The Tampa Bay Times has done some excellent investigative reporting on the 50 worst charities in America — organizations that took in more than $1 billion over the past 10 years, and gave almost all of that money to their own staffs and professional solicitors. The series explains how charities like this operate and skirt the regulatory system. But if you're feeling TLDR, there's also a PDF that can help you quickly figure out if you're donating to one of these scams. A large portion of the 50 worst is made up of charities devoted to cancer and veterans' issues. Read the rest
Over the years, I've been really impressed with the stuff I've heard about microfinancng charities like KIVA. The idea of helping people in developing countries launch and support small businesses, changing their lives and the lives of their children, makes a lot of sense. And the personal stories that go with microfinancing are pretty appealing.
I'm starting to re-think my opinions on microfinancing, however, after reading some of the research done by GiveWell.org, an organization that casts an evidence-based eye on what different charities do and whether they actually get the results they claim.
It's not that microfinancing is bad, per se, GiveWell says. It's just that the system doesn't measure up to the hype. And if you've got a limited amount of money to spend on helping other people, there might be more effective ways to do it that produce more bang for your buck.
GiveWell has written a ton on this, but I'd recommend starting with a blog post of theirs from a couple of years ago called 6 Myths About Microfinance Charities that Donors Can Live Without. This piece provides a succinct breakdown of what questions you should be asking about microfinance charities, and provides lots and lots of links for deeper digging. The myth that surprised me the most:
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Myth #6: microfinance works because of (a) the innovative “group lending” method; (b) targeting of women, who use loans more productively than men; (c) targeting of the poorest of the poor, who benefit most from loans.
Reality: all three of these claims are often repeated but (as far as we can tell) never backed up.