The art of impactful giving

This is a continuation of my previous post: what selling my startup taught me about giving back. Have a read for the most important lessons I learned on this journey, and some background on why I’m writing about my giving.

"I no longer think about return on investment as something tied to the dollars in my bank account."

‘Giving back’. Despite our best intentions and high expectations, it often takes a nudge to follow through. And when you finally do embark on the task, the charity sector can be so complex and opaque, it’s hard to even know where to begin.

For me, the journey to effective giving started two years ago, when I struggled with a temporary life-threatening illness called Guillain Barre Syndrome. Going through that made me see the acute importance of helping others achieve — at the very least — a baseline level of well-being.

Later, when a business I co-founded was acquired by Yelp, it was clearly the right time to start giving.

It's hard to leave the startup mindset behind

In addition to feeling passionate about health, I wanted to learn about innovative and long-term solutions to poverty. Beyond those broad interests, my goal was simply to achieve the most impact I could. It’s hard to leave the startup mindset behind! I was surprised at how incredibly complex and daunting this task actually was, but I was lucky that I’d just discovered Founders Pledge. Their research team taught me about evidence-driven philanthropy and guided me towards the best donation opportunities given my interests.

With their help, I finally settled on two projects that I am blown away by. But I’m not just sharing this to promote those charities (although they are fantastic). I want to showcase what I learned: that by thinking analytically and carefully about how you give, you’ll find the most exciting projects to support. This can be an incredibly rewarding process.

A one-time opportunity: Development Media International

As I mentioned in my last post, I don’t think we tend to treat our donations as carefully as we would our investments. But considering what’s at stake, I really believe we should be applying the same (if not more) intentionality and rigor in putting together our charitable portfolio. As such, let me tell you about the donation I equate to the charity equivalent of a seed investment in Uber.

Development Media International (DMI) run evidence-based radio, TV and mobile campaigns to change behaviors and save lives in low-income countries. Their aim is to reduce the mortality rate of children under five, by encouraging parents to seek treatment for their children’s potentially fatal diseases. They have an excellent six-year track record, plus an unusually strong commitment to transparency and research: they actively seek external evaluators for their work. All good signs, which meant I had high confidence in their ability to achieve impact.

Outsized leverage

What sealed the deal was a highly leveraged opportunity to support the Ministry of Health in Mozambique via DMI. Mozambique has one of the highest child mortality rates in the world, with 79 deaths per 1,000 live births. The Mozambique project is anticipated to result in roughly 720,000 extra treatments for life-threatening illnesses like Malaria and Diarrhea.

By ensuring hundreds of thousands of children get treatment, the project will have a huge impact on both physical and emotional suffering.

Why now?

This was a unique opportunity because DMI needed to close a relatively small funding gap to unlock a much larger amount of government funding they would likely have lost otherwise. The project’s fate — and the hundreds of thousands of children it would lead to vital medical treatment for — depended on this final funding. This is the definition of an incredibly effective donation opportunity.

A game-changing idea: GiveDirectly

GiveDirectly facilitates completely unconditional cash transfers to very low-income households in East Africa. They use an electronic payment system to transfer the rough equivalent of one year’s annual income to each recipient. Recipients are most often single mothers.

Now, you might be thinking: ‘unconditional cash?! That’s a bad idea if I ever heard one.’ But as I explored in my last post; we can’t rely on intuition to predict which charity programs will actually work. We have to consult the data.

Evidenced impact

In international development, cash transfers are some of the most well-studied programs you can find. These studies, in lots of geographical contexts, show that unconditional cash transfers effectively tackle economic vulnerability, which impacts so many aspects of life: food security, education, access to health care, and so on.

Society has conditioned us to think the poor would spend free money on negative goods, or simply waste it. But rigorous studies show the opposite: recipients overwhelmingly spend the cash in productive ways. They invest in their own businesses, tools, education, and homes. The transfers lead to increased long-term consumption and economic security, even years after the initial cash injection is spent.

A disruptor in the charity space

GiveDirectly has taken on all the qualities of an outstanding start-up:

They’re data-driven and committed to evaluating their effectiveness. With every project, they pre-commit to publishing the results of external impact evaluation, no matter the outcome. I know a lot of entrepreneurs who want to get a return on every investment. It was a huge learning for me to realize that there are ways to define ‘return’ beyond the traditional financial thinking. Choosing a great charity can provide significant — and measurable — social returns. There can be a great return on being able to buy a roof for your home, or some livestock for your family. I no longer think about return on investment as something tied to the dollars in my bank account.

They’re lean. Low administrative costs and smart use of tech mean they can transfer 82% of their funding directly to recipients.

They’re transparent. They collect feedback from all recipients and track their key performance metrics over the long-term. You can access their recipient feedback in real-time on their website.

Why now?

A portion of my donation to GiveDirectly was earmarked for a new program they’re piloting: the most ambitious study to date on Universal Basic Income. The study will provide around 30,000 people a basic income (around $0.75 a day) for up to 12 years. It’s an incredibly exciting opportunity to support research that could have huge implications for future economic empowerment globally. It’s also a higher-risk investment, as we don’t yet know what the outcomes will be.

My philosophy to this is that philanthropy is a lot like investing.

And I wanted a diversified portfolio, with a mix of low- and high-risk investments. If GiveDirectly is the publicly listed equity, then their UBI study is the fringe startup that has a huge expected return, but a higher risk of failure.

Continue the conversation

In the interest of transparency: after pledging and donating through Founders Pledge, I actually decided to join the team as CEO of their North American branch — a testament to how much I valued my experience as a member of their pledge community.

If you’re an entrepreneur, ping me and I’ll help you get connected to sign the Founders Pledge. It’s a no-brainer and helps you lock in your intention to donate by signing a legally binding contract to do so when you have some liquidity. I would have never been able to identify the amazing organizations I donated to had it not been for the FP research team. It’s a phenomenal opportunity to have positive social impact, and the whole thing is free, because we are non-profit backed by a small group of founders (most notably Facebook co-founder Dustin Moskovitz and wife Cari Tuna, through their Open Philanthropy Fund.)

If you’re not an entrepreneur, I would strongly encourage you to check out Giving What We Can and to commit a portion of your salary to charity.

If you have any questions or comments about this, or god forbid if you disagree, I’d love to hear from you in the comments. Hopefully we can get an honest dialogue going.