‘Tis the season to give! Words of Ward Philanthrophy for 2013

I’m issuing my annual call for folks to help out those that are worse off than themselves this holiday season through charity.

For those with short attention spans, choose one of the top 3 charities over at givewell.org, the best charity recommendation site I know of, here.  (I recommend & have been giving to Against Malaria Foundation as the best way to save lives, especially those of children.  For poverty alleviation, Give Directly is the best choice.)

Why (and where) you should give

As comparatively wealthy members of the world, I believe folks like us have a moral duty to improve the lot of others in the world.  Even if you don’t agree with me on that, consider that helping others has been shown to do wonders for the person doing the helping.  Make yourself feel good by donating to charity!

I strongly recommend giving to causes that help those living in extreme poverty outside the US and other ‘first world’ countries.  This is because dollars go the furthest when helping those that have next to nothing.

Think about it this way:

You could save a life for about $2,000 (per Givewell.org) by purchasing mosquito nets to protect children in Africa, or you could spend $100,000 – $200,000 on cancer research to extend an American life by 3 – 6 months.  As thinking human being, I know the right thing to do is to save as many lives with my limited resources as I can, even if they are ones across the globe whose names I will never know, and whose pictures I will never see.

I believe that every human’s happiness is just as important as another’s, so I give internationally through charities recommended by Givewell to maximize the good that my dollars do in the world.

I might give token amounts to causes that are emotionally close to me or my friends & family (cancer, Alzheimer’s, a Boy’s & Girl’s recreational club in my neighborhood), but I know that I have a responsibility to donate any significant amount in the most effective way possible, and that the human race as a whole will be better for it.

Give smart!

Something like less than 25% of charities measured are actually shown to produce social benefits, so it’s important to choose carefully when giving.  Givewell.org is my favorite charity selector, and has been for years.  They evaluate charities using rigorous standards and provide simple, easy-to-follow recommendations, so that you can be confident that your dollars will go a long way.

Take action

Every year several members of my family and I reduce our holiday stress & increase our feelings of well-being by forgoing presents.  Instead, we commit the same amount of money we would have spent on gifts to worthy charitable causes.  I highly recommend you try this approach (or a hybrid version such as half gifts/half charity) with your own friends and family (excluding those under the age of 18 or so, of course :).)

This yearly activity has several benefits including 1) not having to find & shop for gifts for others, 2) not having to think up gift ideas for things you want others to buy you, 3) making you feel good about helping people, and 4) leaving you no worse off financially than if you bought presents instead.

So, pick a cause and do some good this season!  Click here to pick from a great list of worthy charities, or save a life and donate to Givewell’s top choice, and my personal choice, Against Malaria Foundation.

(And if you weren’t convinced, here’s more good press on Givewell from freakonomics.com.  You don’t just have to take my word for it!)

Happy holidays and happy giving!

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UPDATE: Why We are Right to Rebuild Haiti or An Argument for Charity

UPDATE on 10/20/2010: Here’s a link to a good TED talk on how the vast majority (like, ~99% perhaps) of lives lost during the Haiti earthquake were due to poor building construction.  The speaker notes that what is required for better buildings isn’t more money beyond what’s already required to rebuild Haiti, but just more training for Haitian builders (at a minimal extra cost.)

I read a blog post called “If You Rebuild It, They Will Come” by a man named Paul Shirley.  In it, Mr. Shirley argues that we shouldn’t give/have given money to the Haiti relief effort due to the poor position they (he claims) put themselves in.  To me, even if the Haitian’s were entirely to blame for the damage the earthquake did to their country (I believe luck & history had a lot to do with it), such criticism is missing the point of an urgent relief effort.

Mr. Shirley’s criticism is a bit like giving a lecture to a badly injured speeding motorist, as he bleeds to death, on how he should have driven more carefully, rather than taking him to a hospital.  I’d prefer to take him to the hospital first, and give him the lecture later.  Mr. Shirley also seems to assume that the governmental and institutional failures of Haiti should be reasons to deny its citizens aid.  For starters, in no point in Haiti’s history do ordinary citizens appear to have be in a position to build up either the physical or intellectual capital necessary to privately look after their own needs beyond a subsistence living.  With regard to intellectual capital, schooling in the local Creole language did not even occur until 1922, less than 90 years ago.

(BTW: I’ve linked many of my sources, but if I state something unlinked/cited, it is from Wikipedia, the fount of all knowledge.)

Haitian civil unrest & violence

Mr. Shirley might argue that these citizens who are now victims of the quake are the very ones who caused the violence and civil unrest that’s been the source of so many problems throughout Haiti’s unstable history.  I suspect he would be wrong.  Let’s look at a parallel case in Afghanistan or Iraq.  You could blame the Taliban in Afghanistan for the poor conditions and civil rights abuses.  However, the Taliban are estimated to number in the tens of thousands in Afghanistan.  Let’s assume there are 100,000 of them.  The Afghanistan population totals about 28 million.  That means that only 0.36% of the population are Taliban, or 1 in 280.  You might counter by saying that yes, 279 out of 280 AREN’T Taliban insurgents, but since they outnumber them, why don’t they revolt and kick them out of the country if they don’t like the conditions caused by the Taliban?  I would suspect it’s the same reason I wouldn’t take up arms against the US government if it decided to become a totalitarian dictatorship tomorrow: I’d get slaughtered.  The Afghanistan people are poor, like the people in Haiti (who are even poorer.)  They lack education and military and financial strength.

Similarly in Iraq, there are roughly 100,000 – 130,000 insurgents.  If we divide 130,000 by the population of 31 million we get 0.42%, or about 1 in 240 people.  My point here is that a relatively small amount of people with guns and resources can control a much large number of people without one or the other.  Thus, blaming the typical Haitian citizen for not kicking violent organized groups out of the country is unrealistic.

Poverty and lack of financial & intellectual capital

“By most economic measures, Haiti is the poorest country in the Americas. It had a nominal GDP of 7.018 billion USD in 2009, with a GDP per capita of 790 USD, about $2 per person per day.[1]

However, of that ‘wealth’, about half of it is in the hands of Haiti’s richest 1%.  Thus, GDP per capita for 99% of the country is actually $1 per day.

“About 80% of the population were estimated to be living in poverty in 2003.[1] Most Haitians live on $2 or less per day. [72] Haiti has 50% illiteracy,[73] and over 80% of college graduates from Haiti have emigrated, mostly to the United States.[74]

So of those folks that DO get access to education (very few), 4 out of 5 leave the country for greener pastures. (And who could blame them?  Mr. Shirley certainly wouldn’t, unless they stayed behind to contribute to their home country’s economy and got crushed in the earthquake; then he’d blame them.)

Government & Corruption

I’ve established why I believe it’s ridiculous to assume that Haiti’s private sector could’ve been expected to prepare for the earthquake, which would’ve been relatively unaffordable, but what about the government?  Surely there must have been some capital stored up to build earthquake-proof houses etc for the masses?  Unfortunately, that is also not true, in part due to looting of Haiti’s coffers by corrupt officials:  “It is estimated that [a former Haitian president, his wife] and three other people took $504 million from the Haitian public treasury between 1971 and 1986.”

“Similarly millions was stolen by [former president] Aristide.[80][81][82][83][84] During the Aristide era, drug trafficking emerged as a major industry. Beaudoin Ketant, a notorious international drug trafficker and close partner of Aristide, confessed that Aristide “turned the country into a narco-country. It’s a one-man show. You either pay (Aristide) or you die”.[85] The BBC describes pyramid schemes, in which Haitians lost hundreds of millions in 2002, as the “only real economic initiative” of the Aristide years.”

Okay, so officials have been corrupt and have stolen hundreds of millions from the government over the years, but what about all the foreign aid that Haiti has received?

Foreign aid makes up approximately 30–40% of the national government’s budget. The largest donor is the US, followed by Canada and the European Union.[87] From 1990 to 2003, Haiti received more than $4 billion in aid.”

$4 billion might sound like a large amount of money, and it is, until you divide it by population.  Let’s assume the aid was spread out evenly over 13 years and that the population was, on average, 7.6 million.  That equates to $308 million per year, or $40.50 per person per year, which is about 1 month’s wages for most people in Haiti.  Could you rebuild your house on a sturdy earthquake proof foundation for $40 bucks, or even 1 month’s salary?  Or how about relocating to what might be a safer place (regardless of whether you can earn a living there)?

“In 2005 Haiti’s total external debt reached an estimated US$1.3 billion, which corresponds to a debt per capita of US$169. In September 2009, Haiti met the conditions set out by the IMF and World Bank‘s Heavily Indebted Poor Countries program to qualify for cancellation of its external debt. [94]

So until recently, the government was carrying debt equal to 18.7% of its 2008 GDP. That’s not a very strong base from which to run a deficit with large-scale public infrastructure projects.  To put it into comparison, the US’s record-high government debt is around 8% of GDP, only 43% of that of Haiti’s in % of GDP terms.

Who should rebuild Haiti?

Mr. Shirley states “I don’t know whose responsibility it is [to rebuild Haiti], either.  What I do know is that it is not the responsibility of the outside world to provide help.  [Ward’s note: which is basically saying it’s either Haiti’s responsibility or no ones.]  It’s nice if we do, but it is not a requirement, especially when people choose to influence their own existences negatively, whether by having too many children when they can’t afford them or by failing to recognize that living in a concrete bunker might not be the best way to protect one’s family, whether an earthquake happens or not.”

On the subject of family sizes in Haiti, for one thing, birth control is likely very inaccessible.  (If Mr. Shirley would then urge Haitians simply to not have sex, he would be severely overestimating the will power of all but a special class of human beings.)  Secondly, it may actually be in the economic self interest of Haitians to have large families (to say nothing of emotional self interests.)  Two thirds of Haitians support themselves by subsistence agriculture.  On a farm, more children equals free labor, so it may be rational for individual families to continue have larger families, despite their poverty.

Logically I can’t dispute whether or not better off people have a ‘requirement’ do help those much worse off.  Morally I disagree.  I believe those with way more money than they need to make them happy (the western world) has a strong moral imperative to better the conditions of those worse off.

How would you want the world to be if you were randomly placed in it?

There is a very simple thought experiment that I find helpful in defending the ideal that those with a lot should help those with a little.  Imagine that you were given a chance before birth to allocate all the resources in the world to various countries, regions, and peoples of the world.  You can do this however you want.  The catch is that afterwards, you will be randomly placed into that world population of about 6.5 billion.  Given income distribution in our world (as of the year 2000), you would have a 45% chance of living off less than $3/day (including a 23% chance of living off less than $2/day, the level that Haiti is at.)  2 out of 3 times you would be living off less than $14/day.  You would only have a 13% (1 in 8 ) chance of being relatively affluent & making at least $11,500 per year (1997 data), which is well below the poverty line for a family in the United States.  (The US median income per family is about $55,000 per year, making us extremely wealthy by worldwide standards.)

We live in a world where the richest 10% of the population owns 85% of its assets, and the poorest 50% owns 1%.  Would you choose to distribute resources as they are today, knowing that you’re most likely to live your life in incredible poverty (by US standards)?  Or would you choose to move things around a bit, giving yourself a chance to live comfortably no matter where you happen to be born?

Two times the wealth doesn’t equal two times the happiness

I would choose the latter, and I suspect many other people would as well for the following reason.  Pretend someone offers to let you flip a coin for your entire net worth.  If the coin lands heads, you double your wealth.  If it’s tails, you are utterly wiped out and have nothing: no house, no savings, no clothes/cars/iPhone etc.  Would you take the gamble?  I suspect 98% of Americans would not.  The reason?  Having twice as much wealth doesn’t bring us twice as much happiness.  The more money we make, the less valuable each dollar is to us.  Economists refer to this trait as being ‘risk averse.’  Losing what we already have hurts more than gaining an equivalent amount, so we pay for security in the form of insurance or diversified mutual funds.

Of course, in terms of the ‘where would you be born’ thought experiment, the results of birth misfortune are much more dire than simply losing your current wealth.   Not only do you have a 7/8 chance of making less than $11,500, you will likely lose your paths of opportunity to a better life: education, health, human rights, and physical security.

Incentives

One issue I haven’t addressed is the proper incentive system for people, not just “ideal” wealth distribution.  If someone does something harmful to themselves, you want to discourage them from doing so again.  I’ve already explained why I believe the vast majority of impoverished Haitian’s are NOT very responsible for their fate, thus, it makes little sense to punish them by withholding aid.

Where possible to do so effectively, the US & private donors should definitely make an attempt to reform Haiti’s government and provide citizens with better opportunities to help themselves.  That being said, we can do a lot in the mean time.

Conclusion

In closing, I urge thinking people to avoid assigning blame to people in trouble simply because they have had the misfortune to be born in a different part of the world.  This is an easy trap to fall into because it absolves the blamer of all responsibility to help.  It is also easy to forget how incredibly privileged we are in western Europe & the United States.

Fortunately, judging from the roughly $1 billion in private donations from the American charities to Haiti, the vast majority of people are ignoring Mr. Shirley’s callous and faulty reasoning and donating however they can to help the Haiti relief effort.  If you haven’t already, I urge you to do the same.

“Of all vulgar modes of escaping from the consideration of the effect of social and moral influences on the human mind, the most vulgar is that of attributing the diversities of conduct and character to inherent natural differences.”

– John Stuart Mill

URGENT: Haiti needs your help – Take action by donating right now online

[UPDATE: We’ve collectively donated $1415 to date, $585 more to hit the goal of $2000! Please donate and then answer the poll with however much you can spare.]

You are probably aware of the massive humanitarian disaster in Haiti as a result of a 7.0 magnitude earthquake.  An estimated 50,000 people are dead with 2.5 – 3 million people affected by the disaster.  Probably the easiest way to help immediately is by sending money to a relief organization to help out.

It’s important to me to ‘give smart’ and make sure charity dollars go to organizations that make the most of them.  For this, CharityWatch.org has created a list of charities providing help to Haiti with ‘grades’ of each charity.  Find one that you like and donate whatever you can to help the relief effort (and replenish funding for the next big disaster, whatever that ends up being.)

The internet has become a powerful source of fundraising.  Take advantage of this opportunity and help out the decimated population of Haiti by donating to one of the links below, all of which received ‘A’ ratings from CharityWatch.org and are providing direct relief to Haiti.  Remember, ANYTHING you can spare helps (the more the better, of course, but the key thing is just to donate SOMETHING):

International Medical Core (Disclosure: my wife and I donated to them) (A+ from CharityWatch.org)

Doctors without borders (A from CharityWatch.org)

As a way of measuring the positive impact of readers like yourself, I’ve put a poll at the bottom of this post.  Please update it with whatever amount you’ve donated (it’s all anonymous.)  I’ll add it up and post the results periodically (if anyone knows of a free polling/survey utility that will add up responder’s numbers and display them, please let me know!)  Let’s try to hit $2,000 at least; that’s $20 from 100 people, $50 from 40, or $100 from 20.  Please join me and the rest of the ‘Words of Ward’ community in doing your part to help those in desperate need.

More good ideas for charitable giving

It’s estimated that worms treatment has a benefit-to-cost ratio of 20:1! Also, it affects 2 billion people (400 million children) and costs only ~0.25 cents per kid to treat. Sounds like a fantastic use of charitable dollars.

– Give to “Room to Read” to fund education around the world.  ($250 for 1-yr of schooling for a girl who wouldn’t otherwise have the opportunity.)  http://www.roomtoread.org/involvement/adopt.html

– Below is a good post by Tim Ferris (author of the ‘lifestyle design’ book “4-Hour Work Week”.)  He gives convincing rationale for why you should give NOW (and not wait until you are older/have more money):

http://www.fourhourworkweek.com/blog/2007/10/04/karmic-capitalist-should-i-wait-until-im-rich-to-give/

‘Tis the season… to give! Financially savvy charity

While this blog is primarily about how people can enrich themselves, I haven’t yet addressed another very important and similar topic: how people can enrich others.  Since the holidays are a time when people contemplate giving back to the community, their church, the poor, the environment, etc, I thought I’d share what my family is contributing to.

The Grameen Foundation is a microcredit organization dedicated to eradicating poverty.  They pursue this goal by giving low-interest loans to the poorest people in the world (and generally to women, who are more likely to use the money to better their families and community.)  These loans can be used to start or expand businesses, allowing the poor to literally pull themselves out of poverty.  The assumption behind microcredit organizations is that if poor communities are given access to reasonable credit sources (excluding “predatory” high-interest/fee loans), they can make economic advances akin to  wealthier individuals and communities.  Loans are often very small (in hundreds of US dollars or even less.)  Loan recipients might use these funds to expand inventory in a small road-side shop, or to purchase an additional cow to produce more milk. 

This theory has proven highly successful thus far, with 70% of the Grameen Foundation’s loan recipients rising above the poverty line (measured by wages of less than $1-2 US/day) within 5 years after receiving the loan.  The pay back rate of these loans is also very high (96% as of 2003.)  This is in part due to the fact that loans are given to groups of people.  Each individual in the group is responsible for entire group’s loans.  The group has a high incentive to ensure that its members repay their individual loans, or else the whole group loses access to its credit.

Microcredit is just one way a philanthropic individual can better the situation of those less fortunate around the world.  There are many charities out there, but I encourage you to give wisely.  Some groups make better use of their funds than others.  There are web sites like Charity Navigator or the Motley Fool’s ‘Foolanthropy’ section that help conscientious givers find charities that make the most out of the dollars they donate.

If you’re finding yourself a little cash-strapped this holiday (and many in the US and around the world are), you may want to consider alternative ways to give.  One thing I like to do is ask others to make a donation to the charity of my choosing, instead of buying me a gift.  This absolves me of 1) having to think of something for them to get me that I may not even want that much and 2) having to make the donation myself.  Often, my family members request the same of me, so we all end up donating to each other’s charities.  Personally, I find this more satisfying than collecting another “thing” for Christmas that I don’t really need, but that’s up to you.  (And besides, you can always buy yourself something later if you decide you really want it.)

Happy giving and Merry Christmas, Happy Hanukkah, etc,

Ward

P.S. The Motley Fool has a summary of the Grameen Foundation’s operations if you’d like to learn more: http://www.fool.com/foolanthropy/about/grameen.htm

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