Main Series: Understanding Global Charity

Series introduction: Understanding Global Charity

As much good as the combined efforts dedicated to global charity produce every moment, every year, there are still significant and fundamental problems that prevent us from delivering our full potential. Much of it has to do with how we lack a common, comprehensive education of what global charity really looks like.

This post tells the story of two disasters and how charity responded to them: one of a massive tsunami and one of a microscopic parasite. It also sheds light on some of global charity’s problems and the reasons why that comprehensive education and this series is needed.

On Friday March 11th 2011, at quarter to three in the afternoon, the tectonic plate beneath Honshu, Japan’s largest island, had finally gotten enough. For centuries it had been pushed and shoved by the neighboring Pacific plate, wedging against it at a gradual pace of some 8 to 9 centimeters per year. As a result, an incredible amount of elastic energy had stored up between the two plates. Picture a plastic ruler held against the edge of a table top, and a hand bending it down into a curve. This is essentially what was happening – there was a bent ruler the size of a country sitting under the Pacific Ocean roughly 100 kilometers east of the coastline of Japan.

On that Friday afternoon, the Honshu plate decided it had bent enough. As if snapping back into place, it lifted a colossal mass of water on top of it by nearly 10 meters in an instant, triggering a gargantuan tsunami and the strongest earthquake ever measured in Japan.

Location of the earthquake epicenter.

Japan_location_map_with_side_map_of_the_Ryukyu_Islands.svg: by Maximilian Dörrbecker (Chumwa) File:Japan (orthographic projection).svg: (Connormah) derivative work: W.Rebel, licensed under CC BY-SA 3.0

The Great East Japan Earthquake, as the incident is often referred to in Japan, reached the fourth strongest magnitude ever recorded on Earth and sent tsunami waves reaching heights of up to 40 meters to the coast of Japan’s Tohoku region. The inhabitants of Tohoku were shocked by the extreme earthquake, and then left guardless as the tsunami waves arrived and completely submerged vast coastal areas. All buildings were sweeped level near the coast, huge cargo ships washed onto dry land kilometers from the shore, and bodies of victims who did not make it to high ground would later be found hundreds of kilometers away. Altogether, the combined destructive force of the earthquake-tsunami left more than a million buildings collapsed or damaged, some 440,000 people evacuated from their homes, and close to 16,000 people dead. The World Bank estimated the economic damages could reach US $235 billion, making it the costliest natural disaster in world history. It also infamously caused three reactor meltdowns in the Fukushima Daiichi nuclear power plant, creating the second most severe nuclear disaster ever after Chernobyl.

Tsunami flowing over a levee in Fukushima.

“Actueel: Opnieuw tsunami dreiging Fukushima” by KoiQuestion, licensed under CC BY-SA 2.0 

But if the Japanese are known for something, it’s for being organized in the midst of chaos. Before the extent of the destruction was fully evident, the Japanese government began its response to arrange help in the affected areas, supported by numerous non-profit aid organizations. Among the first of them, the Japanese Red Cross Society (JRCS) established a field force to care for the wounded and to distribute blankets, pieces of clothing and emergency sleeping kits.

The disaster received close coverage by the global media, prompting the nations and individuals of the world to sending in supplies and donating several billion dollars. But, among this outpour of donations in the first days of the disaster, something quite important failed to reach the headlines. On March 15th 2011, four days after the tsunami hit the Japanese coast, JRCS issued an information bulletin to the general public, saying the following:

“To date, rescue/relief teams from the governments of New Zealand, USAID, Germany, the EU, Singapore, South Korea, Switzerland, Mexico, Australia, China, UK, Turkey and France have been assisting in the affected areas. A total of 91 countries and regions have also offered assistance. The United Nations also deployed the United Nations Disaster Assessment Coordination Team (UNDAC) to Japan to support the operation. […]

JRCS staff and volunteers continue to distribute relief items, ensuring displaced people are offered hot meals, clearing debris and providing medical transportation. Over 76,530 blankets have been distributed by now, and 11,500 were being sent on the way. […]

The Japanese Red Cross Society […] has determined that external assistance is not required, and is therefore not seeking funding or other assistance from donors at this time.

It is worth rereading the last sentence of the press release. Four days into the crisis, JRCS was not seeking any further external funding or other assistance from donors.

Why? Because JRCS had run the numbers and realized they now had as much funding and resources they needed to support the victims of the disaster. The results of the calculation were clear: the amount of inflowing donations was so huge that the organization couldn’t possibly keep up with putting the money to use. No more volunteers were needed at the scene as more than 2 million people had already registered or expressed their interest to do so. No more sleeping kits would be needed as more than one per person would not make the night any more comfortable. In other words: all further potential donations sent to JRCS would for the time being be best used elsewhere. But, nevertheless, they kept coming.

A year after the event, in April 2012, JRCS reported numbers on the ongoing recovery effort. It laid out a budget for how much money different projects would consume: 4.6 million yen (~US $60,000 at 2011 exchange rates) for regional healthcare support, 2.0 million yen (~$25,000) for assisting the nuclear power plant accident victims, about 30 million yen (~$375,000) for improving the living conditions in evacuation centers, and so on. In total, the budget amounted to 53 million yen (~$600,000) across 12 project areas. But then, separately to the activity budget, JRCS had received a running total of roughly 315 billion yen ($3.9 billion) in private donations since the disaster struck, more than six times the activity budget. These donations would be dispensed as cash grants to displaced victims.

The report also noted other sizable contributions to the aid effort: the state of Kuwait had donated 5 million barrels of crude oil (worth $500 million at the time), the various Red Crescent Societies of the world had donated $690 million, and the government of Japan had passed recovery budgets to the tune of $300 billion (for, among other things, paying for mortgages of those who had lost their homes).

To put this into perspective, the $3.9 billion alone that JRCS had received in private donations meant on average more than $8,800 of cash grants for each and every person forced to evacuate – on top of the emergency resources that were deemed sufficient four days into the disaster, and all the other support not covered by JRCS.

In another corner of the world, another aid organization was working on another kind of disaster: parasites. The unknown and unfortunately boringly named Schistosomiasis Control Initiative (SCI), founded in 2002, works to protect impoverished children in Sub-Saharan Africa from a nightmarish disease called schistosomiasis. Schistosomiasis is the condition of having certain parasites (called schistosomes) in your body and suffering from the debilitating consequences – hence the name of the organization.

A schistosoma (seriously magnified).

Image by David Williams, Illinois State University [Public domain]

You might have seen images of pot-bellied but otherwise dangerously skinny children; many of these cases are caused by schistosomiasis. Schistosomes usually find their way into human hosts via contaminated water, which makes small children playing in puddles and rivers especially prone to infection. Once worms find their way inside a host, they lay eggs. The eggs can get lodged in the host’s intestinal wall or liver and cause obstructions, which might in turn lead to blood loss, enlargement of the spleen, build-up of fluid in the abdomen or potentially life-threatening swelling of the throat.

Abdominal swelling caused by schistosomiasis in a Filipino child.

“Schistosomiasis in a child (Philippines)” by SuSanA Secretariat, licensed under CC BY-SA 2.0 

Schistosomiasis and other similar so-called neglected tropical diseases also carry a tremendous societal cost. Even if the condition wasn’t lethal, it does in many cases obstruct the victim from going to school, from working, or from contributing to their family. Sometimes victims might simply be cast out from their community altogether due to unsightly malformations in their bodies. The total social cost is increased by the fact that schistosomiasis is incredibly wide-spread, as more than 250 million people in more than 60 countries were affected by schistosomiasis in 2015, and an estimated 5,000 – 200,000 people die from it annually It is by all measures a constant and silent destroyer of wellbeing in a huge part of the developing world.

This is why it is extremely good news that the cost to effectively treat a child with schistosomiasis is close to negligibly small. In 2011, at the time of the Japanese tsunami, it cost SCI around $0.50 per person to administer a single treatment of a couple of tablets, which reliably protects a child from schistosomiasis for a year. That’s half a dollar per patient per year. Medical experts associated with SCI claim that this is probably one of the most cost-effective forms of healthcare available anywhere in the world. In addition, SCI is hailed by neutral third party evaluators GiveWell (an organization that analyzes and ranks the world’s most effective charitable organizations) as being efficient and evidence-based in their work, and having a proven track record of starting and expanding deworming programs.

Now then, this begs a question. If we have had such an efficient, cheap and proven method of protecting poor children from the horrible effects of schistosomiasis for more than 10 years, why is it still a wide-spread problem?

The answer, as you might expect, is money. Unlike the Japanese Red Cross during the 2011 earthquake, SCI chronically needed more of it. Every extra dollar donated to SCI could have been put to effective use: to buy more drugs, to make the drugs reach one more village in rural Africa, to treat the next infected child in line. It’s just that the money wasn’t there.

Depending on the point in time, SCI’s full potential has been restricted by insufficient funding to a significant extent. In 2014, GiveWell estimated that SCI had room for a further $4.5 million of funding which they could effectively use before significantly compromising their cost-efficiency. In 2016, the gap was between $9 and $21 million. In November 2018, the gap was estimated to be about $31 million. (As of November 2019, SCI is expected to receive significant funding from DFID, and it is unsure how large their funding gap will be for the time being.)

Again, let’s put things into perspective. $31 million, the sum needed to fill SCI’s funding gap in 2018, is a tiny sum of money in the larger scheme of things. It would have corresponded to 0.2%-0.5% of how much the people of the United States spend on ice cream in a year. It would have corresponded to less than one percent of the $3.9 billion of private donations received by JCRS in 2011. It would have corresponded to safety from schistosomiasis for potentially millions of people.

For a very brief moment, let’s put the two stories you just read aside and consider a thought experiment. Let’s think about solving a problem of allocating resources efficiently and fairly using two different “disciplines”: non-profit charity, and for-profit business.

Looking from a distance, doing charity is not that much different from doing business. Both involve evaluating alternatives, making decisions, creating optimal solutions, making investments of money and resources, and finally, trying to ensure a return of some kind on that investment – a positive impact on the world when it comes to charity, monetary profit when it comes to business. But on a closer look, weird differences emerge. Differences that first seem only small holes and exceptions in the logic and rules that apply to each discipline, but as you move closer, the gaps grow and grow until in some places all but the opposite rule applies to one and the other.

To illustrate this, consider the classical notion of an invisible hand called the market economy that automatically guides profit-seeking capital to where one gets “most bang for the buck”. For example, if an investment required $3.9 billion to manufacture 440,000 products, i.e. ~$8,800 per product, and there was an alternative way to produce comparable items at $0.5 per product, then without fail capital would first flow to the cheaper alternative. There would be no question. It would keep funding that cheaper alternative right up until it could not absorb any more funding, and only then would it move to fund the costlier alternative – and even then only if it wasn’t able to find some third option that would remain cheaper than $8,800 per product.

Now, bringing back the two stories, we find that in the world of charity a different guiding hand exists. Opportunities to help, where 440,000 Japanese evacuees receive $3.9 billion in (certainly helpful, but not critical) private donations at ~$8,800 per person, can get funded within a year, while other, even as low as $0.5 per person urgent opportunities to ease suffering and save lives in Sub-Saharan Africa can struggle to find funding for decades. The hand, in this case, seems not to guide capital to where the positive social impact per dollar is highest, but rather to causes that are sensational, surprising and which arouse strong emotions in donors.

There are many other interesting rules by which this other guiding hand operates. For example, it guides 90% of all the private money we donate to support issues that are close to home: not only in the metaphoric but most importantly in the geographic sense. Most of what the well-off of this world donate does not end up in developing countries, where the problems to solve are significantly more drastic, and the same amount of donated money is sometimes worth a 100 times more due to lower local price levels. Instead, the opportunity to make money go 100 times further is almost always traded away by keeping the money within our home cities or countries.

Yet elsewhere the hand guides money and effort to causes offering a negative return on investment. Consider the social program called Scared Straight, run in the US since the 1970s. In it, delinquent children and junior offenders at a high risk of becoming grown up criminals are “scared straight” by adult prisoners serving life sentences. They yell, threaten and tell stories of nearly being beaten to death before serving a life sentence while the youth have to stand in silence and listen. Several random controlled trials have shown that Scared Straight sadly has the opposite of the intended effect. The program slightly encouraged the children to commit crimes instead of decreasing the chance of that happening.

The invisible hand of charity also paints a different rule for charities when it comes to expectations of growth and impact over a longer time period. While it is completely normal for a for-profit company to stay unprofitable for several years if it has a believable plan for growth (Amazon made practically no profit in its first 15 years of business), it is unthinkable for a charity to invest heavily in growing rather than directly helping. We are led to stare at a single figure, the percentage of money spent on the cause versus the organization’s overhead or fundraising, to determine whether a charity is worthy of our donation. By doing so, we are actually encouraging both the wasteful and the extremely effective charities to stay small.

The hand points out that it is perfectly fine for someone to become rich by running a business that does not care for social impact, by investing in speculative stock, or even by engaging in net-harmful business to society. But at the same time it is a cardinal sin to become rich through helping other people or the nature. We collect public blacklists of charity leaders who we think earn too much. And while doing so might be effective in weeding out corruption, we also create a huge incentive for the most skilled workforce to not work for charities, if they are motivated by higher pay.

I could go on describing how the hand does a further weird thing here, and another there, but eventually, we have to shake free of such metaphors and face what is truly happening. There are no invisible hands. We the people make all those mistaken decisions.

The need for an education about global charity

I believe we do not do these mistakes on purpose. We all want to help, and I’m sure most of us share the ambition to maximize the benefit coming out of whatever money we donate or time we volunteer. I simply believe we lack an education of what the Charitable Landscape really looks like in the world, and what effect our choices have in it. We first of all fail to comprehend the big picture – not because we don’t know how to look, but because it is as of now nowhere to be seen. We only see what is in front of us: the charities working in our home cities and countries, and anecdotal nuggets of information from here and there around the world, like the stories from Japan and Africa you just read. But otherwise the Charitable Landscape remains akin to the world map of the Middle Ages, filled with dark unexplored areas. How much are we actually spending on charity globally? Is that a lot compared to other things we spend money on? Where does the money come from and where does it go? What are the biggest problems in the world, and are we focusing on the right things? And if we wanted to make a difference, what should we do? Not having the answers to these questions – not understanding the full breadth of options and impacts we have access to – ultimately leads us to wasting a huge portion of the total potential we all have in our hands and wallets.

There is currently no data readily and easily available to get those answers. No central authority keeps track of all the charitable money flows moving around the globe, or even the definitions to judge what qualifies as charity. Nonetheless, breaching this gap and providing that lacking education is what this series sets out to do. Despite the difficulty and the inevitable uncertainty of data, this series will do its best to help you, the reader, to understand global charity in as much light as there is currently available. You will, at least, get a sense of the where the edges of the big picture run, while leaving nothing important out; you will understand details where they matter; and you will learn to get a sense of big and small, of effective and non-effective, and of urgent and nice-to-have.

Hopefully, you will attain a mental toolkit to help you assess pieces of information about charity, as well as the most urgent problems facing the world and what your role in solving them might be. Hopefully, you will attain an education in global charity that contributes to bringing fairness into the rules that govern this discipline of doing good, and relief into the lives of those who need it the most.

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