This is a guest post from Jeff Raderstrong, who blogs at Change Charity. Jeff’s views are his own and do not necessarily reflect the views of Philanthropy Action.—eds.

Mario Morino’s recent column at Venture Philanthropy Partners’ blog underscores the concerns I have about focusing too much on donors in the effort to improve philanthropy. In an earlier post I argued that donors pushing for better measurement and accountability might not be as effective as non-profit employees pushing for those same reforms internally, but Morino takes it one step further and says external pressure might actually be detrimental.

Morino says that when dealing with measurement at non-profits, one should always ask “to what end?“ are those measures are being taken.  A focus on measurements is only beneficial if it helps the non-profit fulfill its mission. If non-profits become disconnected from the purpose of measurements, major problems can occur. “[I]f the metrics are overly simplistic and unmoored from mission, then organizations will go racing in the wrong direction. To paraphrase Yogi Berra, they’ll get lost, but they’ll be making good time.“ If a non-profit is told its funding will be based on external measurement indicators, the organization could spend more time worrying about showing results, rather than producing them. (See “teaching to the test,” No Child Left Behind Act, which Morino discusses.)

Therefore, Morino argues, measurements and changes based on those measurements should be directed internally. “If we were to take that nonprofit-centric—rather than funder-centric—approach, we would all have a much higher likelihood of achieving what we’re really setting out to accomplish. Nonprofit leaders would not be navigating with intuition alone. They would gain powerful tools to determine where they’re headed, chart a logical course, and course-correct when they’re off.“

I think Morino’s underlying assumption, which he never explicitly states, is that a lack of measurement does not necessarily mean a lack of results. There are a lot of non-profits out there that don’t have the capacity for social-outcome measurement and they shouldn’t be punished for that. If donors want non-profits to do measurement right, they will need to provide a lot of “encouragement and support” to allow non-profits to find the best ways to measure, along with appropriate adaptations to those measures.

Morino says this process will come over a long period of time and represent a dramatic shift in our thinking:“We’ve approached this challenge as if it’s about numbers when it’s really about changing cultures. Changing culture requires large and persistent investments of time, talent, and money.“

Update: I’ll be on Science Friday with Ira Flatow (NPR) at 2pm today, Jan. 22nd, discussing giving to Haiti and donor advice.

I’ve been pleasantly surprised to see a steady flow of high quality advice for donors responding to the Haitian earthquake. The New York Times profiled the efforts of two intrepid bloggers, Alanna Shaikh and Saundra Schimmelpfennig. Part of Ms. Schimmelpfennig’s effort has been to compile good advice from others, in addition to her own expertise, from around the world (if you haven’t seen the comprehensive advice compiled by Ms. Schimmelpfenning at Good Intentions Are Not Enough, it is highly recommended). Still, even she, I don’t think, has been able to keep track of all the advice columns and stories.

As I see more and more of these stories appear, I’ve begun to wonder: how will we know if this proliferation of good advice has had an impact on the Haitian relief and recovery effort? What metrics will tell us that donors to Haiti and the nonprofits working there learned the lessons of the tsunami, Katrina, and Nargis? I have a few ideas:

* the ratio of gifts-in-kind to cash donations is significantly lower
* the amount of money given to disaster relief organizations that is earmarked for Haiti is lower
* the percentage of funds given to organization that didn’t already have a long-term presence in Haiti is lower
* the percentage of funds given to disaster relief organizations (as opposed to long-term development organizations) is lower
* the number of “mission” trips to perform unskilled labor to “help” Haitians decreases dramatically
* giving to Haiti shows a “long tail”—in other words donations don’t abruptly fall off after the immediate crisis is over and donors give to recovery efforts for months into the future

Of course, all of these are comparative metrics. I’ve never seen the figures for other disasters which would make-up the baseline for such comparisons. Perhaps they are out there.

What other metrics should we be looking at to assess the impact of donor advice? Have you seen any data on these issues from prior disasters?

I’ll confess I’ve even begun to wonder if there is too much advice from too many sources out there. Would the message be heard more clearly if it was coming from so many places, and with so many variations, at once?

This is a guest post from Jeff Raderstrong, who blogs at Change Charity. Jeff’s views are his own and do not necessarily reflect the views of Philanthropy Action. Actually, we do in fact disagree with Jeff’s view, but we’re happy to have the debate.—eds.

Maybe it’s my homegrown American sense of individualism, or maybe it’s those NBC public service announcements, but for some reason, I’ve always thought that with the right information, people could accomplish anything. I’ve applied this logic to philanthropic reform: If people just had access to information about their favorite charity’s impact, or just simply requested that information, non-profits would succumb to the wishes of their funders and start evaluating and revising based on the effectiveness of their programs.

Philanthropy Action and other  blogs also operate—to varying degrees—under that assumption. But as Tim and Laura have written here recently, good evidence does not always get people to change their behavior. Examples of readily accessible information being ignored in favor of the status quo are too numerous: Climate change, fair trade, etc., etc.

The good information directed at donors about effective philanthropy may also be falling on deaf ears. Charity Navigator, one of the biggest charity evaluators out there, recently announced a complete overhaul to its evaluation system to one based on impact and effectiveness, which has the potential to offer good charity evaluation information to more people than at any other point in history. However, based on my rough and generous calculations, Charity Navigator has a market penetration of about 2% of all US donors. I worry that most of its new information will not be accessed, or that if it is, it will be ignored.

So focusing on giving information to donors—especially casual donors—might not create the industry-wide reform needed. Instead, if we want non-profits to think about effectiveness and work off of accountability, information should be directed at the non-profit organizations themselves. Many organizations, like the Independent Sector, the Social Impact Exchange and the Acumen Fund are showing non-profits that operating under effectiveness-based measurements is better for them and how it will ultimately better serve their clients.

Ultimately, pressure from both sides is needed. But since most donations come from individuals and not a small group of major donors, expecting the masses of donors to pressure non-profits to change might not be feasible. Instead, reform could come sooner if non-profits begin to realize that measures of accountability will create better programs and increased capacity to leverage donations. If more outreach and information about reform is directed towards those working in non-profits, organizations might change before all their funders know why it’s necessary.

In light of the devastating earthquake in Haiti, we thought it would be useful to republish some advice for donors to disaster relief efforts that we’ve culled from lessons learned after the Boxing Day Tsunami, Katrina, the Chinese earthquake and other other recent natural disasters. These thoughts are most specifically drawn from studies conducted by the Fritz Institute and the World Bank.

1) The response in the first 48-72 hours after a catastrophic event is overwhelmingly local. Local organizations, even local people with no official organizational affiliation, are the ones usually reaching out to search for their neighbors and friends and provide whatever relief is available. They also have the knowledge of the terrain, the local dynamics and where the most vulnerable reside. Thus, it is the local groups that need immediate support in terms of supplies, money, etc. Where international organizations with a relief capability play a role is where they already have a local presence and are able to dispatch their personnel quickly and efficiently to help locals. This reality may make international organizations not already in the region feel helpless, but it should instead be viewed as an invaluable opportunity to assess the situation and its needs and plan for what follow-up and recovery support can be provided.

2) Survivors are consistently concerned about friends and loved ones, often more so than they are with their own health and safety. Relief efforts need to acknowledge this concern while dealing with the immediate requirements of the surviving victims—studies consistently report that survivors whose concerns over the missing were acknowledged and addressed had a more positive recovery outlook months later than those whose concerns were dismissed. A more positive outlook was also noted in people who received aid of any kind—water, shelter, food, clothing, etc.—in the first two days after the event.

3) Donations of in-kind clothing and food often are less useful than monetary donations given to organizations who can then assess need. The reason is that that clothing is often climatically or culturally inappropriate; by wearing them victims are reminded of their displacement and humiliation. Likewise, food donations that arrive after the immediate days or weeks, when local food markets may be nominally back in order, can cause the same distortions as in-kind food aid, which depress prices at functioning local food markets and breed shame in the recipients.

4) Donors need to keep a long term view of the recovery period. The vast majority of funds are given in the immediate aftermath of a disaster for relief efforts, often more money than is needed for that task. Most famously, a few weeks after the Asian tsunami, Doctors without Borders stopped accepting donations because they had received more than they could use in the relief effort. One of the most consistent findings from the Hurricane Katrina and Asian tsunami studies, however, is that nine months after those events the majority of the victims were still living in temporary housing and had not yet regained their previous levels of income generation. This suggests that large donors should prioritize the longer term effort of building permanent homes and creating income-generating opportunities over the immediate safety and public health challenges have been met.

5) Recovery needs to be managed with an eye toward equity and the environment. Land rights, for example, need to be established quickly so that the displaced and worst affected don’t lose the rights to their land to those less affected. Donations and recovery efforts must also be sensitive to the economic and environmental balances in the region. For example, after the Asian tsunami, coastal regions in India received donations of fishing boats so their fishers could return to earning income. The problem was more boats were donated than had been operating before the disaster, thus putting additional pressure on fisheries and decreasing incomes for everyone on the water.

As the disaster relief effort ramps up donors considering where their money can do the most should consider the above noted lessons and evaluate aid agencies based on how aware they are of the pasts’ failures and how willing they are to improve on their outcomes.

2009 may go down as the year that food scarcity emerged as a source of global economic opportunity. Yes, I just used the terms “food scarcity” and “economic opportunity” in the same sentence, and not without some concern. I find it theoretically distasteful that one group may go out of their way to benefit from the disadvantage of another, and so I began reading a few weeks ago with some trepidation two separate pieces—one in the Times, one in the Post—about the land-grab taking place in a part of Africa called the Guinea Savannah Zone. The Guinea Savannah Zone is a fertile crescent of land that includes parts of Sudan, Ethiopia, Congo and Angola, among others. The Zone is earmarked as fertile, “underutilized” land by the World Bank and others.

Investors from countries with a lot of money but very little arable land—such as Saudi Arabia, South Korea and India—have purchased the rights to develop millions of acres for agriculture and export the yield for sale in their native countries. Not limited to the Guinea Savannah Zone, international agriculture acquisitions have become more common in the past few years. For example, a controversial attempt by South Korean conglomerate Daewoo to acquire significant volumes of Madagascar’s arable land played a role in fomenting a coup last summer. In aggregate, the increase in international agricultural deals raises significant questions, especially since the country most enthusiastically selling rights to its land is Ethiopia, known best by Westerners for the millions of citizens who starved to death in the 1980s and the millions more who receive food aid every year. Both the Times and the Post implicitly conclude that the lease of Ethiopian land to foreign developers amounts to nothing less than exploitation of the poor by the wealthy. But does it have to be?

It does not take long for the subject of agriculture to come up in any discussion of global poverty. The majority of the rural poor around the world rely on agriculture for income, food, or both. And they are likewise most affected by agricultural “shocks” such as drought, conflict, soil nutrient depletion and climate change. None of this is news. Nor is it unknown that, despite this vulnerability, most international aid agencies have focused their attention elsewhere for the last two decades. This means less money going to the development of drought- or pest-resistant seeds, and less money to subsidize fertilizer, provide education in new methods or invest in infrastructure to bring crops to market.

Some entities in the aid world are working to make up the difference—particularly in Africa, where food scarcity in many countries of the sub-Saharan region is a frequent issue. In 2007 the World Bank’s annual report on development highlighted agriculture in the developing world as needful of major investment by the Bank itself, and the wealthy economies that fund it. In 2008, The Bill and Melinda Gates Foundation announced increased investments in agriculture, including for the creation of new seeds and helping farmers connect to markets where they can get better prices for their goods, all in the interest of creating a “Green Revolution” for Africa.

When I try to put together the the fact that, on the one hand, there are a billion acres of underutilized arable land in Africa, and on the other hand, ongoing food scarcity in that same region, I get pretty confused. While I can understand why the reporters at both the Times and the Post might see the lease of agricultural land in Ethiopia as exploitation, I can’t help but see it as a failure on the part of developed economies to help a country with known challenges take advantage of existing resources. The fact that a number of private investors are now pursuing those same resources for both commercial gain and to solve a similar problem for their own people, well…I don’t mean to be cynical, but, it’s too late now to look shocked and dismayed—you snooze, you lose.

And private investment in agricultural production in Ethiopia is not necessarily a bad thing. The Times piece points repeatedly to a recent Foreign Affairs article by Oxford economist Paul Collier, in which he argues that commercial agriculture in Africa may play a role in economic development and decreased food scarcity. Creating larger, more efficient farms with better yields may create more reliable employment and income than the dozens of subsistence level peasant farms that exist throughout the continent. Indeed, the wages of local workers are likely to be far steadier than the uncertain income they would earn from their own small farms. People working on a Saudi—owned farm in Ethiopia profiled in the Times complained that the pay was “poor,“ yet the farm is paying the going wage in the region, and it is not clear that the workers have better employment alternatives. What neither story makes clear, and is a substantial concern, is to what degree land is being expropriated from local owners to sell to international investors.

Other critics point to environmental concerns: Ethiopia is leasing the land rather than selling it, and its investors are foreign, which raises alarms about whether the lessor truly cares about sustaining the resource for long-term use. Will they use water resources sparingly and engage in proper land stewardship if they don’t own the resource and don’t have any personal investment in the community? These are real issues—but it is not clear that native people working land they view as their own are more likely to engage in sustainable practice than businesses whose commercial interests are at stake. Just look at India and the dramatic water scarcity issues it is now facing as a consequence of overuse by land-owning farmers. In any event, Collier again offers some useful thought on these matters. If foreign land deals are going to become more common in the future, given the challenges of food and water scarcity, then countries with available land would be advised to adopt functional laws and charters that set a fair lease price for the land, a fair wage for the workers, fair rules about use of local vs. immigrant labor and fair and responsible practices around environmental matters. Certainly, concerned aid agencies and advocates can offer help and guidance, but the real actors in any functional and long term relationship have to be the involved countries and their people. The result could be opportunity for everyone, and exploitation for none.

Recently I was listening to Rory Stewart’s The Places In Between, the story of his walk across Afghanistan. Near the end of the book Stewart turns his attention to the aid agencies, public and private that had come rushing into Afghanistan. His observations are worthwhile reading for anyone interested in making international aid more effective, so I’m excerpting them here:

Critics have accused this new breed of administrators of neocolonialism. But in fact their approach is not that of a 19th century colonial officer. Colonial administrations may have been racist and exploitative, but they did at least work seriously at the business of understanding the people they were governing. They recruited people prepared to spend their entire careers in dangerous provinces of a single alien nation. They invested in teaching administrators and military officers the local language. They established effective departments of state, trained a local elite, and conducted countless academic studies of their subjects through institutes and museums, royal geographical societies, and royal botanical gardens. They balanced the local budget and generated fiscal revenue because if they didn’t’ their home government would rarely bail them out. If they failed to govern fairly the population would mutiny.

Postconflict experts have got the prestige without the effort or stigma of imperialism. Their implicit denial of the difference between cultures is the new mass brand of international intervention. Their policy fails but no one notices. There are no credible monitoring bodies and there is no one to take formal responsibility. Individual officers are never in any one place and rarely in any one organization long enough to be adequately assessed. The colonial enterprise could be judged by the security or revenue it delivered, but neocolonialists have no such performance criteria. In fact their very uselessness benefits them. By avoiding any serious action or judgment they, unlike their colonial predecessors, are able to escape accusations of racism, exploitation and oppression.

Perhaps it is because no on requires more than a charming illusion of action in the developing world. If the policy makers know little about the Afghans, the public knows even less, and few care about policy failure when the effects are felt only in Afghanistan

Policy makers did not have the time, structures or resources for a serious study of an alien culture. They justified their lack of knowledge and experience by focusing on poverty and implying that dramatic cultural differences did not exist. They acted as though villagers were interested in all the priorities of international organizations even when those priorities were mutually contradictory.

In a seminar in Kabul I heard Mary Robinson, the UN High Commissioner for Human Rights say, “Afghans have been fighting for their human rights for twenty-five years. We don’t need to tell them what their rights are.” Then the head of a major food agency added privately, “Villagers are not interested in human rights. They are like poor people all over the world. All they think about is where the next meal is coming from.” To which the head of an Afghan NGO providing counseling responded, “The only thing to know about these people is that they are suffering form PTSD.”

Without the time, imagination and persistence needed to understand Afghans diverse experiences, policy makers would find it impossible to change Afghan society in the way they wished to change it.

Mint, the very popular “personal finance app,“ has a very interesting post on their blog about charitable giving in the US and elsewhere. The visuals are terrific and there’s plenty of interesting information. Unfortunately, their post ends by telling people they should use the worst way to pick a charity this year. In other words, they give financial advice that is dead wrong.

If you care about ending the harmful myth that overhead ratios are good way of evaluating charities, pay a visit to the Mint blog and tell them they need to fix their post and stop giving bad financial advice.

In response to my earlier post about the worst way to pick a charity, an old friend forwarded me this question:

You make some good points, but what should people be using then? How can people simply and quickly make a judgment? Results aren’t always the best—can you say the actual results from people giving to cancer or heart disease-related charities meet the expectations by the amount of dollars given? Compare that to those supporting inoculations, for example.

It’s a good question, and in my mind, the question we need to be asking because we don’t have a complete answer. Here’s my response:

There is something of a chicken/egg problem here: charities don’t produce effectiveness information because donor’s don’t ask for it. Donors don’t ask for it because they know they can’t get it.

That being said, there are a number of relatively new efforts that are doing some terrific things: GiveWell, Great Nonprofits, New Philanthropy Capital, Giving What We Can, Philanthropedia among others.

None of them are perfect and none of them provide a quick answer—but givers also have to understand that if they want their dollars to do the most good, they are going to have to devote some time to investigating and learning. You can make a quick donation or an effective donation. If your emphasis is on quick, you’re likely to get a commensurate return on the dollars you’ve invested.

The month between Thanksgiving and Christmas is often known as giving season, not just for Christmas and Hannukah gifts but because many people make major donations to charity this time of year.

Given the global recession, it’s more important than ever to make those charitable dollars go further by putting them in the hands of charities that do the most good. For years, donors have been relying on one measure to evaluate charities—the overhead ratio. The ratio is a measure of how much of each dollar donated goes to “programs” versus other costs like executive salaries and fundraising. It’s understandable that many donors want as much money as possible to go to people in need.

But donors who use overhead ratios to evaluate charities are doing more harm than good.

There are plenty of reasons that overhead ratios are meaningless as a measure of effective charities:

• It tells you nothing about the impact the charity has on people it’s trying to help
• The rules for determining overhead costs are vague and every charity interprets them differently
• Accounting experts estimate that 75% of charities calculate their overhead ratio incorrectly
• It discourages charities from investing in tools and expertise that would make them more effective

In short, picking a charity based on the lowest overhead ratio is like buying the cheapest car that money can buy. You might spend less in the short run but it’s inevitably going to let you down.

That of course doesn’t mean that all financial data about a charity should be ignored. Smart donors should consider a charity’s finances when making a decision. But the question donors should be asking is, “How much of your budget are you spending on making sure your programs are effective?“

Until the new year we’ll be writing at least once a week about the harm that the use of overhead ratios does. We’re joining with a number of organizations to put a stop to donors’ reliance on overhead ratios. Together, Philanthropy Action, Charity Navigator, GiveWell (Note: I serve on GiveWell’s board), Great Nonprofits, Guidestar and Philanthropedia have issued a press release today explaining why you shouldn’t use overhead ratios and what some alternatives are.

We hope you’ll join us by blogging, tweeting, facebooking, emailing, and of course, talking to your friends, neighbors and co-workers. Tell them that overhead ratios are the worst way to pick a charity this year.

You can download the press release here.

I want to believe that arming people with good information will allow them to make better decisions, though I’ve seen plenty recently to suggest that belief is wrong. Books like Dan Ariely’s Predictably Irrational and Sunstein and Thaler’s Nudge have sold thousands on the premise that people do not often do what is in their best interest or make good decisions with the information they have.  A recent article on the market failure of cancer prevention drugs offers another data point for their position. The piece outlines how doctors and patients alike have put great hope on diet, exercise and vitamin supplements as effective cancer preventatives. Yet research has produced only mixed results for the impact of diet and exercise, along with some damning evidence that vitamins may actually cause illness (check out the range of comments on this blog post for a taste of the response). The more hopeful news that treatment drugs Tamoxifen and Finasteride also work respectively as effective breast cancer and prostate cancer preventatives has been met with indifference.

Tim used the examples of hormone replacement therapy (HRT) and immunizations to articulate a similar point about behavior a few weeks ago—namely that good evidence on the increased risk of breast cancer caused by HRT caused almost immediate cessation of the use of hormones to alleviate menopausal symptoms, while very bad and well-contradicted evidence on the link between vaccines and autism has created a sometimes-violent anti-vaccine movement. It seems to me that the thread in all four examples (HRT, vaccines, vitamins and Tamoxifen/Finasteride) is human denial about the body’s limits. We are willing to believe that taking medication is bad for us; less willing to accept the opposite (and so many don’t believe that vitamins cause harm because they don’t see them as medication—they come from food!). The issue, in short, is nestled deep in human psychology. I don’t know how effective a drug has to be to change our minds, but if any measure can be gleaned by Tamoxifen, which cuts cancer risk by 50 percent, then the difference needs to be as close as science can get to a guarantee.

The relevance of these cases for philanthropy is that there are strong negative implications for prevention efforts related to any variety of illnesses—intestinal worms, measles, malaria, HIV. It is no secret that HIV prevention, for example, attracts only a fraction of the donations given for treatment programs. (This has always seemed illogical to me. What could be more effective at alleviating suffering than preventing an infection from occurring in the first place?) But if tests on the ground show that patients will not take drugs expressly for prevention than pharmaceutical companies will not research and test them, and donors will focus their efforts in areas where they can see the impact. This may result in a decrease in financing and research from private enterprise, and an increased burden for the nonprofit sector. So it is worth thinking about why pharmaceutical prevention efforts are sometimes unsuccessful, and finding ways for people to make good decisions with good information.