Annual Traditions and Charity Hysteria

Everybody has traditions to observe at this time of year. It may be the annual venting of decades old family disputes. It might be the experiment to see if gastrointestinal alcohol fermentation plus massive sugar loading can lead to the generation of new life forms. It might be the pilgrimage to those quaint buildings known as “department stores” to exercise a bloodlust absent since the cessation of public ritual sacrifice.

Almost as guaranteed are the expected but not entirely welcome traditions. Like the coverage of the annual road toll. Or the “year in celebrity culture” review. Or all too often, the “charities don’t really give much money to causes” stories that spring up like freshly fertilised zombies (OK, zombie biology is not a strong point for me).

Some things should not be a tradition. [via dailymail.co.uk]

Some things should not be a tradition. [via dailymail.co.uk]

The Disclaimer

Let’s get the disclaimer out of the way. I spend some of my time working for a charity. That charity also supports the research that forms part of my PhD, so I am likely to have strong feelings on this topic. So please read on in an appropriately forewarned fashion and tell me at the end if my logic is undeniable or entirely spurious.

Just Add Outrage

The common feature of these stories is the headline grabbing motif that runs along the lines of “you give money to charity and they waste it all on fundraising/overheads/all the things that are not charity”. The linked article is a typical example and at first reading, it’s pretty persuasive.

Read a little closer though and the manipulations of the story are obvious. Even more annoyingly these types of stories all too frequently ignore the actual bit of the story that matters  – the impact that the charity is having in the area they are working in.

Comparing Apples with Boutique Cider

The first bit of false equivalence here is to compare smaller, local charities with international giants like World Vision and the Red Cross. Smaller charities tend to have relatively limited infrastructure for raising funds. So if they pursue telemarketing or mail outs as part of their strategy, chances are they will lose a fairly decent wedge of money right there. However, the reach of that campaign may be well beyond what they might otherwise manage just by pursuing local events.

To compare the small charity operator with global organisations that need very little marketing due to their massive historical presence is absurd. Each time there is a major event where charities need to step in, you’ll rapidly find those organisations are promoted through all forms of media and even government as being the location to donate (as they should be because they can rapidly do really good stuff because they have economies of scale). To compare those organisations with something operating through the passion of a relatively small local group of committed souls is entirely pointless.

False Metrics

There’s another major problem here. The implication is that the money spent on the fundraising process is a marker of how effective a charity is. That’s complete balderdash. The measure of how effective a charity is should be whether they produce an impact. Here’s an example from that article:

“The National Heart Foundation collected more than $51 million from fund-raising last year but spent more than $20 million on fundraising, $8 million more than it put towards research.”

Sounds awful! Read the next sentence though:

“The bulk of its revenue went to health programs.”

So most money is spent on exactly what is advertised on the cereal box (and then you can add the spending on research, which the Australian Society of Medical Research would tell you has a pretty good return on investment).

The story doesn’t make any effort to actually measure the impact of these health programs of course, but that is the real measure of what happens with your donated money. If you want to measure if the National Heart Foundation is effective, then measure whether their work helps reduce the rate of heart attack (because looking after someone with a heart attack is quite expensive as stated here by the NBER in the US).

I can understand why the casual writer dodges this question – it requires work and, to be fair, better reporting from charities. The further issue is that there are some areas where charities provide vital services to the good but would struggle to put that in money terms. Make-A-Wish is the perfect example because I wouldn’t question for a second the value of creating superheroes but I don’t know how you’d attach a money value to that benefit.

An Alternative Viewpoint

For a different way to look at how the outrage goalposts we set for charities put them at a disadvantage, it’s worth a look at this TED talk from Dan Pallotta. While I wouldn’t agree with everything he says, and there are elements that are as obsessed with the US perspective as labelling your local sporting comp the World Series, there’s some bones to gnaw on. Why is it that we focus on the costs of fundraising and overheads rather than the total good achieved for the sector? How do we hope to let the not for profit sector grow while prohibiting the time and investment that we’d expect of businesses?

It’s worth the time taken to watch it.

Honest Appraisal

I’m not saying charities shouldn’t be accountable or seek to be efficient. They should definitely be reporting to a consistent and transparent standard. I just think it’s time pockets of the media stopped being so damn lazy.

Just because it’s that time of year where you put on the tracksuit pants, gorge on pavlova for breakfast and carve a couch groove with your back doesn’t mean it’s time to rehash the leftovers from the last ill-founded charity attack.

And if you were thinking of finding a charity to help rewrite someone else’s story, then focus on the quality of the new script they produce, not the details of the edit.  I’d venture you won’t be disappointed.

Where are the deep pockets?

There was a period of time where I only used the name Bill Gates thus: “F#@$ing Bill Gates! Bloody Microsoft hunk of junk!” The accompanying visual was most likely to be the blue screen of death.

These days I have entirely different feelings about him. I’m likely to be singing his praises when I’m hanging in a nursing home. Through his new career in philanthropy (along with the very impressive Melinda Gates), he has proven that he can use his ridiculous level of wealth and formidable mind to make a real impact in world health, education and development. They’ve already achieved amazing things through the Bill and Melinda Gates Foundation. Chances are, when we solve problems like malaria, the Gates Foundation will have been a big part of that story.

So, why the love letter? Well, the world’s richest geek was on Q and A this evening (the video isn’t up at the ABC iView site yet, but I don’t doubt you’ll find it soon). Beyond having a very high word count on “research”, as he is clearly of the view that research is the key to progress, there’s a couple of things about his philanthropy that are interesting.

The first is the level of engagement with the subject. It is very evident that he is not just throwing money from Olympus. He is seriously engaged with the details of what they’re doing, and the difference they hope to make. Seeing a multibillionaire who clearly has some concept of the challenges facing the broader world, or the potential benefits of addressing global health and equality issues was more refreshing than a faux Scandinavian deodorant ad. It also provided a chance to reflect on all the Australian überwealthy similarly engaging with the challenges facing the world, beyond just reminding us that African miners want to work for $2 a day. Yep, just think of all of them at a big party (and feel free to grab that spiky tumbleweed rolling on by to use for an acupuncture session and release the negative energy that’s building up).

The other interesting thing was the foundation’s readiness to consider “blue sky” ideas – bolt from the blue thoughts that might seem outlandish but just maybe have a chance of making a difference. Precisely the sorts of ideas that get suffocated by the oppressive national competitive grants system.

I can’t help but reflect again on the need for novel ideas and opportunities to fund the research that will drive the development of cultures everywhere. In an environment where government-funded options are ever more competitive, and ever more pressured by political realities, what other options are out there?

Could direct philanthropy or charity organisations provide the way forward? Well, there are some groups out there supporting research (the Brain Foundation, the Ramaciotti Foundation etc). I can’t think of any particular big ticket philanthropists engaging with research in a similar fashion though.  The other challenge for not for profit organisations is the way we think about charities and how they should raise and spend their money (and an extra disclosure here, I spend some of my time working at CareFlight, a registered charity which devotes some of the money it raises to research).

That issue is a complex one itself, but I can’t do better than refer anyone who has a spare 20 minutes to watch this awesome TED talk from Dan Pallotta (seriously, clear 20 minutes) in which he very clearly states exactly the obstacles we put in the way of charities growing and carrying out their goals. Most particularly, we tend to focus on the proportional amount they spend on “frontline services” rather than growing bigger projects or re-investing to raise larger overall amounts. For the US (and, I believe the UK), total donations to charity as a proportion of GDP haven’t changed much for 20-30 years. So as much as there might be an interest from NFPs to get involved, there are issues that need to be addressed.

What about other novel ideas? We need to start exploring different mechanisms to fund research, or at least expand the range of opportunities for researchers to raise funds. Hell I’d even consider a special research economic exclusion zone if it would help. If social impact bonds (sometimes called social benefit bonds) can be used to fund preventive programs or services, could this model be used to fund basic research (or other forms of research)? Or wouldn’t it be good if more clever people who understand economics came up with suggestions like this from Chris Becker where he lays out preliminary thoughts for other sorts of investment bonds to support research (with some of the fancy economics lingo that makes my eyes glaze over when I go to see the accountant, but I like the concept).

The point is that research funding options in Oz (and I’m sure lots of other places) remain a bit monochromatic in their offering. There are plenty of novel ideas coming from researchers. Is it asking too much for a few clever types to exercise some imagination and deliver on new ways to fund research? Anybody out there got a clever idea? (Yep, I’m looking at all 6 of you who will actually have a look at this entry, I want answers dammit!)

PS The whole area of social impact bonds is pretty interesting anyway. Having been lucky enough to meet the very clever Emma Tomkinson a while back, you’ll find her blog has a plethora of stuff related to these instruments and examples of where they’ve been used. It’s well worth a look.

And I really would love to hear about any other novel options for funding research.