Here I want to address the second side of Ken Stern’s subtitle: “Why Charities are Failing and a Better Way to Give.” He does believe that charities and their donors can do better, but that will require setting higher standards of performance.
A prime example of how this occurred is the story of Youth Villages, an organization that contracts with states and municipalities to provide treatment programs for troubled youth. Originally it concentrated on residential programs in the “Boys Town” tradition. But after many years of operation, it began doing serious research on program outcomes, which revealed that over half of their “graduates” were reverting to previous patterns of destructive behavior after they left the program. The organization dramatically increased its success rate by adopting Multisystemic Therapy, an approach devoted to “addressing the entire family ecosystem.” In-home treatment turned out to be both more effective and less costly than more isolated residential treatment.
Many charities may have the dedication to set higher standards for themselves, as Youth Villages did. But Stern would like to see a more “effective charitable marketplace” in which donors demand it. He wants donors to “take charitable giving as seriously as they do investing in the stock market.” They should hold charities more accountable by expecting them to publish specific goals and research results.
One limitation of the book is that it gives short shrift to the problem of measuring program outcomes. Stern says:
There is some truth…to the idea that charitable activity does not lend itself to empirical measurement: it is certainly difficult to measure souls saved at church. But the concern is vastly overstated; the large majority of charities fall into the human services category— education, social services, health care, for example— and can be measured, benchmarked, and fairly evaluated.
As someone who has spent most of my working life in the field of education, I can testify to the challenges involved in applying scientific research designs to research on human subjects. The problem is often to isolate the effects of a program by making controlled comparisons. Measuring something before and after an intervention is a start, but one would like evidence that the outcome is better than it would have been without the intervention, since people outside of the program are changing too. Ideally, one would randomly assign some subjects to the program and others to a control group, but that requires more control over people’s lives than many organizations have. Even when the most desirable research design is feasible, it may be very expensive and time-consuming to complete, distracting the organization from the primary activity to which it is devoted.
Nevertheless, Stern is right to call for more accountability and research. He would like to see government funding decisions based less on mere habit or political power and more on proven results. One of the obstacles facing Youth Villages in implementing the in-home treatment model is that federal funding favors separate residential treatment facilities, so states find it less costly to fund those facilities even though they have a less favorable cost-benefit ratio for society as a whole. In another example, the Obama administration wanted to base a national program of home counseling on the model of the successful Nurse-Family Partnership, yet similar but less effective charities “launched a vigorous campaign to broaden the eligibility language and water down the evidence requirements” to increase their own chances for funding.
One hopeful sign of greater accountability is the emergence of some intermediary organizations to help donors channel their donations to the more effective charities. Although donors have been able to get ratings of charities in the past, such as those from Charity Navigator, they have been based on very superficial indicators, such as administrative overhead and executive salaries. These can be red flags if they are exorbitant, but charities need to spend money on their own organization to build infrastructure and recruit talent. The emerging raters–Stern calls them “signalers”–set much more meaningful requirements for their recommendations. The trade-off is that they evaluate only a small number of charities. GiveWell, for example, looks for organizations that are meeting acute global needs at very low cost, recommending a top three.
New Profit is an example of “social entrepreneurship,” an effort not only to evaluate charities but “offer management and strategic expertise to the charities in their portfolios.” It acts as a kind of charitable mutual fund, doing for large charitable donors the research and selection work that an actively managed stock fund would do for its investors.
Stern would like to see more donors, including governments, direct their giving through such intermediary organizations. I think that what small donors need is something like Consumer Reports for charities. But donors would have to care as much about good charities as they do about good cars and TV sets in order to support such a thing.
Beneath the Surface 