Nonprofit Chronicles

Journalism about foundations, nonprofits and their impact

dustin-and-cariFacebook co-founder Dustin Moskovitz and his wife Cari Tuna today said they will donate $25 million to GiveDirectly, a nonprofit that makes direct cash transfers to extremely poor people in Kenya and Uganda.

It’s the largest gift to date to GiveDirectly, the largest ever shaped by the ideas of Effective Altruism and the largest so far for Good Ventures, the private foundation created in 2012 by Moskovitz, whose wealth is estimated at $9 billion, and Tuna, a former Wall Street Journal reporter who now devotes herself to philanthropy.

In a post on their website, Moskovitz and Tuna say:

Our investment is meant to accelerate GiveDirectly’s growth and build its capacity to partner with major international aid agencies, as interest in cash transfers increases across the aid sector. Our investment also will provide cash transfers to thousands of individuals and families.

..We see a lot of potential in cash transfers as a tool for greater impact and accountability in international aid and development [emphasis added]

Michael Faye, the executive chairman and co-founder of GiveDirectly, told me by phone that the gift comes “at a real inflection point for cash transfers,” which are gathering support even in mainstream development circles.

“We were seen as the crazy experimenters a couple of years ago,” Faye said. “We now know cash works.”

There is a lot to say about this gift.

For GiveDirectly, this is transformative. Donations to the charity, which was started in 2011 by grad students at MIT and Harvard, have grown briskly, from about $700,000 in 2012 to $5.5 million in 2013 to $17.4 million last year. The first nonprofit to focus exclusively on cash transfers, GiveDirectly sends a one-time payment of about $1,000, by mobile phone, to people in Kenya and Uganda. It’s one of the few nonprofits to submit its work to randomized controlled trials, the gold standard of evaluation which was developed to test medical interventions. [To learn more about GiveDirectly, you can read my recent blogpost, or dig into this excellent, long story by Nico Pitney of the Huffington Post, or peruse the charity’s website, which is a model of transparency, if not of marketing, except perhaps in a shrewd, counterintuitive way.]

While the grant is unrestricted, Moskovitz and Tuna say they expect $16 to $19 million to be used for cash transfers to the poor, either by GiveDirectly or in partnership with governments or big aid institutions. Governments have the resources to finance millions of cash transfers, as compared to the thousands made so for by GiveDirectly; some are actively interested. Faye and director Jacqueline Fuller, who sits on the GiveDirectly board, are members of a panel on cash transfers convened by DFID, the UK’s development agency.

The other $6 to $9 million are aimed at scaling up GiveDirectly through marketing. Most people who have donated to the charity have discovered it on their own or through GiveWell, which does in-depth research into nonprofits. They tend to be “rather sophisticated donors who care about evidence, authenticity and transparency,” said Paul Niehaus, another co-founder and the group’s executive director. GiveDirectly wants to reach more such funders  — they’ve been labeled “nerd altruists” — while appealing to a broader base of donors by telling the stories about the people who get the cash, or letting them tell their own stories. “In an unfiltered, authentic way,” adds Niehaus. 

More broadly, the donation by Moskovitz and Tuna is the latest endorsement of cash transfers and their potentially disruptive role as a benchmark for international aid programs. Tuna sits on the board of GiveWell, which named GiveDirectly one of its top charities because, it says, “cash transfers have the strongest track record we’ve seen for a non-health intervention.” If nothing else, cash transfers are an incredibly efficient way to help poor people–especially, when compared to government agencies or big aid organizations, with their globe-trotting staff, subcontractors, paperwork demands, etc.

Cash transfers challenge the “business model” of big humanitarian groups that try to do lots of different things in different places, often with scant evidence of their effectiveness. Faye and Niehaus, among others, say that cash transfers can function as an “index fund” of anti-poverty programs, setting a benchmark against which other efforts (microfinance, donations of assets like cows, training programs) should be measured–in much the same way as mutual funds or public companies track their performance against broad stock indexes.

Arguably, aid programs that underperform the “index” ought to be scrapped. As Moskovitz and Tuna say in their post: “If GiveDirectly helps to shift even a small portion of institutional spending from less cost-effective programs to cash transfers, it would be a major accomplishment.”

Finally, this is the latest sign of what appears to be growing enthusiasm in Silicon Valley for Effective Altruism, the global movement of thinkers and doers who rely on evidence to try to do the most good with their money and time. This past weekend, more than 300 people who identify as Effective Altruists gathered at Google headquarters to hear from, among others, Faye, Fuller, entrepreneur Elon Musk and leaders of GiveDirectly, GiveWell, the Centre for Effective Altruism and Giving What We Can, all of which promote smarter giving.

Tech industry notables who have shown interest in Effective Altruism include Facebook co-founder Chris Hughes, a member of the GiveDirectly board, and Instagram co-founder Mike Krieger, who works with GiveWell. In Philanthropy for Hackers, a Wall Street Journal essay, Sean Parker, another Facebook co-founder (how many were there?) says that he and his tech-savvy pals want to “know that they are having an impact that can be measured and felt” and that their philanthropy will be shaped by  “metrics and analytic tools.”

This is, needless to say, not the way most philanthropy works today.Starting Facebook was hard, I’m sure, but figuring out how to take the ego and emotion out of philanthropy, and replacing them with logic and math? That’s a daunting task. We don’t know yet how many rational, evidence-driven donors are out there, and for how long they will stay committed to their vision.

Then again, Moskovitz, 31, and Tuna, who graduated from Yale in 2008, became the youngest couple to sign the Giving Pledge when they did so in 2010. That means they’ve promised to give most of their billions away. So they are just getting started.

One thought on “A $25 million gift to GiveDirectly

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