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The case for “Band-Aid” philanthropy

Philanthropists used to be too unwilling to take risks. Now they might be too unwilling to just buy bednets.

WHO Makes Progress Battling Drug Resistant Malaria In Cambodia
Children in Cambodia sleep under a bednet.
Paula Bronstein/Getty Images

If you’re working on directly solving a problem faced by poor people, you’ve almost certainly heard it at least once: Helping people is aBand-Aidsolution.

Here’s the argument: Most problems like poverty, disease, hunger, and war won’t be permanently fixed by homeless shelters, private donations, or other small-scale projects. We need bigger changes to the system to really solve them.

That’s true as far as it goes. But it’s a short leap from concluding that shelters and bednets to prevent malaria are just “Band-Aids” to concluding that philanthropists should stop wasting their time on the “Band-Aid” solutions in front of them, and should instead focus their energy on big bets that might, if they pan out, solve the problem entirely.

In the spring edition of the Stanford Social Innovation Review, David Callahan, the founder of Inside Philanthropy, pushes back on that view, and points out some of the tragic consequences of its newfound popularity:

A dominant message within elite philanthropy right now is that smart funders should not waste their money on Band-Aid solutions that are applied downstream. Instead, they must search for opportunities upstream to make breakthroughs in attacking systemic problems. These days, to pursue significant influence as a major-league philanthropist—and win accolades—you are supposed to be on a ceaseless quest for innovative and scalable solutions to society’s toughest challenges.

I share Callahan’s hesitations about this. There are a bunch of problems with dismissing simple, known solutions as mere “Band-Aids” and elevating big bets as the more meaningful way to do philanthropy.

One is that if you don’t know what you’re doing, most of your big bets will be bad bets.

To be sure, philanthropists really can do a lot of good by looking for high-risk opportunities with the potential for outsize returns. And there’s an argument that those high-risk opportunities are the perfect fit for philanthropy, since there aren’t any other institutions in modern civil society that fund them.

But unlikely efforts to solve the problem at the source can do worse than be a waste of money — they can actively do harm, if you were wrong about what the problem is. Systemic change might be needed to solve societal problems, but that doesn’t make arbitrary attempts to change systems likely to have good effects. Effective giving in uncertain arenas like policy change might best be thought of as a hard problem for foundations to approach once they’ve already gotten very good at what they do.

Another problem, Callahan observes, is that the search for innovative, clever grant opportunities is causing philanthropists to give less money overall. That’s because these innovative grants are often to small-scale programs that can absorb a few million dollars in funding, but not a few billion.

The boring “Band-Aid” forms of aid, by contrast — think vaccination programs, cash transfers, bednets — could put hundreds of millions of dollars, maybe even billions, in additional funding to use.

“The high value placed on novel and ambitious programs may be slowing down the pace at which today’s new mega-givers are disposing of their fortunes,” Callahan writes. “When donors do identify true innovators — say, some overlooked nonprofit that has found the magic formula for licking this or that social ill — chances are that they will be unprepared to absorb an eight- or nine-figure gift.”

The shift to higher-risk giving was probably a good thing for philanthropy

How’d we end up obsessed with higher-risk, high-reward giving in the first place? There seems to have been a definite shift in that direction over the past few years, partially driven by new foundations entering the field and wanting to make their mark, and partially driven by strong arguments.

Interestingly, the transition to a more “bets”-oriented philosophy of giving was probably a very good thing for philanthropy.

Foundations tend to expect each of their grants to produce results, and they’ll naturally be hesitant to make grants that have only a small chance of panning out. If a project looks uncertain, won’t have returns for a long time, or is overwhelmingly likely to be a bust, then it wouldn’t typically get funded — even if it’s impactful enough to make the long shot worth it.

In recent years, there have been some changes in how major foundations consider these questions. In 2016, the Open Philanthropy Project published “Hits-Based Giving,” an argument that philanthropists should accept more risk because many of the giving opportunities with the highest expected value would be ones that were unlikely to pan out. “Much of the best philanthropy is likely to fail,” the organization’s founder argued. “We suspect that high-risk, high-reward philanthropy could be described as a ‘hits business,’ where a small number of enormous successes account for a large share of the total impact — and compensate for a large number of failed projects.”

And indeed, the charitable world seems to have gotten friendlier to the idea that philanthropists should be more risk-oriented and more willing to make grants that might not have immediate or certain impact. Fourteen articles in this month’s Stanford Social Innovation Review tackle the question of how to think about big bets, from profiles of promising projects to questions about how the structure of large foundations makes it hard to take risks.

On the whole, the fact that the philanthropy world is now, as Callahan puts it, “on a ceaseless quest for innovative and scalable solutions” is a good thing — it means there’s more room to make big, uncertain, and important things happen.

But what Callahan is pointing out is that this shift in priorities had a cost — a growing sense, at least among some philanthropists, that the only cool, innovative, or valuable projects are the “big bets,” that merely saving lives with global health interventions is somehow outmoded. And that might be making many philanthropists less willing to invest in proven, cost-effective ways to do good.

The human recipients of “Band-Aid” philanthropy

There’s a deeper point here. While we should of course stay on the lookout for opportunities that are even more cost-effective, thinking of programs like bednet distribution, vaccination programs, and parasite treatments as “Band-Aids” seems to reflect an unhealthy perspective.

For a family living in a country with endemic malaria, one of the problems they face is that they don’t have the means to keep their family safe from malaria. Bednets aren’t a “Band-Aid” for that family but a solution to their problem.

Recipients of cash transfers in developing countries use them to build houses, get out of debt, get medical attention, and start businesses. They have problems like homelessness and debt, and the money is not a Band-Aid for those problems. It’s a solution.

Aid like this only starts to seem like a “Band-Aid” if we think of the problems as “malaria” instead of “families unprotected from malaria tonight”; as “poverty” instead of “kids sleeping under a leaky roof because their parents can’t afford the repairs.”

When you zoom in and remember why we care about poverty and malaria in the first place — because of the individual people whose lives are affected, this morning, this evening, tomorrow — then “Band-Aid” ceases to really apply.

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