How to outsource picking charities
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Illustration: Brendan Lynch/Axios
One of the biggest inefficiencies in the nonprofit world is the fact that charities are rewarded for fundraising prowess more than they are for their skill at making the world a better place. Causeway, a new product from Charity Navigator, is an attempt to address that problem.
Why it matters: The less effort that charities have to spend reaching individuals and persuading them to open their wallets, the more they can focus on their core activities.
The big picture: "We're finding that our younger users are not as married to a nonprofit as they are to a cause," says Laura Andes, Charity Navigator's vice president of ratings and impact.
- Charity Navigator has therefore created baskets of charities working in certain areas — animal welfare, say, or organizations addressing homelessness or education in the United States.
How it works: Charity Navigator does the work of looking at all the charities working within a particular cause, and then picking a handful of them who are particularly effective and diversified.
- When you donate to one of the Causeway "funds," your money is then divvied up between those charities.
- The funds can be thought of as a bit like ETFs for charitable donations — but they're not funds in the sense that they hold money for any length of time. They're strictly passthrough vehicles.
Where it stands: The biggest and most well-known such passthrough vehicle is GiveWell, which focuses on charities that seek to save or radically improve lives, invariably in the developing world.
- Causeway is an attempt to extend that model to other causes — ones that might be less effective in terms of quality-adjusted life years bought per dollar, but that many Americans still want to support all the same.
Between the lines: Charity Navigator's criteria are much broader than GiveWell's — they include things like financial health and governance standards, rather than just focusing on outcomes.
- As such, these funds are a demonstration that ranking charities by effectiveness does not necessarily entail signing on to the principles of Effective Altruism.
The bottom line: Picking good charities is hard. Anything that eases giving to them is positive for the sector.
Charity Navigator for some years has offered a giving basket option that allows Americans to make a single donation that then gets divvied up between charities of their choosing.
Why it matters: The product hasn't been hugely successful, leveling off at just over $40 million in donations per year.
What's next: If the weakness of the giving basket is that it still requires a lot of work on the part of the giver, then the new Causeway product could elicit a significant rise in funds donated.
