The rise of the mega-donors

A data-driven approach to foreign development/aid, one that centers randomized controlled trials and other markers of rigorous study, is gaining steam as a way to push forward programming and solutions that actually work. There are critiques that the method is expensive and doesn't scale easily, but many are excited by the potential for a new era of accountability and impact.

The approach of giving cash straight to poor people - rather than funneling goods or services indirectly through the slow, diluted, and complex systems of charities or governments - is nothing new, but evidence of long-term success and sustainability are few. That's why many NGOs and governments are now coupling cash transfers with more comprehensive programs such as job training and financial counseling, as well as addressing some of the root causes that keep people poor, like lack of infrastructure and market access.

For years, policymakers have debated different approaches to helping the poor , but new data offers resounding evidence for a strategy that works: an approach known as a “Graduation” program. This method offers participants a “productive asset” to generate income with training on how to use it, as well as the resources (such as healthcare, food, loans, and coaching) to maintain the asset while building a pathway out of poverty.

Evaluating evidence of an organization’s impact informs charitable giving. Ratings organizations like ImpactMatters and Charity Navigator provide transparency to donors by reporting on the effectiveness of charities and social programs. The organizations make comparisons by analyzing the tax forms of nonprofits. Some, like GiveWell conduct further investigations and provide in-depth evaluations.

In a randomized experiment in western Uganda, scientists demonstrated the effectiveness of paying rural farmers not to chop down trees since deforestation contributes to CO2 emissions worldwide. They studied for two years the declines in forest cover between a control group (no payment) and the participant group (paid). Building on a United Nations project in which wealthy nations pay poorer ones in an attempt to equalize the costs of responding to climate change, the outcome of the project proves the existence of a low-cost environmental policy solution to stemming rising global temperatures.

Researchers from Yale and MIT conducted a poverty study across various countries and found that aid can relieve poverty if it is comprehensive and gives people a productive asset.

For most well-meaning donors, it can be difficult to calculate which charities are most effective with their funding - that is those that aim to solve the most serious problems, use interventions that work, employ cost-effective strategies, are competent and honest, and can make good use of each additional dollar. Organizations like GiveWell are part of a new and welcome trend toward rigorous evaluation of social change programs, and helps people best decide where to donate based on what causes matter to them most.

California marks the first state in the United States to join the ranks of other countries such as Mexico that saw a significant decline in soda sales and increase in water sales after enacting a sugar tax. Critics of the tax have voiced concerns about the policy's impact on small business owners and infringement on consumer choice, but lawmakers are still moving forward with expanding the tax statewide.

A grantmaking organization known as The Solutions Project seeks to diversify the traditional white male-dominated world of philanthropy by pledging to invest 95% of its resources in renewable energy projects led by people of color, and 80% to organizations led by women. Recognizing that these populations are often the most affected by dirty energy and climate change, The Solutions Project is building on past investment successes, like a project that turned an old school into solar-powered housing for seniors.

Friends of the Children pairs a cohort of about eight students, identified as some of the most at-risk in a city or neighborhood, with well-paid mentors who stay with the kids from kindergarten through the end of high school. Currently in 15 cities, the national organization allows cities to adapt their program to their unique context while still providing data tracking and marketing support. Researchers and donators credit the organization's focus on a limited number of kids over a long period of time for its success.