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Charity on formula: Donors base their choices on solid data about impact

Donors direct their money towards the most effective charities when they are provided with valid data on impact. This is proven in a large American study from Impact Genome, which works to map data on social initiatives and make them comparable.

Who should you choose to give to? Data on the effect of an effort influence donors' choices, shows a large American study. [Photo: JumpStory]

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Perhaps you know this pattern from yourself: Russia attacks Ukraine, and you see families fleeing on television. A knot grows in your stomach: I have to do something! You find discarded winter jackets and woolen ski underwear, put them in bags and search Facebook to find someone who has had the same thought. The clothes end up in a garage in the neighborhood, and someone will probably pick them up.

Or maybe this is more you? The UN publishes a new climate report and says what scientists have warned about. The world is on its way to becoming a greenhouse, and we are not meeting the climate targets. What can I do, you think, desperately searching for an organization that will take your money and fight for the climate.

The truth is that our charitable giving is often driven by affect and emotion. We know very little about how the money is used and whether the purpose we intended is actually being supported. Because there is no tradition for the work carried out in the service of the good cause to be put on a scale and measured and weighed.

Can standardized information qualify decisions?

A new American study from Impact Genome and the organization ideas42 has investigated how information about the impact an NGO or other civil society organization carries out helps to determine the inclination of qualified donors to give money. The idea is that data on impact can generate a more strategic distribution, so that we work purposefully on the world’s problems and no longer distribute blindly.

The study listed a number of charities that all fight for food safety. After that, 1,500 ordinary people were asked to donate up to 5 dollars in eight trial rounds. If you did not want to donate in a round, you could save your donation and distribute it in a later round. The trial showed that the organizations that could present easily digestible, standardized information about their documented impact received the most money.

“Not only were people more generous than studies otherwise predict. But it was also encouraging that the donors took the time to read all the information before making their decision. They made sophisticated choices and didn’t just choose the cheapest donation option, as there has been a fear of presenting people with standardized information,” explains Heather King, one of the lead researchers behind the Impact Genome Project.

Learned from marketing

The Impact Genome Project has been in existence for eight years and is a leading in mapping the “heritage” in the social sector. Concretely, this means that you convert the effect of efforts into data that can be compared with each other. The exercise is about creating a common language, explains Heather King, and it is also a method that many other sectors, such as the financial world, have long used strategically. 

“If you think about other sectors – it could be marketing – then you use standardized information to predict how people act. You can “nudge” people to buy a product or have a certain political opinion. In the same way, you can use data to get people to donate more appropriately so that others get food, shelter or education. We call it impact science, where the aim is to bring all actors together. It is no use for single actors to continue in their own little silo without any big overview and overall purpose,” says Heather King.

Although it may feel controversial to dissect the good cause and the ditto intentions behind it, the Impact Genome Project may have a relevant point. There is a mismatch between the large sums spent on charitable work and the effect that comes from the efforts. On a global level, the equivalent of a staggering 72 trillion dollars (or the equivalent of 538 billion Danish kroner, ed) is donated annually, according to the Impact Genome Project’s own “scanning” of the market. Still, not much progress has been made when we look at, for example, the UN’s 17 global goals.

Charity on formula

But how do you go about creating standards that can actually be compared. Because surely it is easier to calculate, for example, the distribution of free meals than efforts to promote democracy?

“It’s about defining a state of change: Did the effort mean that a person registered to vote? And did she actually vote? Or is the effort about making the person more aware of their rights? These are all different things, but if we can get precise in defining what change looks like, then you can measure it in different ways. And once we agree on units of measurement, then we can start to compare different charities within the same sector. The system we’re building, also enables you to define different physical areas so that help goes where it is most needed,” explains Heather King.

Heather King admits that there can be a disadvantage for smaller organizations that do not have the financial leeway to do an analysis of their own efforts. But that should be a priority – or something to seek external funds for – because the Impact Genome Project contains a so-called rating system, where more emphasis is placed on solid facts than anecdotal statements about how big a difference you make. If you cannot present valid data, you are at a disadvantage:

“Here the experiment showed again that people look at the different information and weigh the pros and cons. We have a kind of quality assessment where we indicate how much we believe in the individual organizations based on the information they themselves provide. It’s not to single anyone out, but to make sure we’re aligned with each other,” Heather King elaborates.

The foundations are on the sideline 

The Impact Genome Project collaborates with the large foundations, and here the work to standardize and measure efforts is followed with great interest. Because unlike ordinary citizens, foundations don’t send five dollars every now and then, but amounts in the millions. Foundations also often have large companies behind them and fundamentally want to act responsibly and sustainably, points out Heather King.

This increases the demand for proven effectiveness. If not from the foundations themselves, then at least from the board members, who often come from business sectors and demand information about impact. The foundations are therefore interested in having efforts measured and weighed in the Impact Genome Projects and also request independent analyzes of the projects they are considering supporting.

“We have foundations that, for example, want to support financial sustainability for individuals. When we then screen the grant recipients in our system, we sometimes find that from their own perspective they rather support education. They may make initiatives that are about budgeting, but that is not at the heart of the effort,” explains Heather King and elaborates: 

“It can be an eye-opener for the funds: “Okay, wow, this is not at all what we thought we were financing. Perhaps it is not so strange that we do not see the changes we expected?” So our system can help foundations find programs that actually work strategically with the effort you want to support.”

Next level

Lastly we ask Heather King to look into the crystal ball and give us a guess as to what the near future might bring. She talks about taking the mapping of charities to the “next level”: 

“The vision for us is a mapping of this entire ecosystem of charities across countries and continents. We are driven by setting up a system that creates transparency and equips donors so that the money that is made available creates the most value possible.”

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