Giving to Ineffective Charities is Psychologically Tempting. Here's Why We Should Resist.

The best charities in the world are significantly more effective than average ones, yet few people seem to prioritise effectiveness when deciding where to donate.

Researchers Lucius Caviola, Stefan Schubert, and Joshua Greene recently published a paper titled ‘The Psychology of (In)effective Altruism’ which explores the psychology behind this puzzling phenomenon. This article summarises some of the most important ideas from this paper.

Understanding charity effectiveness is crucial

Imagine you win a $100,000 lottery ticket, half of which you intend to donate to a deserving cause. Since your grandfather recently lost his eyesight, you feel especially motivated to donate to a charity that can prevent others from suffering the same fate.

You have now picked the cause you’d like to donate to and the amount you’d like to give. The only question that remains is which charity should you pick.

Let’s say that you have two options: a charity that offers preventative surgery for chronic eye conditions in a low-income country, and one that trains guide dogs for people who are blind that live in a high-income country. After searching on Google, you find that it only costs $100 to save a person in a low-income country from going blind from trachoma, an infectious eye disease that over 20 million people actively suffer from. By contrast, it costs nearly $50,000 to train a guide dog to assist a person who is blind in a high-income country.

Which charity should you choose?

Looking at the numbers should make the choice clear: for the entire $50,000 you’d like to donate, you can either improve the life of one person who is blind in a high-income country by providing them with a sightseeing dog (but not actually cure them of blindness), or prevent 500 people in low-income countries from going blind in the first place.

It is likely that you (and many others) do not value the welfare of a single person in a high-income country as much as you value the welfare of 500 others in a low-income country. But looking at which charities people in rich countries such as the US donate to paints a very different picture: a relatively small portion of all US charitable giving goes to highly effective charities — ones that typically operate in low-income countries. So beyond the amount that you donate, it is perhaps more important to consider the effectiveness of the charity you’re donating to, rather than simply thinking about the amount you give.

“The variation in charity effectiveness is much larger than the variation in donation amounts that a donor is likely to consider: you can double your impact by doubling the amount that you give to typical charities, but you can multiply your impact by a factor of ten, 100, or even 1000 by choosing to support more effective charities”

Obstacles to Effectiveness

It is clear that cost-effectiveness is crucial when we intend to use our limited resources to help others. Knowing how to avoid the things that stop us from being cost-effective is important so we can do as much good as possible with our time, energy, and money.

In this section, the authors explore two main obstacles to effective altruism: motivational obstacles, and epistemic obstacles.

Motivational obstacles are what stop us from achieving the things we would like to achieve. Epistemic obstacles arise from gaps in our knowledge and reasoning. The most important ideas from each category are summarised below.

Motivational Obstacles

1. Subjectivity of giving

Donors tend to view charitable giving as different from, say, buying a car. Whereas customers explicitly care about cost-effectiveness (e.g., researching the most reliable car for a given budget), donors seem to care less. Why? Possible explanations include the fact that many people view charity as inherently subjective and non-obligatory. If charity is subjective, — such that there is no right or wrong choice — cost-effectiveness becomes less important as donors can simply choose whatever they feel is best.

“The perceived subjectivity of giving may be the most fundamental obstacle to effective giving.”

2. Narrow Affective Motivation

What encourages the preferences we have for where to donate? Research indicates that charitable giving is commonly influenced by emotions, including empathy for the victim and the positive feelings one gets from helping others. Crucially, these emotions are not always triggered by effectiveness: one might feel equally good about themselves after donating $50 to a blind dog charity versus one that prevents trachoma, despite the fact that the latter is vastly more effective.

“Charitable giving, and helping behavior more generally, is typically driven by emotional motivators such as empathy (or sympathy) for victims or the positive satisfaction of personally provisioning a good (i.e., ‘warm glow’).”

3. Personal Connection

We are more likely to donate to causes we find personally meaningful, even if they aren’t effective. Many of us in high-income countries probably know someone who has battled cancer, whereas few can say the same for malaria. And if we donate solely based on what we are personally connected to, we might be more inclined to donate to cancer research instead of malaria prevention, despite the fact that additional money towards cancer research is unlikely to save as many lives as funding anti-malarial interventions.

“Donors in wealthy nations are more likely to be personally affected by cancer than malaria, leading to greater support for charities focusing on this more personally relevant disease. Moreover, they are unlikely to change their minds if informed that charity experts consider malaria charities more effective at saving lives.”

4. Narrow Moral Circle

We tend to care more about those who are close to us, even when we might be more capable of helping those who are far away. Closeness can be understood in three ways:

• Geographically close: we tend to care more about those who live near us than those who live far away, even though geographic boundaries are arbitrary when it comes to helping those in need.
• Biologically close: we tend to care more about humans than non-human animals, even when taking into account non-human animals’ capacity to suffer.
• Temporally close: we tend to care more about people alive today than people who will be alive in the future, even though future generations’ interests are deserving of our consideration.

“There is spatial distance, which typically coincides with social distance: people are more willing to help others the more they feel socially connected with them. Donors in the developed world, for example, prefer local over foreign charities although charities working in distant poor countries tend to be more effective.”

5. Scope Neglect

Our willingness to help does not necessarily increase as the number of individuals who could benefit increases. While the 10th life we impact should be as important as the 10,000th, we tend to mistakenly perceive the value of each additional life as less important as the number of individuals involved increases. For example, one study found that people were willing to spend nearly the same amount to save 2,000, 20,000, or 200,000 birds from a disastrous oil spill.

“Few would say that the 100th life one can save is worth less than the first life one can save, yet people’s altruistic motivations do not scale proportionately with the number of beneficiaries.”

6. Prioritization Aversion

Effective giving requires difficult tradeoffs. Each dollar donated to charity A could be donated to charity B, hence why it is so important to research and compare charities to prioritise where each dollar can do the most good. This is not to say that the people helped by one charity are more or less important than another. Rather, we must face the reality that our resources are finite and that we have to make difficult decisions in order to do the most good we can. The authors note that we generally dislike making these kinds of tradeoffs, especially when lives are at stake. Yet, avoiding these tradeoffs can cost lives and dampen our overall effectiveness, especially when we split our donations across many different charities of varying effectiveness.

“Prioritizing some causes over others implies prioritizing some people over others – not because they are inherently less worthy, but as a form of philanthropic ‘triage’.”

7. Character and Reputational Benefit

Giving to charity can make others view us positively. Effectiveness, however, may not mean much to how others judge our altruistic actions. If we are even partially motivated by how others view us, we might be more inclined to give to highly visible or emotionally charged causes even when doing so is ineffective.

“Under prevailing norms, donors have relatively little reputational incentive to give effectively.”

Epistemic Obstacles

1. Overhead Myth

Donors tend to mistakenly believe that charities with high overhead (administrative) costs are necessarily bad. While it is true that some charities spend too much on overhead, higher overhead costs aren’t always associated with lower cost-effectiveness. If donors focus too much on overhead, charities are encouraged to reduce overhead costs even when additional staff and infrastructure might lead to better outcomes.

2. Innumeracy

Maximizing donation effectiveness can be difficult. Doing so sometimes requires complex quantitative reasoning and a basic understanding of statistics and economics — skills many lack or fail to transfer over from other areas such as investing. Furthermore, many people are influenced by “pseudoefficacy”, the incorrect belief that it is not valuable to make a small difference if the problem is exceptionally large. For example, faced with the hundreds of thousands of people who die from malaria each year, some donors might have the mistaken intuition that saving one person from malaria is not worthwhile.

“Donors attend to the proportion of victims they can save rather than the absolute number. This can discourage donors from supporting solutions that, while highly effective, address problems of broad scope.”

3. Underestimation of Effectiveness Variance

Most people seriously underestimate the difference in effectiveness between charities. Survey respondents estimated that the best charities that work on global poverty are only about 1.5 times more effective than average ones. However, experts estimate that the best charities are about 100 times more effective. So why do these ineffective charities still exist? One explanation is that because donors do not directly receive the goods or services that charities provide, ineffective charities aren’t forced out of the market the way a failing business would be.

“One explanation for these vast differences in effectiveness is that the charity market is, from an effectiveness perspective, highly inefficient. Donors do not penalize charities that do less good than others in the way consumers penalize companies that offer higher prices or lower quality products. As a result, many relatively ineffective charities remain in operation without improving.”

4. Ignorance About the Most Effective Charities

Charity evaluation experts in the effective altruism community have converged on a relatively small number of stand-out charities. One explanation of why these organisations have traditionally received lower funding than large, well-known charities is that most of the general public is simply unaware of these highly-effective charities.

“People tend to overestimate the effectiveness of charities that they find personally appealing, especially ones that are local.”

Strategies to Increase Effective Giving

Many epistemic and motivational obstacles interfere with our ability to identify and fund the most effective charities in the world. While there is plenty of research on what can be done to increase the amount that people give, there hasn’t been much research on what can be done to get people to donate more effectively, which is perhaps more important than the total amount that people give in the first place. In this section, the authors provide some psychologically-informed strategies to improve effective giving.

1. Information

There is mixed research on the effectiveness of giving people information on which charities are the most effective. However, some studies have highlighted that information can be useful for specific types of donors, such as ones that are altruistically motivated and more educated. Some donors might be more motivated to give to effective charities if they are provided extensive information on how much better highly effective charities are than average ones.

“Providing more tangible details about a charity’s intervention strategies may also make giving more effective. All studies to date use limited amounts of effectiveness information, but some donors, including donors willing to give large amounts, may be influenced by more extensive information."

2. Defaults

Much like other behaviours, setting defaults can increase the likelihood that people do things. For example, some donation platforms could pre-select highly-effective charities as the default option, while still preserving freedom of choice for people who wish to give to other causes.

“While default choices are by no means specific to effective giving, highly effective defaults are especially relevant because they can be justified in terms of their greater social benefits, as in the classic case of opt-out organ donation.”

3. Incentivizing

People respond to incentives. To encourage people to donate more to effective charities, doing so should be made more enticing. For example, charities benefit extensively from donor tax deductions and matching campaigns from wealthy individuals and other organizations. Governments could provide incentives by targeting tax deductions towards highly effective charities.

“Although incentivization is a general strategy, it may be especially relevant to effective giving if there is a subset of donors who are highly motivated to incentivize others to give effectively and who are therefore willing to provide matching funds for this purpose.”

4. Unit Asking

Unit asking describes when donors are first asked how much they would like to give to help one person before being asked how much they’d like to give to help a group. Doing so tends to greatly increase the amount that people are willing to donate.

“Unit asking tends to increase donors’ inclinations to raise their donations proportionally with group size and thus makes giving more effective.”

5. Splitting

People tend to split donations across multiple charities if possible. If allowing people to split donations causes them to donate some (rather than none) of their money to highly effective charities, it can thereby increase overall effectiveness.

“Many donors may be amenable to splitting their donations between an emotionally appealing charity and a highly effective charity, especially if provided with effectiveness information.”

6. Philosophical Reasoning

Philosophical arguments can encourage people to donate to effective charities. The effective altruism movement was built on a foundation of philosophical arguments, such as Peter Singer’s drowning child argument, and has since directed billions to effective charities. It is important to note, however, that not all people will be influenced by philosophical arguments (and not by the same types of arguments), and that further research is needed.

“Veil-of-ignorance reasoning of the kind pioneered by Rawls and Harsanyi – asking people to consider what they would want if they did not know who they are going to be – can counteract parochial tendencies (‘narrow moral circle’) and thus make giving more effective.”

7. Norm Changes

We are social creatures by nature. We are heavily influenced by social norms of what is and what is not acceptable in society. While current altruistic norms tend to emphasise self-sacrifice, perhaps norms around publicly pledging our dedication to effective charitable giving, cost-effectiveness, and evidence-based decision making could be made more prevalent in the future. One such organization that is pushing for these norms is Giving What We Can, a community of individuals who have publicly pledged to donate 10% of their income over the course of their careers.

“It is unknown how widely such effectiveness-oriented norms could spread, but history tells us that radical norm change is possible, as demonstrated by widespread changes in moral views about slavery and racial discrimination, women’s rights, gay rights, etc.”

Conclusion

We have immense potential to make a positive change in the world. Effective charitable giving is one way we can make the present more equitable and happy, and the future more secure and prosperous.

Psychological obstacles can get in the way of this, however. Some of these obstacles are due to our motivations (or lack thereof), while others are due to our lack of knowledge. Some promising strategies may help us overcome these obstacles, such as changing incentives, norms, and the manner in which choices are presented to donors.

Human psychology can be tricky stuff. Some of the psychological processes that kept us alive thousands of years ago when we lived in a drastically different society might be insufficient for enabling us to do the most good we can with our charitable giving in the present. More research is needed to better understand the psychological underpinnings of charitable giving and what can be done to encourage more effective giving. Fortunately, this study provides a strong foundation for further research to be built upon.