26
Dec
11

Incentive sentences

This one’s from Alex Tabarrok:

When was the last time that a charity […] told you that due to successful fund-raising there are now more urgent needs elsewhere?

See, for the last three years GiveWell had listed VillageReach as their top-rated charity… but going into 2012 they’ve switched their ne plus ultra to the Against Malaria Foundation.  Why might that be, considering that no-one’s reported any problems with VillageReach?  Alex quotes:

VillageReach was our top-rated organization for 2009, 2010 and much of 2011 and it has now received over $2 million due to GiveWell’s recommendation. We do not believe that VillageReach has short-term funding needs […]

This, by the way, is very good news, not only for VillageReach (and for the Against Malaria Foundation), but for the charity business in general.  Individual charities have strong incentives to point out misery and failure, as by citing all the work that remains to be done they provide motivation for people to give them money.  As time goes on, donors who aren’t true-believers will start to wonder whether they’re doing any good at all.  GiveWell, on the other hand, has strong incentives not only to be objective, but to be seen as objective in their evaluations of charities and their structures, capabilities, and needs.  This is a strong signal of GiveWell’s objectivity, which will (with any luck) lead to more donations.

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2 Responses to “Incentive sentences”


  1. December 26, 2011 at 18:36

    Tabarrok’s point is good—I think true to at least the 95% level. The closest that I have any experience with to what he describes are these:

    1. Compassion International: My wife and I sponsor several children through this agency. Some time back, we were notified that the financial situation of one of our sponsored children had improved such that they no longer needed funding on a monthly basis for this particular child. We just selected another, but this is reasonably close I suppose.
    2. Twin Rocks Friends Camp generally only asks people for money when they’re going to make capital improvements to the camp. Most of the time they’re operating at cost (their income and expenses balance). When they’ve raised their targets, they let their donors know and stop asking. I suspect there are a fair number of institutions like this.

    But yeah, the other 95% of charitable organizations insist that Satan will rise up to rule the world unless you give more now.


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