When we analyzed the results of GiveDirectly's efforts in
class, we were examining the immediate results (within one year of giving) of
direct money transfers. This left me wondering about the more long-term effects
of direct giving. How could our class answer this question, though? We are
wondering about data generations away. Even if an experiment had already been
started to monitor the long-term effects of direct philanthropy, our class will
have left BU long before the results are in.
Luckily, such a study has already been done! In late 2013,
Freakonomics released a 30-minute podcast episode titled, "Would a Big
Bucket of Cash Really Change Your Life?" Freakonomics co-author Stephen Dubner spoke with University of Chicago
In 1832, the state of Georgia had a lot of land to give
away (unfortunately, this was because they had taken it from Native Americans
in the events preceding the Trail of Tears). They wanted to give it away in the
fairest way possible, so they decided to do so lottery style. All white males
who had lived in Georgia
for the preceding several years were eligible to enter, and it only cost 12
cents to sign up! Bleakley estimated that incredibly, 100% of eligible
Georgians entered the lottery. This is because the potential reward far
outweighed the cost. 20% of those who entered were given a large tract of land.
Here's the coolest part: the lottery's prize was estimated to be worth the same
as the median wealth level in Georgia
at the time. Winning the lottery doubled the wealth of the average Georgian, and did far more for the poorest ones.
The question, however, is what was the result of these
massive donations? The answer is discouraging. Much as we saw in Liberia with
GiveDirectly, Georgians who were given land saw a one-time increase in their
wealth. But, the sudden boost of wealth didn't translate to prosperity in the
following generations. Children and grandchildren of the winners went to school
only as much as, had the same overall literacy rate as, and grew up to attain
the same average amount of wealth as the children and grandchildren of
non-winners.
Bleakley admits that we are extrapolating by applying these
results to society today, but he is still very clear: direct gifts of money are
not the answer to the problem of poverty. Let's allow this extrapolation for
the sake of discussion. Essentially, what the government of Georgia did by giving away the equivalent of the
median wealth of a Georgia
resident is the same as giving $1,170 to individual Kenyans today (The East African reports that number as
the median wealth in Kenya
today- http://tinyurl.com/q6d2373).
This is more than 10 times the amount that GiveDirectly was giving away, but
even so, the Georgia
In class, I told my group that I was skeptical about the benefits of GiveDirectly,
but that I didn't really know why, and that I didn't have any data to support
my views. Having seen a real, larger-scale version of GiveDirectly's method
play out over several generations, I am now more convinced of my original
opinion. What do you guys think? Another question I am left with is why the direct giving didn't work. The podcast only discussed how it
failed- why do you think this occurred? (or do you disagree completely)?
Here's a link to the Freakonomics podcast: http://freakonomics.com/2013/09/26/would-a-big-bucket-of-cash-really-change-your-life-a-new-freakonomics-radio-podcast/
Those of you who are skeptics of Give Directly may enjoy this column from the Stanford Social Innovation Review:
ReplyDeletehttp://www.ssireview.org/blog/entry/givedirectly_not_so_fast?utm_content=buffer97512&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer.
The article reviews several different approaches to addressing conditions of poverty and discusses the results of randomized control trials involving each of them. Give Directly fares less well than the other approaches.
The question I'm hoping you all consider is "what constitutes effectiveness?" That is, my impression is nearly all activities nonprofit organizations create to address the challenges we care about the most have their limitations. This column identifies limitations to Give Directly. How do you use that information? Is the column an argument against donating to Give Directly, or does it simply help us to appreciate Give Directly's limitations? Perhaps it suggests that giving directly on its own is insufficient to lift people out of poverty.
I think when looking at the effectiveness of a certain project, we must first look at what the goal of the project is.
ReplyDeleteIn the Georgia land lottery example, it seems that the goal was to distribute the land in a fair way. Is that what happened? Sure seems like it. It's unfortunate that being given this land didn't translate into lasting increases in wealth, and it also doesn't seem like the goal was for later generations to prosper off of the land. That would have, of course, been a great outcome. But ultimately, the Georgia land lottery effectively accomplished it's mission of distributing land fairly. (Assuming it wasn't some sort of corrupt system, it's not something I'm familiar with.)
I think that the same idea must be looked at when regarding GiveDirectly. I looked around the website, looking for goals and a mission statement. The closest thing that I found was the "Values" page. http://www.givedirectly.org/values.php
GiveDirectly lists their values as being efficiency (Put at least 90% of every donated dollar in the hands of the poor.), transparency ( Do one, easy-to-understand thing with every donated dollar; do it ourselves without subcontractors; and clearly explain what it costs to do it.), and respect (Empower the poor to set their own priorities.)
When considering that those are the values and goals of GiveDirectly as an organization, I think that they are an effective charity. Some of the evidence does not point to their being lasting change following a direct cash donation, but it appears that lasting impact is not an ultimate goal of the organization - rather, it's a great positive, if it happens.
Courtney and Professor Campbell raise an important issue about the effectiveness of a charity: understanding its limitations. I agree with Professor Campbell that virtually all nonprofit work has limitations. However, we must ask a critical question in understanding that: does the charity do good work within their limitations, or do their limitations make it impossible or very difficult for them to bring about real change? In the case of Give Directly, I think the latter applies.
ReplyDeleteOne of the biggest limitations Give Directly faces is the issue of funding infrastructure, or lack their inability to fund it. Infrastructure is crucial to ending the cycle of poverty. In the article Professor Campbell linked, Kevin Starr and Laura Hattendorf point out that "when you don't have access to high-quality education, information and products, it can be hard to make optimal decisions and take effective action. The poor don't spend the cash on stupid things; they just may not have access to great things." If a city has no infrastructure in place, giving its residents money will likely not be enough to bring them out of poverty. For instance, there is a shopping mall near my house that's about to close down, and it only has three stores left. If you gave me a $1,000 gift card to be spent at that mall, it would be very hard for me to use the money effectively.
I agree with Courtney that Give Directly effectively executes their mission statement. However, the problem is that the limitations of their mission mean their work won't bring people out of poverty on the scale they likely are hoping for. Give Directly's model doesn't build infrastructure most of the time, making it very hard to bring people out of poverty. For instance, consider if 25 people were give $1,000 each in a village in which there is no school. Building a school costs a lot more than $1,000, so which choice is the best bet to get one built: trusting people to pool money on their own and get it built, or give with the condition that they divert some of the donation towards building a school?
Economist Berk Ozler believes that "CCT's [conditional cash transfers] work better when the problems go beyond mere shortage of cash: if families do not appreciate the real value of education, for instance, or if part of the benefit of doing something comes when everyone does it (vaccination is a case in point)." (http://tinyurl.com/nqpknc3).
You can't buy better education for kids if there's no school, and divvying up lots of cash across many families is not the way to get one built. I think that using CCT's to develop infrastructure is a missing component of Give Directly's method.
That's my opinion on how to fix Give Directly, but what about other charities? How can we assess if they are effective or not? I think the answer, once again, lies in the charity's limitations. What constitutes effectiveness is not what a charity says in their mission statement. They could say something that sounds promising, but if their goals are too limited (i.e. Give Directly), they won't be able to do what they set out to do. That means it is our responsibility as donors to understand a charity's goals and limitations. Are their goals broad enough to bring about positive change, or do they hold them back.
When researching GiveDirectly I was completely skeptical because I don’t believe people will use the money wisely in order to better their lives for the long-term. For me, GiveDirectly is a short-term solution to someone’s ongoing problem. I know in some cases people actually used the money for things they really needed, such as the metal roofs and I was happy to hear that. However, I just don’t think it works for majority of people.
ReplyDeleteGiving directly doesn't work because it is a one-time solution to someone’s needs. If the goal is that a person will use the money to better themselves or their family by obtaining their needs how is that measured? What if someone’s need is a cigarette or food? Both of these things will run out but would have satisfied that person’s needs. Even if someone did use the money to start up a business there’s no guarantee that it will be successful. There are too many factors and variables that aren't and can’t be accounted for in order to ensure that giving directly will work.
Then the question left is: Is it a waste of money to give directly when it doesn't make a difference in people’s lives in the long run? Do we continue to give directly even if we know that people will use the money for things that aren't going to last? It’s hard to answer these questions because I personally think only an individual knows what their personal needs are and no one can answer that for them. However do we then scale people’s needs to see which ones are worthy of receiving the money directly? If the studies show that over time the method didn't work how can we continue it? It’s a tricky situation because to me giving directly is the best approach to satisfy individual’s needs without a middleman or an organization deciding for them. There’s just no guarantee how that money would be spent.
Give directly seemed like a wonderful idea when I first heard of it, but after thinking about it awoke more and reading Jesse's blog post I realized there are a great many limitations to giving directly. For example, the organization seems like it cares more that all the mony is going to the people than the people get the best help they can. In this case it seems like according to give directly the lottery discussed in jesse's post would seem like a good staregy for charity when it never actually helped anyone. I am reminded of micro loans when thinking of this charity. If you do not know what micro loans are they are loans that are for somewhere between 50-100 dollars they have been getting extremely high return rates and have succesful alleviated poverty for a majority of people who have used them. This seems like a much better alternative to giving directly, because since it is a loan they will need to use it responsibly and in a way that they would continuosly make profit and sustain themselves. When comparing the two it seems to me that giving directly is much easier but the impact of micro finance is so much more important and might actually alleviate poverty in the long term by stimulating the economy. Which would free more capital allowing the society to evolve and grow naturally albeit with less hungry and poor.
ReplyDeleteI think that the example of the land lottery in Georgia really relates to the issues that I have with Give Directly. In the podcasts that discussed the organization, we learned of many instances when the money was used to contribute to a movement out of poverty. Families were buying motorcycles, cows, and new roofs; all things that either made or saved them money in the future. We also learned that, despite their movement out of poverty, there was no increase in the number of schools or health centers in the villages. Maybe these families were bettering themselves, but it didn't translate into long-term change for their community.
ReplyDeleteThe Georgia land lottery had similar results. Families were richer, but they were still acting poor. Like you said, there weren't more children attending school, the literacy rate remanded stagnant, and the children of winners had the same average wealth as the children of non-winners. Like the situation in Kenya, there wasn't any positive changes that were maintained into future generations in Georgia. Although we haven't analyzed many years of impact in Kenya, I believe that GiveDirectly's donations will have similar effects.
I think this blog post was a great insight into how direct giving does not create long term results. I think that a reason why direct giving doesn't work is because an organization cannot give to everyone. We heard in the podcasts that the neighbors of people who received money bore a lot of resentment. I believe these feelings can have a negative impact on the motivation of others to better the community because they don't see the positive changes as good but unfair, rather. There are definitely many reasons that direct giving doesn't create long-term success, but I believe this is one of them.