Rationally speaking, is a presentation of New York City skeptics dedicated to promoting critical thinking, skeptical inquiry and science education. For more information, please visit us at NYC Skeptic's Doug. Welcome to, rationally speaking, the podcast, where we explore the borderlands between reason and nonsense. I'm your host, Massimo Luchi, and with me, as always, is my co-host, Julia Gillard. Julia, what are we going to talk about today?

Masimo, we have a special guest with us in the studio today. Holden Karnofsky is the founder of Give Well, which is a non-profit organisation devoted to investigating charities and NGOs to determine how much of an impact they're having.

You could call it evidence based philanthropy, basically determining whether a charity is doing good as opposed to just telling a convincing story and helping people figure out where to donate their money if they want to get the most done for their dollar.

Holden, welcome. Thanks.

But do you want to start off by telling us a little bit about how you got the idea for well and sort of how the process surrounding it went?

Yeah, absolutely. It was started in 2006 and at that time it was just a volunteer part time project. It was myself and seven friends. We were all working at the same hedge fund and we were all just trying to give away money as effectively as possible. So we were all giving something between 500 dollars and 10000 dollars. And, you know, kind of with every other major purchase we would make, we wanted to see that we were getting the best deal.

So in this case, that meant doing the most good for our money. And we would get together every couple of weeks to try and help each other sort through the issues and share good charities we were finding and the information we were finding on what areas were promising. And we found that there was almost no information out there to help people like us. So there are ratings agencies and there were ratings agencies like Charity Navigator that discuss the charity's financial metrics.

But when you're asking questions like, for example, I want to help improve inner city education, you know, which programs are doing a great job, which programs have the most promising approach? You really need a lot more than just the finances. And in fact, there's a growing consensus that the kind of financial metrics like how much of my dollar goes to programs versus administration are very misleading and are actually a backwards way to find outstanding charities. You know, we tried calling foundations.

We asked them for advice on where to give. They generally tend to be pretty secretive and didn't tell us much. And finally, we tried calling charities and asking, hey, you know, what do you do with your money? What's the evidence that it works? How cost effective is it? And we got very few answers. So after about a year of this, we had decided a few things. One, that we couldn't do this part time.

We weren't getting anywhere to that. A couple of us, myself and Elie Hassenfeld, were very passionate about these issues and found them more interesting than our work at the hedge fund. And three, that we thought this was a very important issue because it turns out that individual donors gave about six times as much as all foundations combined. So good giving and smart giving really shouldn't just be for Bill Gates. It should be for everyone who's giving those people out to a lot.

And we wanted to help them do more good. So Ellie and I left our jobs. We raised money from a former co-workers. We started give well. And basically what we're all about is we try to find the most outstanding charities we can. We write out the full details of how we found them and why we think they're good. We go for maximum transparency and we find donors who are really all about doing as much good as possible and just try to be helpful to them.

So although I have a question about the way you phrase how you go about this thing on your website. I found it interesting for a reason that is well, I'll read the quote first and you the reason and I'd like to hear your reaction to it. So you say on the website, we have no universal or one one size fits all way of measuring an organization's impact, unlike many of our leaders who insist on, quote unquote, objectivity and assess only things that can't be argued about and thus to our minds, things that matter little if at all.

We take the approach of making subjective judgment calls informed as much as possible by empirical evidence and thorough research in making our reasoning as transparent as we possibly can. Now, the reason I find this is quite interesting is twofold. First of all, it I'm guessing that it might get you in trouble with people. On the other hand, do want to get an objective, quantifiable and so on. And so for assessment, the other reason is because I really like it.

It's one of the things I like about the best, about the website, the website, because it fits with one of the things that we talk about often in this podcast, which is, you know, the relationship between science as as you know, let me objectively quantify things and so on and so forth. And the broader approach to knowledge, which says, yes, I obviously do want empirical evidence, but I need to be concerned not only with the quality of that evidence.

I also need to be concerned about going beyond the numbers and making what you call informed judgement calls as long as that call is transparent. So so do you actually get into trouble for this kind of statement on the website, other people complaining about the fact that you are therefore too subjective or not reliable yourself?

We do occasionally get that from. S. I mean, some people will object that you can't be neutral without being objective and things of that nature. I think we still get a lot more guff from the opposite side. So I think we still have far more people saying that we are too reliant on data, that we are too reliant on facts that were too empirical in our approach, because I think that most people perceive that, you know, giving to charity is just not something you're going to reduce to a formula, certainly not with the information that's available today and probably ever.

And so I think that's, you know, that's a pretty commonly agreed upon and understood thing. There's a lot of things you can't reduce to a formula. Right. Like you wouldn't decide which restaurant to eat at or which movie to watch just based on objective metrics. That's why we have reviewers, I think charity something that's recognized to be very much that way. And if anything, you know, we still get a lot of complaints that, you know, we're too focused on the numbers, that we do a lot of a lot of focusing on the areas that we can understand empirically.

So what aspects what do you what are you referring to when you talk about the subjectivity? What are the ways in which other rating organizations or other researchers are trying to be objective that you think are misguided?

Well, I mean, Charity Navigator focuses on financial metrics, so that's a good counterexample. There aren't a lot of other charity readers out there. But this is you know, this is probably the best known one. And just to give one example of the sort of metric they have been using, they'll take the total money a charity spends and say how much of that went to administration and fundraising with the implication sort of being the lower the better. And that's sort of supposed to imply some sort of efficiency.

The appeal of this metric is that you can do it, you can apply this metric to any charity in the world. It's the same metric for, you know, a water building charity in Africa, for an education charity in the U.S., for an opera house or for the U.S. Golf Association. And that's exactly the problem, is that this sort of thing is just not going to tell you where you're accomplishing the most good. There's a lot of problems with this metric.

There's a lot of problems with pretty much any objective metric that's applied to charities. And actually Charity Navigator has conceded this at this point, and they're working on a new rating system that's going to end up somewhere in between. So they're they're bringing in more subjectivity, more human input in human judgement. But there's still going to be a lot more formulaic than give. Well, so that's that's sort of the contrast. And I would say right now that nobody thinks there's a good formula available for rating charities.

So I would say to the extent, you know, the more common criticism of give well is that even though we're going really in depth and even though what we're doing is is not reliant on formulas, mean tends to be high quality, we're limited in our capacity. We can't look at every charity in the world. That's a criticism we get. But we don't get a lot of people saying, well, you know, you don't need to be so subjective.

There's a great formula. Nobody really thinks there's a great formula.

I have an example, a personal example about what you were talking about a minute ago. That is the objective metrics of seeing, well, how much of my dollar is going to the actual operation versus, you know, over overhead costs and so on, so forth. And I'll bring that up in a minute and then actually will bring me to to the issue that you just hinted at, which is that you can't do everything. You cannot cover everything.

So I have a very good friend who has worked for many years for the International Rescue Committee, which is based in New York. It's a humanitarian disaster relief, conflict oriented organisation. And one of the things that she was explained to me some time ago was precisely that, that they get a lot of attention because, in fact, their their ratio of dollars to go to the to the on the field, so to speak, versus everything else, is, in fact very high.

I think something like 90 percent or something like that. So they rank very high in that terms. But she was telling me that trying to explain to me that that isn't necessarily a good thing. Right? It's certainly not. You don't want to push beyond a certain level. But one of the implications, for instance, is that that organisation, like a lot of these charities, is based in New York. Cost of living in New York is very high.

The result of that decision that the organisation made to have such a high ratio, you know, efficiency ratio is that a lot of their employees actually are not particularly well paid. And it's sort of strange then that brings up a strange sort of result of somebody who wants to give money to a charity because you want to help people. But if you're doing so by essentially exploiting other people, they're doing the actual the hard work so that it's maybe one of the problems that you were that you were getting at.

What kind of other inefficiencies might be hidden by the fact that, you know, there is a very high level, very high ratio, apparently, but in fact, the money is not being used as well as it could.

Yeah, I mean, I guess I would break my objections to that sort of metric into three parts. One is it's it's just kind of very easy metric to play games with. We fill out the IRS Form 990, we're a charity, and so we report that metric. And I can tell you there's no external audit on it. I mean, we kind of, you know, we decide how to classify the. We write things down, and my general impression is that a charity that wants to classify itself as having pride program expenses can usually find a way to do it.

So a lot of this just encourages game playing with the accounting and with the audit objection to what would be exactly what you were getting out with your comment about I.R.S.. Now, I can't speak to IRS specifically on this topic, but one of the first things we started to realize as we were starting give well was we felt a lot of charities weren't spending enough on so-called overhead. And, you know, some of the symptoms you'll see of that are, one, they're not paying enough.

So they're not able to hold onto people and they're not able to get the best people and to its evaluation goes by the wayside. So a lot of times we would say, you know, hey, you're doing this program. It's in a foreign country. It's in a foreign culture. It seems pretty challenging. Are you doing any data collection to see if, let's say, disease rates are actually falling as you hoped, and we usually get responses back, something like, well, donors want every penny going straight to the people, not to consultants, not to evaluation.

So this to me is kind of an unfair standard. I mean, when we think about a company, you know, we don't care how much they spend on administration. We care how good the final output is and how good a job they do. And yet with charities, we're denying them a lot of the things that in my mind are important for doing a good job, like paying reasonable salaries and like doing evaluation. The third objection that I had to this metric is really the big picture one, which is that I just think we need to stop equating effectiveness with efficiency.

So efficiency is this notion that the less you waste, the better. But the much more important thing is, you know, let's say that you spend 90 percent of your money on the program versus 70 percent. What program are you carrying out? Is it a good program? Is it well executed? It's my belief that helping people through philanthropy is generally very difficult. It's difficult for different reasons and different causes. So in the US, the problems that charities are trying to solve are generally very poorly understood and very complex overseas.

A lot of times you're trying to do something fairly simple, like deliver vaccinations, but you're trying to do it in a culture that you may not understand very well, in a setting that may not be what you're used to. So you're trying to do something difficult. And the question is, are you doing a good job? Is your program well thought out? Does it deliver the best bang for the buck? Is it something that's really addressing the most important need of the people you're trying to help?

And when you start nit picking how much of the money is spent on admin, you're really losing sight of this and actually kind of going backwards by saying, well, it doesn't really matter what we do as long as we do a lot of it.

The other side of the other question that I was related to, my example the of the IOC was this. So I looked it up, of course, on your website. And as you know, it's not listed. And I found out that the reason is not listed is because there are certain areas that you guys don't cover, at least right now. Don't go think one of them is, in fact, conflict oriented international organizations. So can you tell us now why that particular one is missing?

But in general, how do you go about picking areas? What kind of other areas are maybe missing at the moment and you're trying to do something about it in the future or what?

Yeah, this has changed over our history. So at first we kind of you know, we thought that we might get to a lot of charitable areas, but we were just focusing on the ones first that were most interesting and exciting to us. That seemed like the best way of helping people over time. We've kind of explicitly decided not to change that and to really just focus on the areas we think are most promising. And the reason is that our goal is not to evaluate all the charities in the world.

Our goal is to find great donation opportunities for donors who want to do as much good as possible. And that's something that confuses a lot of people about give well and makes it different from other charity evaluators. If you come to our site looking for an opinion on the charity that your friend asked you about, you're going to be disappointed if you come to our site saying, I don't know where to give give me a great option. That's when I will be able to help you.

And so it's kind of more of an investment mentality is the analogy I often use. There are investment funds out there that look for great companies. They would be completely wasting their time if they tried to evaluate as many companies as possible and give them scores from, let's say, one to 100. All they care about is the ones that are 90 or better because they want to find the great investment opportunities. And doing that is hard enough without trying to cover everything in the world.

So give all is really not about rating every charity. Give us about finding great opportunities for donors and helping people do as much good as they can.

One of the commenters on the teaser for this episode asked a question that I'm sure you get all the time. It sounds like from the way you've been describing give Wells approach, it sounds like you're really interested in given the goal, the stated goal of this charity. How effectively are they accomplish that goal? But what this commenter, Ian Pollock, asked is whether you make any distinction between different goals are, you know, it's a charity.

How do you compare a charity that works toward better quality of life with a charity that's trying to save lives?

Do you make any distinction between quality of goals? Yeah, we do.

I mean, we separate charities by. And we do have some content on our website that says, if you like this goal, give here. If you like that goal, give there. But again, you're not recommending a goal is a better one than another.

But we do that, too. I mean, we list the goals in order of how compelling we find them. And I mean, we don't believe this is an objective thing, but we do believe that our opinions are informed by some facts. And so, for example, we have U.S. education charities on our website. We have international we have global health charities. We believe that global health is a better opportunity to help people. We have reasons for believing this.

We've written this up. We don't believe this is an objective fact. We think reasonable people can disagree. And so since we have got some recommendations for US education, we provide them to people interested in that cause. So basically, I mean, we're just going after the causes that seem most promising to us and publishing the opportunities that seem best to us. And we're totally unapologetic about the fact that it's our opinions. Our goal is not, again, not to be objective, it's to be transparent.

We want people to see exactly how we came to these conclusions. And the reason that people give using our recommendations is not because we've proven ourselves right, but because we've done probably more work than they have thought about it more than them and laid out all our reasoning so that they can check us. So we do you know, we do some of that separation. But it's kind of just as it happens, we go after the best charities we can find.

And sometimes we end up saying, well, this isn't our favorite, but if you like this, cause then it would be. So we do have some of that on our website.

But it does make sense. When you were just saying a minute ago about, you know, you don't pretend to be objective, but you don't need necessary to go all the way through to sort of concede the opposite. Right. That well, this is just my opinion. And you feel like you like it. Sort of what I read through what you were saying is, look, there are different ways of making priorities or making decisions about any any complex issue, this one being philanthropy, being one of them.

And that doesn't mean that the opinions are completely arbitrary because they are, in fact, based on information that is available and you guys collect. And it doesn't mean that the reasoning is arbitrary either, because, as you say, you make the effort to make it transparent. So the fact, as you pointed out a minute ago, reasonable people could disagree doesn't necessarily lead to the conclusion that therefore, you know, the whole idea is entirely arbitrary. And it's just my my my personal opinion.

The reason I'm bringing this up is because we often get into these kinds of, you know, similar kinds of situations in completely different areas, such as, you know, the objectivity of moral judgments, which actually does enter into the philanthropy thing. You know, you don't need to be saying that morality is about the quantifiable, objective criteria, but you don't need the need to concede at the opposite end that well, therefore, my opinion is just as good as anybody else's opinion.

While opinions are reasoned and reasoned, reasons are based on factual information.

Right now it's being, in fact, true information.

I noticed that you are very picky in terms of you recommend and the top of your website, about two percent of charities out of how many? And is that the global statistic or is it a is there a difference between the United States and international groups are trying to be more selective in one case or another or what?

I think two percent is a fair representative overall or just conceptually, how many charities we recommend. If you you know, if you wanted to know the numbers, it really all depends on what you count is looking at a charity because, you know, there's we look at every charity we can find that's relevant and then we'll narrow the field using heuristics and shortcuts. And then sometimes we'll revisit charities and sometimes we'll look at one more in-depth and another, which is all just common sense if you're trying to find the best opportunity.

We're not trying to give every charity review or a fair shake or the same rating, the same level of reading. So that's you know, it sort of depends how you look at it. I mean, the numbers, I think the best numbers for getting a picture of this is that an international aid report, we've looked at about 400 charities and we recommend about two percent of those. But but we used to have the numbers on the front page.

We change two percent because we think the concept is right. The numbers kind of depend on how you define them. That's a surprisingly low percentage or whatever. I mean, maybe maybe shouldn't be surprising to me was surprising because after all, the whole idea of these charities, of course, is that these are people presumably want to do good for for for a cause or another. They're not they're not for profit. At least most of these things are not for profit.

I would assume they're not a business trying to make a buck. They're trying to help people. And yet you think that and only a very small percentage of them actually worth supporting.

Well, I should clarify one thing, which is that we're all about finding the best opportunities possible. So even if all charities were outstanding, we would still find the two percent most outstanding and recommend those. I mean, that's what we're about. That said, I mean, I do believe the charitable sector is very dysfunctional. And so I do believe that the vast majority of charities we've looked at can't inspire any sort of confidence in us. That's partly because of our own lack of knowledge.

And, you know, there may be some charities that if we could only do a different kind of angle or a different kind of investigation, we would gain. Confidence in them, and that's something that we're working on, but I also feel that it's an inherently dysfunctional sector because organizations, their their revenue and their effectiveness are completely disconnected. And so an organization may be completely ineffective at helping people, but if they can tell a good story, they'll raise money.

And if they have the right context, they'll raise money and organization. Money can be great at helping people, but if they don't have the context in the story, they're not raising money. That's a fundamentally broken system. That's not how most that's not how most things work that people spend money on. And I think that leads to a bad dynamic, which is something that we're trying to do something about it.

Do you think that that implies that if you look at the charities that are relatively prominent, relatively successful, that among those charities, the ones that tell the most compelling story are actually less likely to be good bets for donating?

Because it suggests that the reason that they are a large part of the reason that they became prominent was on the strength of their story alone, which may not actually connect to the results.

That's a reasonable way to look at it.

I mean, you could also think that a charity that just has good people at it will probably get both halves right. And so you could kind of see it going either way. So I don't really have an opinion on that. I mean, one thing I've noticed is that the really, really big name charities, it seems a little bit less likely that they've got what we call room for more funding, which means that, you know, more money will really cause them to do more of the activities that they're best at.

A lot of those guys just kind of don't need money. But that's that's also I mean, none of this is universal. We're happy to recommend a famous celebrated charity if we think they're good. And I certainly don't rule that possibility out.

So do you have any Gold Star highly recommended charities that you want to tell us about and explain why you think they are so effective? Sure.

I'll give an example. Are our top rated charity currently is called Village Ritsch, and they are a health system logistics group. So it's about the less the least sexy thing you could think of in charity. And it can be a very hard thing to get donors excited about. Basically, their pilot project was in a rural area of Mozambique where health clinics were having problems because they kept essentially running out of lifesaving supplies, especially vaccines. And villagers came in sort of as consultants to debug the problem.

And they said, eh, we see a few problems. A, the health workers are responsible for collecting their own supplies. That often means hopping on a motorcycle and going two hours to pick up as many vaccines as you can. That's not efficient. You're going to stock out of vaccines if you keep doing it that way, be the fridges are wood fired. So that's just not a good way to keep the cold chain going. It's it's an unreliable energy source.

And see, nobody knows what's going on. There's no there's no management information systems. There's no tracking. There's no problem solving. And so they address these things. You know, for me, they brought in a dedicated logistics team. So it's a set of people who basically their job is to get the supplies to the clinics. They drive all over, they get the supplies out, and the health workers can concentrate on their jobs, be they started trucking up propane from southern Mozambique to deal with the energy problem because they thought that it was a better energy source than wood fires.

And while they were at it, they started selling it to a nearby luxury hotel and spun that off into a self-sustaining business that doesn't need donations. See, they implemented management information systems. They tracked how things were going. They kept track of how often the health centers ran out of vaccines. And that's where they're able to produce their evidence because you've got, you know, very compelling charts showing that after they entered into an area, the stock outs hit near zero and they had been very high before.

Stock outs means when a health center runs out of a vaccine, they also double check themselves by doing a vaccination coverage survey. They compared the progress in the province. They were working into the progress in the nearby province. No one piece of evidence was what I'd call definitive. But when you add it all up, they had a lot of evidence that they had really increase the efficiency of the health system, increase vaccination coverage rates in a way that happened to be quantifiable, very cost effective, well under a thousand dollars per life saved.

Now, that's part of the story. Then the next question is room for more funding, because it's not enough that a charity has done good work in the past. The question is, what are they going to do next? What do they need money for if they need money at all? And a lot of great charities we've ended up discarding based on that criteria. So Village Rich had had the successful pilot project that had been funded by a lot of big names, including the Gates Foundation.

But when it came time to scale it up across the country, a lot of their funders said we're only interested in innovations and pilots and proof of concept, not scaling things up. And so Village Rich was sitting here needing several million dollars over several years to scale their proven program up across Mozambique. And that's where we came in and started aggressively fundraising for them. We, you know, with Give was help. Village Rich did meet its 2010 kind of stretch fundraising target and over a million dollars came to them that we were able to track through Livewell.

And then we're hoping that the whole project will go forward and get funded fully.

That's an interesting attitude to the one that you just mentioned about. Funding a pilot study, and then regardless of whether it goes well or not, people may not be interested in funding the skinning up thing. I run into that several years ago when I was at the university and I see we got a pot of grant funded by an educational foundation and it went very well. But then they did not renew the grant for the next five years because they said, well, OK, now you show that this thing works and we want to move to something else.

And I thought that was very strange. So that's a common attitude among foundations.

Yeah, it seems to be. I mean, everyone has a different focus. Some of the big government funders want the opposite. They want something that's really proven. But, you know, sometimes in between pilot project and like super proven is this kind of valley of death that we felt village rich was in. And yeah, it is kind of my impression that a lot of these foundations, I mean, they don't want to be funding the same thing for a long time.

They they want to be innovators. Some of them may want the glory of innovating and having a strong pilot. And, you know, we're trying to find donors who just don't care who will fund anything that they think does a lot of good, whether that means innovating or scaling up.

Now, I have looked at one particular example indef that I want to ask you. I picked this one just because it's sort of related to my area. It's about education. But I also wanted to spend some time reading through your example to see how you treated your cases. And so this is something called the KIPP, the Knowledge is power program. Yep. And first of all, I was impressed by the amount of information that is there. It's a really long webpage with a lot of references to two studies published about these things.

But I imagine, for instance, in this particular case might have been controversial. This is a network of public but mostly charter schools in New York. As I'm sure you know, charter schools have been the center of controversy and they continually are at the center of controversy. So the first question is, well, did you did you take that into account? Did you get into into that sort of discussions about sort of actual public versus charter schools and that sort of stuff?

And the second question is this. You rated that the number two top U.S. charity when I looked at the website recently. But you also say that the the the evidence of effectiveness is only above average. The cost effectiveness is limited. There is probably a funding gap and transparency is only above average. In other words, the individual ranking criteria, pressure not not stellar. The question therefore is what is it?

Is it because it's difficult to find education organizations for which those indicators actually are much higher? So was this a best of a bad lot, in other words, or was it or that's just the situation in that area?

I mean, yeah, that's roughly right.

I'm hesitant to say best of a bad because, I mean, we don't I've never run a charity, so we don't you know, what we don't try to do is say these charities are bad or, you know that this is how a charity should be. But we just we we are honest about our level of confidence in the charity. And if it's low and all of them and kind of media, I mean, one of them and that one stands out, I'd say that's the case with KIPP.

So, you know, U.S. education is it was used to be my favorite cause when we started to give, well, part time, that was the one I wanted to give to. And I just I think it's it's a really, really tough cause for an individual donor because there's so little known and there's so little that's been shown to work with any sort of what I consider high quality, compelling evidence. And so, yeah, I mean, we didn't find any education charities that we thought were slam dunk.

Kemp was was definitely the best of the lot to us. And as far as the political stuff goes, I mean, we you know, we're not out there advocating for any particular structure of the government school system. The structure is what it is. KIPP is a national network. They're working in a lot of places and they need more money in some cases to do what it is they're doing and serve more of the kids who want to go to those schools.

So I don't you know, I don't see supporting KIPP as a particularly controversial thing.

Hold on. I was interested when you were describing Village Rich, it sounded like they'd come up with this clever outside source of funding of their own. I know it sounds like it doesn't fully fund them, but it helps a lot. And it reminded me of one of the big benefits that people tout in microfinance, that it can be the sort of self-sustaining thing as opposed to constantly needing an influx of funds from donors. Do you think that that's a realistic, you know, for the future, for the long term?

Do you think it's realistic to think that charity can actually be accomplished through for profit enterprises, although it depends on the charity? There are. You know, there are some things that are not going to go for a profit, like delivering vaccines to extremely poor people. Sure, there are other things that may, you know, become self supporting of government revenue. I mean, it all just depends. There's certainly what I would call something that seems like a fad in development today, which is trying to use donations to help businesses get off the ground and then those businesses become self-sustaining in a market way.

So we're talking about microfinance.

I'm talking more generally. And so this includes microfinance, but it also includes, you know, groups that just try to fund businesses like maybe a bed net production business that is trying to sell their bed nets. So, I mean, maybe maybe first I'll talk about my general take on that sort of, you know, that concept of using funds to create self-sustaining businesses. Then I can address microfinance specifically. That's OK. OK, yeah. Great place.

OK, cool.

So, I mean, there's definitely a lot of appeal and I see a lot of appeal in the idea of using donations to create self-sustaining businesses because those businesses presumably hire people to contribute to growth and in a sense can leverage your donation way beyond if you help them get off the ground at the same time. I mean, I think there are some real reasons to be wary, because if you're a straight up business, a for profit business, then you have a sort of accountability.

If you can't sell your products for, you know, and bring in more than you're spending, you're going to go out of business, you're going to be gone. And that makes you accountable to someone. On the other hand, if you're a straight up charity, most creative charities are not really accountable to anyone, in my opinion. But at least their donors can make them accountable and give well is trying to make them accountable by saying, you know, we want you to measure your social impact.

But with a lot of these for profit groups, what you see is that they're avoiding both kinds of accountability, which risks being the worst of both worlds instead of the best. Because you'll say to them, you know, you're a you're a bednar distribution company. Do you have evidence that people are using your bed nets, that malaria rates are falling and they say no, collecting that evidence would hurt our bottom line where for profit. And then you say, OK, how's your bottom line?

And they say, well, we're a social business, you know, and and so we don't need to make money or a lot of times they they are making money, but the money is coming from other charities or something that the charities are buying the bed nets or the government is buying them. So the whole thing can get very confusing and it's something to just be wary of. And from what I've seen a lot of these groups, it's like they can't really make either case.

And that leaves you that leaves you wondering what sort of accountability they have. So that's you know, it's an area that I think is a lot of promise, but a lot of concerns. And to be honest, I haven't found a group in this area I can feel good about yet. But we continue to work on that. Now, microfinance specifically, I think, is probably the area of aid, at least that I know of, where there's been the most success, really, using donations to create groups that really are self-sustaining and or profitable.

So that's an interesting thing about it. On the other hand, I think microfinance is often oversold and there's a lot of myths about it, which we discuss at great length on our website. If you just go to our website and go to international and then issues and microfinance or sorry issues than international and microfinance and the NFR, you know, basically you'll hear a lot that people are repaying their loans.

So that must mean that those loans are helping them get out of poverty. Well, a lot of what you don't hear is that interest rates tend to be in the range of 30 percent to 100 percent per year.

Even when you go on Kiva dog and you make what what they're calling an interest free loan to an individual, interest free means interest free to you. It doesn't mean interest free to them. And so a lot of times, you know, people go on Kiva, they make an interest free loan. They feel good. But that person is paying 30 to 100 percent a year on that loan and the bank is keeping the difference. What happens if people don't pay?

So what happens if people don't pay?

I mean, that that varies by the MFI. And a lot of times it might just mean they get cut off from credit. The most common thing is this group liability set up where nobody in the group can borrow again until everyone is all paid up. And that means that they'll get pressure from other members in their group to repay. We don't know exactly what that pressure consists of. And that brings me to another concern about microfinance, is because just someone just because someone's repaying their loans doesn't mean they're benefiting from the program.

They could be losing money. I've definitely seen anecdotes of people losing money and getting overindebted for this, and they could be managing to pay back, but then leaving the program. One of the things we found in microfinance is that dropout rates, when we can find them and they're often not tracked, tend to be very high. So you'll see 20 to 40 percent of people annually leaving the program and usually not because they're graduating the program or because they don't need it anymore, but more because their business failed or they don't like the product.

And so that's that's a concern of ours. And so when you put it all together, I mean, there's some promise with microfinance. It seems like it's something people want they're willing to pay for. And that's great. You also have to worry that it's hurting some people as well as helping some people. The highest quality studies of microfinance are randomized controlled trials. Two of them, they're very recent, both of them being affiliated with the Poverty Action Lab.

And, you know, they found very mixed effects and frankly, much less encouraging social impact than a lot of other interventions, including micro savings.

Not to mention that the kind of sort of collective punishment you were talking about a minute ago is this at the very least objectionable from an ethical perspective?

I mean, we don't we don't usually apply that kind of approach in other areas. You're essentially punishing an entire group for the misbehaving of a small subset of some number of members of that group.

Do these these organizations actually engage in any overt, sort of available, transparent, ethical reasoning about how to how to go about these things? How do they go about these things?

There are some emerging standards and evaluations for sort of client protection. You know, I mean, my basic impression is that when they do this group liability set up, they're saving themselves a lot of money and hassle by outsourcing enforcement to the people in the group. And that's good and bad. It's it's arguably the only affordable and sustainable way to make loans in some cases, although it's not always necessary, you know, and it also has these risks. And it's hard to know exactly what sort of enforcement is going on.

So I think it's debatable. And I think just about everything about microfinance is debatable to me. What worries me and upsets me is when I see it being sold as kind of, you know, every 30 dollar loan means that someone pulled themselves out of poverty and this this sort of romantic notion of the poor as being all these entrepreneurs who just need 30 dollars to get going. I mean, I think if people take a closer look at microfinance, it's a complicated picture.

There's a lot to like. There's a lot to be worried about. And that's where we stand on it.

Yeah, but myth busting has never been a particularly popular operation. So that's that's the problem. It's easy to sell people with an easy with a simple solution to a problem. I have a question, however, sort of a broader question related to this to this idea.

That is, do you think there are areas where Americans in particular tend to under support certain large areas of philanthropy? So if you were to suggest areas that tend to be underserved, say, in this country, what would that be?

I think well, I mean, I think global health is underserved. I'm not sure if you mean in America, but I you know, I have become a big fan of international aid because of, you know, how different the levels of poverty are overseas and how much more good you can do with the same money, in my opinion. So I think international aid of all kinds is probably under invested in especially global health. And people look at the Gates Foundation doing global health and they say it must be covered.

The need is just much greater than that. There's just there's a lot of people who aren't getting proven medical treatments. They can make their lives a lot better in concrete, tangible ways. And a lot of people are out there, you know, instead giving to charities that do do things that may be great but just aren't, you know, aren't the same bang for your buck.

So I would say global health, a hole in one of giveaways, big supporters and publicized is the bioethicist philosopher Peter Singer Princeton.

And so I'm just wondering whether you what you think of his arguments about charitable giving, that basically people should should give as much as they can until it starts to become uncomfortable for them in their life.

He's famous for the thought experiment that, well, if you would be willing to jump into a pool and in the process, ruin your thousand dollar suit in order to save the life of a child who's drowning, then you should also be willing to spend a thousand dollars to donate to a charity to save the life of a child overseas, even if he's not in front of you yet.

What do you how do you how do you think about Peter Singer's ethical reasoning?

I think the practical implication of Peter Singer's work is that he gets people to challenge themselves, to give as generously as they can. And I think that's a really good thing. So overall, I mean, I'm I'm really happy with what he does, partly because he promotes give. Well, I won't lie. But also he gets people to give more. I mean, I think it's, you know, do I fully agree with everything he says? No.

I mean, I don't think that getting your suit muddy analogy is perfect, but I think it's enough to challenge people to think about, hey, why don't I give more if I can really help people a lot. So, you know, that's pretty much where I stand on him.

And we should add, because we've talked about Singer in the past and I actually have a similar take that is, you know, I certainly don't agree with everything by far that he says.

But I but there is quite a bit that that is thought provoking and challenging by what he says. He also does live up to to what he says. I mean, from what I know, he actually gives up, gives away a lot of his income and following the century, the criteria that he lays out in public. Well, we are actually running out of time, so let's wrap up this section of the podcast and move on to the rationally speaking, PEX.

Welcome back, every episode would be a suggestion for our listeners that has taken our rational fancy. This time we ask our guests to Holden Karnofsky for his suggesting. Sure. So I'm going to recommend three books that I think are good stereotype busters about the global poor and help get rid of some of the myths out there that the charity world promotes and that, you know, cause people to think poorly about the poor. One of them is called poor economics, and that is bad to two very accomplished researchers.

And this is my favorite of the three. It's it's just a very kind of in-depth look at what can be known about the global poor and what their lives are like and what are the best ways, you know, sort of conceptually to help them. The number two pick that I'd give is called Portfolios of the Poor. And that's a book where basically some researchers picked a small number of very poor families in in the developing world and had them keep financial diaries.

So they tracked everything they spent and everything they borrowed. And a picture really emerges that these people have complex financial lives. They do a lot of borrowing, they do a lot of saving. They use complex instruments in some ways to manage their lives. And it's a good way to get a picture of kind of the reality of how they're living. It's you know, it's not what a lot of people picture. And I think it's just a good way to sort of get some more context.

The third suggestion I have is called More than Good Intentions, and that's by Dean Karlan and Jacob Apel. And that's basically a book about the research associated with Dean Karlan and his organization, Innovations for Poverty Action. It's kind of an emerging movement of doing randomized controlled trials to get really high quality information on what programs work and what programs don't. So I think it's a thought read. Excellent.

And I will also jump in to reiterate a pick of mine from a recent episode of Give Weblog itself. And there's the blog is really is really interesting and full of elaborations on on all the topics we've been talking about in the episode today.

Yeah. Thank you. Thank you so much for joining us. This was a really enlightening episode for me.

My pleasure. Thanks for having me. It was a pleasure indeed.

All right. This concludes another episode of rationally speaking. Join us next time for more explorations on the borderlands between reason and nonsense.

The rationally speaking podcast is presented by New York City skeptics for program notes, links, and to get involved in an online conversation about this and other episodes, please visit rationally speaking podcast Dog. This podcast is produced by Benny and recorded in the heart of Greenwich Village, New York. Our theme, Truth by Todd Rundgren, is used by permission. Thank you for listening.