Effective Giving: Social Entrepreneurs

The holidays are finally over. Yesterday Epiphany (or Three Kings’ Day) brought an end to the twelve days of Christmas. We decided to really go for it this year, giving little presents to our kids most every day of the mini-season. (Bonus: the stream of stuff really helped to alleviate school vacation boredom.)  But according to family tradition, on Christmas Day we gave not to each other but to Jesus, since it was His birthday. This year we chose to fund social entrepreneurs whose organizations serve the poorest of the poor, which we explained to the kids are just the kind of presents Jesus most wants (Matt 25:31-40).

Why social entrepreneurs? In recent years foundations and philanthropists have emphasized investing in promising local startup NGOs (nongovernmental organizations) in order to help them scale up. Just as business entrepreneurs have changed the marketplace through innovation, social entrepreneurs around the world have combined their creativity, commitment, and knowledge of local culture to more effectively impact those who experience poverty and injustice in their communities. Perhaps the best introduction to this phenomenon is David Bornstein’s How to Change the World, which tells the stories of social entrepreneurs who tackled issues like electrification in rural Brazil, home-based AIDS care in South Africa, and empowerment of street children in Indian megacities. Many economists claim that local organizations are often more effective and efficient than bureaucratic government programs or bloated international agencies with offices in Geneva.

However, as is the case in for-profit investing, the problem is figuring out who to fund. India alone as over a million locally founded NGOs.  Until relatively recently, we’ve given primarily to large, established, international organizations simply because I don’t know how to find smaller, local NGOs that I’m confident are effective. But this year we found that the three organizations we’ve been most excited about supporting are all in the social entrepreneur category.  My next couple blog posts will profile them. I hope they serve as a mini-How to Change the World, helping us give more effectively in this new year.  How about you? Do you prefer giving to the Fortune 500 of poverty relief, or smaller start-ups? Why?

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2 thoughts on “Effective Giving: Social Entrepreneurs

  1. The analogy with for-profit investing is very helpful. I’m really no good at picking high-performing investments, and I have no reason to think I’d be better at picking high-performing charities. With financial investments, there exists the “index fund”, a sound means to invest without thinking. Unfortunately, there isn’t a charity-equivalent of the index fund.

    My current solution is to donate to a meta-charity (namely, givewell), which seems to me to be the charitable equivalent of a mutual fund.

  2. Gary – I’d love to chat about this some more offline, especially about where I work now! The easiest but probably most unsatisfying answer to your question with where to give for effectiveness is – it depends, especially on your time horizon and desired scale and impact (e.g. 2015 MDGs). Anyone involved in development or social services can tell you there’s no silver bullet. I took a class with the former Chief Investment Officer of the Acumen Fund and can share some of his thoughts with you.

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