Doing harm when you think you’re doing good – part 2

If you become a fundraisers, you won’t raise extra money for charity. Rather, you’ll shift money from one charity to another.

Suppose Oxfam spends an extra £1 on fundraising. We’d expect this to raise them at least £41. So, it looks like they’ve generated an extra £3 for charity. Great!

But what would have happened if they hadn’t spent that £1? If this was an easy opportunity to raise money, then another charity would take it instead. Charities as a whole are raising about as much money as they can from the public. This is what we’d expect. Charities are aiming to do as much for their cause as possible, so if there were easy money to raise, they’d take it. And intuitively, people have a relatively stable ‘charity budget’ . They avoid future giving once they’ve ‘done their part.’

This means that Oxfam wasn’t actually generating new money for charity by doing more fundraising, rather, it was shifting it from somewhere else. So the extra fundraiser wasn’t doing any good2.

But it gets worse.

If you graph how cost-effective charities are, you’d expect to find a curve a bit like the one on my very basic graphic below3:

The key point is that the median is significantly less than the mean. In other words, the effectiveness of the majority of charities is less than the effectiveness of the average charity. That sounds a bit odd, but it’s just because the average effectiveness is pulled up a long way by the small number of really good charities at the top. (Similarly, the average wage at a company is normally higher than what the majority of the staff are paid).

This means that most fundraisers at the margin are shifting money to charities that are less effective than the average charity. So, they are reducing the overall effectiveness of the charity sector. They are actually reducing how much good gets done!

It’s pretty likely that the effectiveness of the median charity4 is significantly less than the mean. It could easily be as low as one fifth5. If it were one fifth, then even if every £1 of fundraising only caused 80p to move from the mean to the median, it would negate the good done by the £4 spent by the median. See below for the calculation6. So, even if most of the money raised wouldn’t have been given by the public otherwise, no good is being done.

In fact, we’ve just seen that extra charity fundraising doesn’t cause much extra money to be given to charity. Most or perhaps almost all of the money is just shifted from other charities. Assuming the money comes from the mean charity, then the majority of fundraisers are shifting money from more effective causes to less, significantly reducing how much good is done by charity overall. The majority of fundraisers look like they’re doing good, but taking into account the indirect effects could mean they’re actually making the world worse off7.

Before we get carried away, it’s important to note that that fundraising as a whole is still doing good8. Moreover, if you’re a fundraiser, and you’ve got no idea how effective your charity is, then you should expect it to have the mean effectiveness (not median). That means that if you become a fundraiser you should expect to be doing good (or at worst be neutral). If you’re working for a charity that’s more effective than the mean, then you’re doing a lot of good.

If, on the other hand, you’ve got reason to think that your charity is less effective than the mean, then please stop!

The reverse, however, is true for the minority of fundraisers who work for charities that are more cost-effective than the mean. They’re shifting money from less effective charities to more effective ones, potentially doing a huge amount of good.

If you’d like to find out more about effective giving, check out our page.

Thanks to Will MacAskill for the inspiration

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References and notes