of all that. So every incremental dollar that a person listening to this might give goes straight to the next best marginal opportunity to do good as best as we can determine with that.\u201d What else should we know? Is there anything else that we should know about GiveWell before we conclude here?<\/p>\n
Yeah. I think maybe the single most important thing to know about GiveWell is something along the lines of, you don\u2019t have to take my word for it. One of our core values is transparency. To that end, pretty much everything we talked about in this conversation, you could go to our website, you could read about, you could find the footnotes that support the claim, the academic paper that the footnotes come from, the documents or the notes from the conversation with the charity.
The reason that we want to do it that way is in the charitable world it\u2019s just all too easy for someone to tell a nice story and get donors behind them, and then have it all fall apart. So we say forget the story. I mean, the story\u2019s nice. Ultimately what drives me to do the work I do is emotion. But then at the end of the day, I also want to be able to see the spreadsheet, see the cold hard facts and make a reasoned decision. What we want to do to the outside world to say to anyone who wants to, look at what we do. If you agree with it, great. And if you disagree with it, then you\u2019re in a position to know because we\u2019ve put that information out there.<\/p>\n
I love it. One thing that I\u2019ll call out that you haven\u2019t discussed here is this concept of the mistakes that GiveWell has made, which I think is a great effort, a great putting a pin in the comment around transparency. Could you walk us through a couple of those big mistakes that you are highlighting on here and why you\u2019ve chosen to put that into your navigation bar on your platform?<\/p>\n
Yeah. It comes back to the same thing that often people pretend that they\u2019ve never gotten anything wrong. That\u2019s just obviously crazy. We all make mistakes all the time. We think it would be much better, especially in the non-profit sector, if organizations were just public about the things they got wrong, because that would enable not only the organization to learn, but also other organizations to learn from them. We\u2019ve made all sorts of mistakes that are on that page.
Early on in GiveWell\u2019s history, so this is talking 15 years ago, we marketed ourselves too aggressively. We wanted to put that out there so people would know. We\u2019ve also just made silly spreadsheet errors that have led us to send some funds to one organization over another. In the scheme of things, it adds up to a small percentage of our overall giving, but we think it\u2019s really important to be transparent with the public, and then also to ensure that internally we have a culture that learns from mistakes.
We have that public page internally at GiveWell. We use Slack as the internal IM client we use. We have a mistakes channel there where people can just say they got things wrong. We think it\u2019s going to lead to a much better culture, one that\u2019s focused on learning and getting better rather than one that\u2019s trying to avoid error if we are open about the fact that we made mistakes so we can all learn and improve.<\/p>\n
Let me ask you one more question here. Not to put you on the spot too hard, but a very notable former billionaire was really into this concept of effective altruism. This sounds a lot like effective altruism, this concept. Could you describe what effective altruism is for those interested, how this relates and why we should still continue to do the work that is in GiveWell\u2019s mission here?<\/p>\n
Yeah. I\u2019d say that effective altruism is a set of ideas that say let\u2019s use reason and evidence to try to do as much good with our time and our money. GiveWell subscribes to that in the sense that we\u2019re trying to use our reason and our evidence to identify ways of helping people in low income countries as much as possible today. I think that the principles that we followed and the process that we followed has led us to find some really great organizations that have helped a ton of people in our history.<\/p>\n
Love it. I think that effective altruism is a fantastic concept, and that in spite of the problems have gone on with FTX and Sam Bankman and all that good stuff, a silver lining hopefully is that more people become aware of this concept, because it is very powerful to think about how do I give effectively across the course of my life in a way that has the maximum impact for society and to do that with a quantitative based approach. That\u2019s something that I think I was really excited to talk to you about, and obviously most people that are practicing this are doing so with good intent. Well, anything else you want to share with us before we go, Elie?<\/p>\n
No. Thanks so much for having me. It\u2019s been great to have this conversation. I hope it helps.<\/p>\n
Thank you, Elie. I appreciate your time today. Give us the website again one more time.<\/p>\n
Yeah, we\u2019re at www.givewell.org.<\/p>\n
All right. Thank you so much for your time and we will talk to you soon.<\/p>\n
Sounds great. You too. Thank you so much.<\/p>\n
All right, Scott, that was Elie Hassenfeld from givewell.org. That was a lot of fun. The one thing we didn\u2019t talk about is talking about your charitable giving with your employer, seeing if your employer has a match of any kind when you are getting ready to make a contribution, especially towards the end of the year. I know that Bigger Pockets has a donation matching program. If you are considering giving on Giving Tuesday reach out to your HR department and ask them if they do any match. That is another way to make your dollars go farther.<\/p>\n
Yeah, absolutely. After the show we were asking Elie, how many lives do you think you\u2019ve saved with GiveWell? I think he estimated it at 150,000 across all of the money that they\u2019ve raised. Yeah, sure, some of the donations might have gone to saving lives anyways, but the marginal increase, the number of lives saved by funneling those funds to the most effective organization, is probably 100,000 thousand easily people saved. It\u2019s just really, really good work. What an impressive guy. What an impressive organization. The scale is remarkable. I hope he continues to do this work for a long time. I hope people follow suit.
I want to give one more plug here. We talked about GiveWell for a lot of this show, but I want to talk for a moment about an organization that Bigger Pockets has partnered with, a little closer to home here. This organization\u2019s called Cross Purpose, and it\u2019s an organization that I have volunteered at personally for about seven years, on and off over the past seven years and have donated to personally. Cross Purpose is a career development program. It takes folks that are often living at around the poverty line. It\u2019s mission is to abolish poverty, and it does that through a career development program that involves six months of career development, a skills based program that teaches leaders how to put together a resume, do interviewing skills, and then a specific career track that can range from electrician to administrative assistant to medical assistant to CDL, its commercial driving license for truck drivers, and beyond.
Graduates of the program go on to make $20 an hour on average and have successful careers many of them. I\u2019ve gotten to know a handful of these graduates and I\u2019ve seen the impact of the program. They rigorously track the social ROI that they\u2019re generating and estimate about a five to one impact on every dollar invested in terms of the taxes paid, the reduction in government benefits that the leaders that participate in the program will receive for those who go on to graduate. I really have been impressed with the program, really have witnessed the scale of it over the last couple of years, and am really excited to see where it goes. So highly encourage everyone to check out Cross Purpose as another option for giving this holiday season.<\/p>\n
I want to reiterate those tips again from Elie for doing your own research. Be proactive. Don\u2019t respond to solicitations. Go out and do your own research based on charities that you want to support, causes that you want to support. Be open-minded about what you want to support. Press the organization about their successes and how they will know their system isn\u2019t working. Ask them what will you do with additional funding. Give money rather than goods, and give with no strings attached. All right, Scott. I had a lot of fun with this episode today. I love the concept of Giving Tuesday. I think this is a fantastic organization. Givewell.org is the name of the organization.
That wraps up this bonus episode of the Bigger Pockets Money podcast. Thank you so much for listening. From the Bigger Pockets Money podcast, he is Scott Trench and I am Mindy Jensen quoting Yoda saying, \u201cLive long and prosper.\u201d<\/p>\n