Translator: Reiko Bovee Reviewer: Denise RQ
It's my second day on the job,
and I am sitting on the wooden floor of a small house
with a local family of Burmese farmers.
They're sharing with me eggs and rice,
and telling me about the latest yields of their eggplant crop.
I'm thrilled, I'm thinking this will be one of so many adventures that I have
during my time here in Southeast Asia, working with this non-profit,
meeting farmers,
putting my MBA degree to great use and feeling inspired,
and like so many Westerners who go abroad to help,
I'm also a little excited about getting loads of well-liked Facebook photos.
(Laughter)
This was several years ago.
Only much later, looking back on that experience,
did I start to think about the impact I truly had.
I thought I was there to help,
but I was also there for my own experience.
When we pursue inspiration, we're also consuming for our own benefit.
I started to think,
"What if that non-profit hadn't paid me those few thousand dollars,
and instead had given loans to the farmers they were already working with?
They could've helped two dozen families receive loans to buy farming equipment.
Or what if I had stayed at my high-paying desk job in America,
earned additional income to give back and send that money to that non-profit,
or even send that money directly to those farmer families I had met?
What kind of impact would that have had?"
I want you to consider that doing what feels good isn't always what is good.
So much of what we do in philanthropy is about pursuing our own experiences.
Let's call this the "ego economy."
The ego economy is what we spend as individuals
on buying inspiration and experiences.
It's the money we give to non-profits
with the expectation that they'll inspire us.
In fact, the ones that do the best job at giving us those personal benefits
are the ones that win.
They're the ones that we give the most money to.
The ego economy is the money we spend
on trying to feel connected to a community,
on not feeling helpless in the face of the need,
on removing guilt, or buying hope.
I've spent a lot of my career thinking about
why philanthropy is so driven by personal benefits.
My own story doesn't start in Burma; it starts many years back.
My mother and father are two immigrants that came to the United States.
My father is from Iran and is a serial entrepreneur,
and my mother is a Hungarian
who has spent much of her life giving back to others.
It's only natural I've been interested in global development
with a bit of an eye to entrepreneurship.
Before moving to Burma,
I advised many of the largest foundations in the world.
I saw there, too, that ego was driving many of their decisions.
Think about so many well-named foundations we've heard of,
and consider why they're all named after the founder or the donor,
or think about
how when we go to a fundraiser or receive an annual report,
we expect to see the names of major donors recognized and called out.
That's all part of the ego economy.
Several years ago, I thought,
"Here's the problem, I can change this. What's missing is data and transparency.
The reason we put our personal benefits in front of our giving
is because it's so hard to find impact."
So, I started a company, a couple years ago,
with the goal of bringing this data to light,
making it easy for even the busiest donor
to give based on impact and data, using expert vetted recommendations.
I found that it didn't really work.
Even when presented with data, we still seem to seek
those personal connections and personal benefits.
Many donors told me, "This data is interesting,"
but at the end of the day,
I saw them giving to where they had a connection.
I realized as I thought about that,
"This is a fundamental part of human nature.
It's within our nature to seek stories and inspirations.
It's no wonder that's a part of why we give."
But let's look at how putting our ego into our giving
both when we give time and money,
can be detrimental and actually lead to unintended consequences.
First - starting with giving our time.
This will probably sound familiar,
but I'm going to use an example that's common in the United States:
volunteering at a soup kitchen.
There's two issues with giving our time.
The first is that when we volunteer,
in many cases that's actually a net negative for the non-profit.
In the soup kitchen example,
the non-profit has to hire a volunteer coordinator;
they have to parade their beneficiaries in front of you or find a task for you
that's going to make you feel good, inspired, and want to come back,
and they have to fill in last minute if you don't show up.
In fact, non-profits report that about 20% of their budgets
are actually spent on engaging and motivating donors.
In business terms, we call this a "loss-leading activity."
It's designed to get us to feel connected to the non-profit
even if it's not always a positive economic benefit for them
because they know if we build that personal connection, will give more.
Here's the other problem with that:
Because we're volunteering, we seek organizations
that will give us a great experience as volunteers
rather than those that have the highest impact.
So, we're actually biasing ourselves towards organizations
based on our own experience rather than impact
many times when we give our time and volunteer.
Let's look at giving our money.
This example will also probably sound familiar.
Say, a non-profit CEO comes to you and says,
"Hey, I have this amazing solution to end hunger in East Africa.
We're going to send powdered milk directly to the children in need in East Africa.
You can participate, our organization is extremely transparent and lean,
all the money goes directly to buying milk
sending it, and distributing it to Africa."
This might sound exciting,
but here are three big problems with this approach to giving.
First, there's a lot of layers of waste.
If you think about giving 100 dollars to an organization like that,
think for a moment about the actual economic value
of the end result of milk that reaches the hands of poor people.
We're paying for all these layers of staff
who are buying milk distributing it, shipping it.
At the end of the day, in many cases,
the economic value of reaching the person on the ground
is less than half of what we donated.
All those jobs, in many cases, could be considered part of the ego economy;
People who are working
for their own benefit and personal motivation to try to do good.
The second issue is, again, our pursuit of a personal connection and story.
So many donors I speak to have that one organization
where they've met the founder or been personally touched,
and they know that organization is doing great work.
That's great, but how much of that is you actually seeking a connection,
a personal link to an organization or founder that you've met,
rather than really being analytical about where you're giving your money?
If we're really honest with ourselves,
a lot of those connections weren't based on a highly analytical process.
The last issue is one of a patronizing approach to this type of giving.
In this particular example, it turns out
that about 90% of the East Africans in this region are lactose intolerant.
(Laughter)
You can imagine that one of the worst things
you can do to a child who's malnourished
is to give them a substance that causes further diarrhea.
This actually happened.
In the 1990s, we sent thousands of metric tons of powdered milk teas
to East Africa.
It's rarely talked about, but it's such a great example
of how our patronizing view on giving based on what we think other people need
leads us to make bad decisions.
There's countless examples of this.
Think about sending books in a language that children can't actually read
or sending malaria nets to regions that have actually low rates of malaria.
We do this over and over when we put our ego into the equation.
If you're like me, at this point, you're probably feeling pretty helpless.
So, when we put our ego into giving our time or our money,
the results can be sometimes negative and lead to unintended consequences,
or to us, not being as impactful as we'd like to be.
I felt pretty hopeless about this, too.
But, there is a ray of hope.
When you think about a way
in which to truly take your ego out of the equation
and give, based on impact,
there's one thing that's been proven to do this effectively, and it's this:
unconditional cash transfers.
That means literally what it sounds like:
sending money, no strings attached, to the poorest people around the world,
so they can do with it what they need to do to improve their lives.
This has been done in developing countries for many years,
but only recently with new technologies like mobile money transfers,
have non-profits emerged that can allow us, as donors,
to actually send our money directly to the hands of the poor abroad.
Some non-profits, like GiveDirectly, that do this, are able to do so at scale
in a highly transparent way, and the results are astounding.
GiveDirectly, for example, reports that when they send money to the poor
in Kenya and Uganda, where they operate,
people do really surprising things with those resources.
They buy prosthetic legs, so they can go to work for the first time,
or they'll buy a more permanent metal roof to their homes,
so they're not spending money monthly on small repairs,
or they'll buy livestock that generates income;
like chickens, that allows them to boost their income.
In fact, in GiveDirectly's research,
they found for every 100 dollars that you donate,
they are able to send 90 dollars directly to the hands of the poor.
For every 100 dollars a poor person receives,
they're able to lift their income by 27 dollars in just one year.
That's really astonishing.
When I tell this to people, they often ask me,
"How does it work?"
"How are they figuring out who to give this money to?"
"Don't people actually just use it to buy alcohol?"
I think a lot of these questions come down to a lack of trust;
I encourage you to look up the research because there have been dozens of studies
that show that when we give money directly to the hands of the poor,
it's not used for booze or working less hours,
it's used to improve their lives.
I see this as a really exciting opportunity.
Right now, we have a solution that works.
In the world today, about one out of 10 people live in extreme poverty.
Despite all the progress, all of the innovation,
about 700 million people are living on less than two dollars a day
in their local currencies;
that's less than half of a Starbucks'.
We have a solution that works.
Furthermore, as a global community of individual donors,
we're giving enough cash every year
that we could literally more than double the income of every single poor person
in extreme poverty around the world, right now,
if we just started giving cash directly.
That's a pretty incredible opportunity,
but it requires a drastic change in how we think about giving.
So, I challenge you and encourage you to think about giving directly,
or when you give, use giving cash directly as a benchmark.
That should be a minimum bar that any non-profit you give to
can prove that they meet.
It's simple but surprisingly hard to be.
I'll leave you with this, which is, "It's OK."
It's OK to pursue your ego when you give.
It's OK to volunteer, take that gap year, or join a board;
it's also OK to stay home and just send a check
and skip that fundraiser.
We know when we feel inspired, we open up our checkbooks and give more.
It's great to give, but I also encourage you to think
about when you're consuming and putting your ego into the equation
versus when you're giving.
When you do give, give impactfully,
because it's about time we change how we give.
Together, we change the world.
(Applause)