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Should charities spend your money now — or save it to help people later?

The debate shaking up philanthropy, explained.

An illustration of a person holding a beam bearing scales with an icon of time on one side and money on the other. erhui1979/Getty Images

A few weeks ago, ahead of Giving Tuesday, GiveWell — the charity evaluator that’s become a major player in philanthropy — made an announcement that caused a stir in the nonprofit charity world.

Every year, GiveWell raises money and grants it to global health charities it has identified as unusually impactful. When it started out in 2007, its annual giving amounted to less than a million dollars. But it’s been growing rapidly since, and this year it raised an eye-popping $500 million — not all of which, GiveWell announced, it would immediately regrant to other charities.

“We plan to roll over about $110M (~20% of our forecasted funds raised) into 2022 because we expect the opportunities this funding would be spent on now are much less cost-effective than those we expect to find over the next few years,” GiveWell said in a statement.

Translation: GiveWell was shifting its strategy, aiming to give away a portion of its growing pile of funds over the next three to five years instead of sending it out to charities immediately, as it had done in previous years.

GiveWells rationale was simple, if somewhat surprising. The organizationwhich was one of the pioneers of a shift in global development toward a rigorous, evidence-based approach to charity — believes that the best charities it has identified today don’t have the capacity to absorb hundreds of millions more in funding.

GiveWell’s bet is that over the next few years it would be able to identify new charities that would be as effective as its top existing options, and that would be able to do more with the funds it donates than charities it could donate to now.

That might seem like a minor strategic update by one organization, but it triggered a major reaction in the field. GiveDirectly, a pioneer in the “cash transfers” movement that lets donors give money straight to the global poor, disagreed with the move, arguing that GiveWell was “thinking too small, undervaluing what can be achieved today, underestimating the costs of waiting, overestimating how much better they’ll allocate funds in the future.” (Disclosure: The authors have donated to both GiveWell and GiveDirectly over the years.)

“It feels like this really powerful moment to say there is so much good we can do on Earth,” GiveDirectly’s Joe Huston told me. “The nickel and diming about a hundred million dollars feels like it’s missing a real opportunity.”

And while GiveWell had its defenders, who pointed out that spending money wisely sometimes takes time and that many charities make similar decisions with vastly less transparency, others working in this space were uneasy with it too. Their reasons varied. Some pointed to the global pandemic as a particularly painful time for philanthropists to decide to wait and donate later. Some raised questions about GiveWell’s methods and whether the organization was equal to the task of making calls such as this.

The decision has brought to the foreground a debate that has long simmered in development circles and could be hugely consequential for the world’s poor: When is it reasonable to wait for better giving opportunities rather than moving money where it’s needed today?

Giving now versus giving later, explained

Many philanthropists sit on their fortunes for decades. GiveWell, to be clear, isn’t doing that. The vast majority of the money it received in 2020 was granted to top global health charities in 2021, and its plan is to grant the rest over the next few years.

But the broader context, where billionaire fortunes mostly go untapped rather than getting spent, is a sore point in the field. For instance, tax-protected arrangements like donor-advised funds hold around $100 billion slated for charity that hasn’t been spent. This state of affairs is partly why people reacted so strongly to GiveWell’s announcement.

GiveWell’s reason, as it explained, isn’t inertia. It spent the last year researching the most cost-effective ways to fund the fight against global deprivation, and, the organization’s representatives told me, they really think that a lot of new recommendations in the near future are going to be the product of that research. Given that there’ll be better ways to spend the money in a few years, shouldn’t GiveWell make sure it gets spent as well as possible rather than as quickly as possible?

But the other perspective on this is compelling too. GiveDirectly argues that when your funding is growing rapidly — like GiveWell’s is — you can solve tomorrow’s problems with tomorrow’s money. (The organizations are unrelated, but GiveWell has recommended GiveDirectly as a top charity.)

By passing up the chance to help people today with today’s money, organizations like GiveDirectly argue GiveWell is moving away from its core job: recommending the best ways to use money to do immediate good. And GiveDirectly worries that GiveWell will accidentally send the world the message that there’s nothing worth donating to today.

The challenges of a small organization that grew really fast

This debate is taking place in a specific context — that of an organization that was once small and plucky but has now grown to be a key player in philanthropy.

About a decade ago, Holden Karnofsky and Elie Hassenfeld left their jobs in finance and decided they wanted to give away their money, ideally to wherever it would be put to the best use solving big global problems. But when they looked into where that might be, they found all the existing answers really unsatisfactory. All of that advertising that says things like “a year’s worth of clean, safe water for a child” for $15? Those numbers didn’t tend to reflect logistics and maintenance costs, and varied wildly by the specific program and situation.

And there are real tradeoffs involved in such a decision, tradeoffs that had rarely come under the microscope before. Let’s say you want to spend $100 to help — do you donate $100 directly toward vaccinating kids in a poor country, or have that money go toward lobbying that country’s government to vaccinate kids? With which approach would your dollar go farther? What if one intervention saves kids’ lives and another intervention lifts families out of poverty — which one is better? How much should you discount good done in the future? How uncertain an intervention should you be willing to fund?

For Karnofsky and Hassenfeld, figuring out where their money would do the most good turned out to be ridiculously hard. Out of that recognition came GiveWell, which tries to answer such questions in a very rigorous way.

It’s not an easy job. The team at GiveWell has taken a swing at answering questions like the ones above, and while people may have disagreements, they’ve broadly been seen as a positive force in the effort to address global poverty.

And a lot of other people must think so too: The number of people donating to GiveWell’s top charities has been growing at a stunning pace. In 2010, GiveWell estimates it moved $1.5 million. In 2020, it estimated GiveWell moved $250 million. This year, it expects to raise $500 million — and its decision to spend $400 million of that is what has caused such contention.

Part of the response to GiveWell can be traced to the fact that it’s become so big and influential. When you’re a tiny charity evaluator directing about a million dollars of funding, there are some questions you don’t have to worry about too much. If you find a good charity, it can probably use a million additional dollars for its programs, so the next step is easy: Give it money!

More abstractly, if you have a set of values that are deeply personal and idiosyncratic, you don’t have to worry about whether you’re going to fundamentally change the organizational priorities of charities in your field: You can just donate your money to the organizations aligned with you and not worry about the aftershocks of that move.

But when you’re moving $500 million, these become real considerations.

Can “give now” vs. “give later” ever be reconciled?

The charities and charity effectiveness researchers we spoke with saw the GiveWell-GiveDirectly debate as only a small part of a broader conversation on how to most effectively use money — one that won’t be settled any time soon. It’s not as simple as “give now” vs. “give later”; there are complexities within that dichotomy, and other factors beyond it that have surfaced in this discussion.

In some instances, planning for the long-term future may require action now. For instance, a group like the Malaria Consortium — which runs the GiveWell-recommended seasonal malaria chemoprevention program, along with other work with malaria and other diseases — might need a promise of funding for two years to establish operations in a new area.

Wendy Harrison from the SCI Foundation, which runs programs against parasitic worm infections like schistosomiasis, walked me through how cost-effectiveness can look different on different time horizons when you’re trying to eliminate a disease. “Understandably, because you’re having to treat everyone, in very remote locations the costs of actually finding the cases and ensuring they are treated does increase,” she said.

Thus, while short-term, highly cost-effective interventions are great, she sees “potentially higher cost-effectiveness if you set a very long-term horizon of the elimination goal” — because if the disease is eliminated, you no longer have to put resources into shorter-term treatments.

Moreover, there’s also a recognition that there are plenty of other worthwhile areas to give to that might not be able to compete with health in terms of short-term cost-effectiveness for human lives saved.

Dan Stein at IDinsight, a global development data analytics and advisory organization, says: “[GiveWell has] a very specific lens in terms of things that are very certain, have very high-cost effectiveness, and are very scalable in the field of public health, and I think I certainly believe there are really good options outside of that box that could even be better, they’re just less certain.”

Radha Rajkotia at Innovations for Poverty Action, which evaluates development programs for their effectiveness, thinks the amount of resources now being mobilized into effective giving provides an opportunity for broader engagement: “Let’s galvanize other forms of capital. Let’s galvanize intellectual capital. Let’s set an agenda within this community that is a little bit about placing some bets.”

But the debate may also prompt a reconsideration of longstanding assumptions in poverty alleviation. Justin Sandefur at the Center for Global Development told us there’s an “inevitable presumptuousness that comes with philanthropy,” where rich donors and philanthropies are making decisions on behalf of the global poor.

He shared one experiment in which the researchers brought ordinary Tanzanians together and polled them on what the government should do with a potential influx of natural resource money, then polled the same people again after they talked with experts and discussed.

“I think some of us went into that thinking there would be a lot of enthusiasm for cash transfers and for direct distribution of the resources,” Sandefur said. But what they found was that the study participants “through the process of deliberation moved away somewhat from cash towards spending more on social services essentially” — which subverted the researchers’ assumptions about the preferences of recipients.

That one study isn’t the be-all, end-all of figuring out what recipients want, but it suggests the value of including the values and opinions of the people whose lives are affected by whether philanthropies give now or give later.

As knotty as this disagreement is, on some level, it should fill people who care about the global poor with optimism. The challenge of figuring out when to give is a problem faced by the effective giving community — spearheaded by the work of groups like GiveWell and GiveDirectly — because the community has gotten so big.

There is so much money moving to effective charities that a great many of the obvious interventions are now fully funded. Figuring out what to do next is a morally urgent question, one that could be hugely consequential to millions of people in the present and the future. But that it’s a question at all is a sign that the world, at least on this front, is trending in the right direction.

A version of this story was initially published in the Future Perfect newsletter. Sign up here to subscribe!

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