Best New Ideas in Money: A new Harvard-designed tool to maximize your Giving Tuesday impact

Companies that evaluate charities, such as GiveWell, help donors find nonprofits that meet effective altruism’s tenets. The movement is particularly popular among the wealthy of Silicon Valley, who see it as a way to optimize their charitable giving. 

But effective altruism leaves others cold. They argue it doesn’t leave room — and judges them — for donating to causes that are near and dear to their hearts, like research to cure a disease that took a loved one’s life, or a neighborhood food pantry or arts group.

Now a charitable giving platform called the Giving Multiplier is approaching this debate from a new angle. Instead of forcing people to choose between these two styles of giving, it lets them do both, and even matches their donations in the process. 

Designed as a way to encourage people to explore effective altruism, the Giving Multiplier was built with pro bono web design and a $27,000 grant from an effective altruism organization. Based at Harvard University, it’s now self-sustaining and has raised more than $693,000 since its launch in November 2020.

“This far exceeded our initial expectations. We would have been happy if we were one notch above bake sale with this,” said Harvard psychology professor Joshua Greene, who created the Giving Multiplier as a project in his research lab with Lucius Caviola, a post-doc researcher in Greene’s lab. 

‘Balance between heart and head’

The Giving Multiplier taps into the psychology behind charitable giving that Greene and Caviola have uncovered in research. For example, the diminishing emotional returns from giving to one’s favorite charity. People enjoy giving $50 to a favorite group, and giving $100 might feel a little better, but it doesn’t feel twice as good, they found in experiments. That leaves room for doing something else with that other $50, and the Giving Multiplier provides that opportunity. 

Here’s how it works: Giving Multiplier users must split their donations. First they choose a personal favorite charity that’s not considered highly effective, then they pick one of nine highly effective charities vetted by effective altruists. The list includes groups such as Give Directly, which disburses cash to people in developing countries, and a group that distributes insecticide-treated nets to prevent malaria. The user then decides how to divide their donation between the personal favorite charity and the highly effective one. Giving Multiplier will match both donations, but the more the donor allocates toward the highly effective charity, the bigger the match. 

“You get this balance between heart and head,” Greene said. “Where you give to the charity that you feel personally about and you feel like you’ve warmed your heart and done something meaningful, and then also you give to the super duper effective charity that can change somebody’s life for less than $1.” 

The platform is the first charitable giving tool to divide and then match donations. It doesn’t charge fees to donors; the financial transactions are handled by the nonprofit Every.org. The matching funds are provided entirely by other donors who use the site. This “virtuous circle,” as Greene calls it, is in contrast to typical matching campaigns at nonprofits, which are usually funded by large “angel” donors.

Philosophical arguments fall flat for some

Greene and Caviola created the Giving Multiplier after realizing that the philosophical arguments that compelled them to become effective altruists didn’t necessarily resonate with everyone. 

“For a long time I had been trying to do experiments trying to convince people to be more effective altruists the way I was convinced,” Greene said, which was through arguments from philosophers including Peter Singer, author of the 2009 book “The Life You Can Save.” Singer was one of the thinkers who brought effective altruism into the mainstream, but its origins date back to utilitarian philosophers such as Jeremy Bentham.  

Singer’s classic thought experiment tells the story of a small child drowning in a shallow pond. You’re walking by and see the child, but saving the child would ruin your clothes and make you late for work. Would it be wrong for you to not save the child, who is, after all, not necessarily your responsibility? Singer’s audiences typically say, yes, it would be terribly wrong not to intervene. Then he points out that people in the affluent world encounter this situation — not with an actual pond, but on a global level — every day, because at little inconvenience, with relatively small amounts of money, they could save the lives of children who are “drowning in poverty,” as Greene put it. 

Singer’s ethical framework resonated with Greene personally, but after running various experiments he’s found that, for the general public, those kinds of arguments work a little, but not very much.

Some say effective altruism’s focus on cost effectiveness doesn’t speak to their personal values, and others are outright hostile to it. One scathing critique once equated it with “charitable imperialism, whereby ‘my cause’ is just, and yours is — to one degree or another — a waste of precious resources.”

‘Ultimately we’re seeking meaning’

The Giving Multiplier’s approach seems like a useful solution, because it acknowledges the varied paths people take to giving, said Michael Thatcher, CEO of the charity ratings site Charity Navigator. 

“Ultimately, we’re seeking meaning through what we do and how we give,” Thatcher said. “We wouldn’t give if it wasn’t meaningful.” 

He’s not personally a follower of effective altruism because it can feel to him like “I’m being told what I should be caring about.” But effective altruism provides an “intellectually rigorous” framework to those who want one for their giving, he said.

However, “it does create a distance,” Thatcher said. “When you’re saving thousands of lives in another country it’s very different than engaging in a neighborhood soup kitchen, where you’re actually seeing the people and relating to the people.”

Methods for measuring a charity’s effectiveness have changed over time, thanks in part to research led by effective altruists, and Charity Navigator recently updated its own metrics. When Charity Navigator launched two decades ago, it was modeled loosely after the investment research company Morningstar, which rates investment fund performance on a 1 to 5 star scale, Thatcher said. But that approach was too limited, and focused too much on financial factors like overhead costs, which are now considered less relevant. Recently Charity Navigator, the world’s largest charity evaluator, broadened its rating system, and it now looks at factors including impact and results, an organization’s culture, and its leadership and adaptability. 

Why people give to ‘ineffective’ charities

One ingredient in the Giving Multiplier’s success is that it goes with the flow of people’s natural tendencies around charitable giving instead of trying to convince them they’re doing it wrong. There are, of course, a whole host of reasons people give to charity that have nothing to do with effectiveness. 

Caviola and Greene explored some of them in a paper published earlier this year on why people donate money to so-called “ineffective” charities. One is that people are typically driven to give by “emotional motivators such as empathy (or sympathy) for victims” and the desire to feel a “warm glow,” but highly effective giving doesn’t always satisfy those desires, they wrote. We also tend to favor helping people closest to us, either culturally or geographically.

Another reason — and this is a point that Greene considers key — is that people lack a basic understanding of the vast difference between high-impact charities and typical charities in terms of their effect on people’s lives. People mistakenly assume it’s akin to the difference between a short person and a tall person, Greene said, but it’s more like the difference between a person and a skyscraper.

“The most effective charities aren’t like, 20% or 50% or 80% more effective than typical charities. They can be 100 times more effective than typical charities, or even 1,000 times,” Greene said. Philosopher Toby Ord, founder of the effective altruism group Giving What We Can, illustrated this principle in an essay explaining that while it costs about $40,000 to train one guide dog for one person with visual impairment in the U.S., that same amount would pay for 2,000 people in Africa to be cured of blindness with surgeries to reverse the effects of trachoma. 

It’s also true that people may not embrace “effective” giving because they’re skeptical it’s possible to accurately measure a charity’s effectiveness. While measuring effectiveness isn’t easy, it’s not impossible, and there are evidence-based ways to do it, Greene noted. 

Because giving to charity is wholly optional, people can feel it’s OK to evaluate it through a subjective lens, said Greene, who is the author of “Moral Tribes: Emotion, Reason, and the Gap Between Us and Them.”

“If you’re an investor, you’re a good investor if your investments yield a high return,” he said. “No one’s, like, ‘I’m an investor, but I don’t like to get much money back from my investments.’ When it comes to charity, there’s sort of an attitude of, ‘It doesn’t really matter how much good it does, because it’s all optional.’ What ends up dominating your decisions is what moves you and what feels good.”

While the Giving Multiplier won’t necessarily convince everyone to embrace effective altruism, it should at least prompt those who use the platform to examine their assumptions about why and how they give. Greene and Caviola plan to keep the platform going for the foreseeable future and may eventually partner with a larger organization or business to expand its reach.

Greene says he hopes the platform speaks to people who are wary of trying to measure charities’ effectiveness. 

“Some people just on a gut level don’t like the idea of doing research to figure what does the most good,” Greene said. “Maybe because they see it as a threat to the things that are the most personally meaningful to them, and so they don’t like the idea of someone saying, ‘Your cause is a second-rate cause.’ I kind of get that, which is what in some sense Giving Multiplier is aiming to remedy. We’re not putting down other people’s existing values.”

Editor’s note: MarketWatch readers can get a higher matching rate on the Giving Multiplier if they use this promo code.