That Time A Hedge Funder Quit His Job And Then Raised $60 Million For Charity
Elie Hassenfeld had an enjoyable and lucrative career in finance. Then he discovered an unusual passion.
“I found myself staying up Friday nights till 3:00 in the morning, reading academic papers about diarrhea,” he recalled. “If you ever find yourself doing that, you know it might be time to look for something new.”
In 2006, Hassenfeld and several colleagues at a Connecticut hedge fund formed a “charity club” to help them make informed decisions about their giving. Each person would pick a cause (Hassenfeld’s was water in Africa) and then research the best charities working on that cause (hence his late-night studying of waterborne diarrheal illnesses).
Two members of the group, Hassenfeld and Holden Karnofsky, found the work so satisfying that they created GiveWell, whose mission is to help people answer the question, “Where should I give to accomplish the most good?”
Answering that question is surprisingly difficult. Very few charities participate in rigorous controlled trials to prove their work is effective. Of the ones that do, many don’t make their findings public.
But donors increasingly want evidence showing that their contributions will actually make an impact, and these donors have clout. In the United States, individuals collectively give far more money to charities than foundations and corporations combined.
As a result, GiveWell is thriving. Since 2007, it has directed at least $60 million to its small list of recommended charities — groups that are “evidence-backed, thoroughly vetted, and underfunded.” Facebook co-founder Dustin Moskovitz is using the group’s guidance to give away millions of dollars of his own money, and last year GiveWell beat its own record for donations moved by $10 million.
This success is spurring broader changes. Charities now have a greater incentive to document that their work is effective (they want a piece of the pie that GiveWell is distributing). New groups are being created that operate on GiveWell’s principles but focus on different goals, like animal welfare.
And GiveWell is helping to validate a broader movement known as “effective altruism,” which is spreading via books, campus groups, and an annual summit. Broadly defined, effective altruists want each dollar they give to do as much good as possible, and to support charity groups strategically, based on evidence of their impact and their need, rather than any personal interests. The tech community around Silicon Valley has embraced the movement with particular enthusiasm, and GiveWell moved its offices to San Francisco in 2013.
GiveWell is in many respects a radically transparent organization. Perusing its website sometimes feels vaguely voyeuristic, because few organizations reveal as much critical discussion of their internal workings. GiveWell is now in the midst of an extensive six-part public evaluation of its work during the past year; it maintains a page documenting its mistakes and shortcomings that currently runs over 8000 words.
“It’s very important to us to critically evaluate what we’re doing to do better in the future,” Hassenfeld said. “And we look for charities that do the same. If something goes wrong, they would know about it, and they would highlight it, and they would learn from it.”
GiveWell’s philosophy is that organizations that only release good news are plainly not presenting the full picture. “If you’re hearing some bad news, that’s a good thing. You should hold organizations accountable to that standard, rather than a totally unreasonable one of perfection,” Hassenfeld argued. “These charities are all trying to solve some of the world’s hardest problems. If it were easy to eradicate malaria, it would have been done. So things obviously go wrong. They face all sorts of struggles. I think it’s really important to be open about them.”
Hassenfeld, 33, says it’s been invigorating to travel to parts of Asia and Africa to see firsthand the work that GiveWell supports. “The level of poverty is just something that we never see here.” But like an eager analyst, he seems most passionate about the data.
“I’ve looked at thousands of tax forms, looked at hundreds of charity websites. When you talk to the organization that is the real deal, in that they want to share all of this information with you, and show that they really can deliver on the promises that they’re making, that’s a very exciting experience.”
He recalled digging through records and websites of 400 charities one year before chancing upon a group called VillageReach, which GiveWell ended up recommending. “Holy crap. They’re doing vaccines. They have this 100-page report documenting their success. This is a great program!” he said. “When you kind of stumble on that, it’s just amazing.”
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Below, Elie Hassenfeld responds to three frequently asked questions.
What books do you recommend to people who hear about GiveWell and want to learn more?
I think a great book to start with is “The Life You Can Save” by Peter Singer. Fair warning, he talks a lot about GiveWell; he’s a GiveWell fan. But I think that book is a great introduction to the basic moral case for giving effectively, and challenging oneself to give more.
There are a whole bunch of books about international development that I think are incredibly interesting. There’s a book, “Poor Economics” by Esther Duflo and Abhijit Banerjee, as well as “Portfolios of the Poor” which is not as well known, but I found incredibly interesting because it follows the financial lives of very poor people in the developing world.
My naive picture before reading this book was that people who were very poor had very simple financial lives and were not particularly sophisticated about finance. And instead, you find the opposite. In many way, they’re much more sophisticated than I am about my finances because it’s so important to them that they get it right.
They have loans that they’ve given out to family members that are basically an asset, and credit that they’ve taken on because it’s a good investment at the time, and they’re thinking about how they’ll manage their day-to-day cash flow needs against all of their assets and their liabilities. It gives some indication of how hard people who are extremely poor are thinking about their financial lives.
[After our interview, Hassenfeld passed along a few other recommendations: “Behind the Beautiful Forevers: Life, Death, and Hope in a Mumbai Undercity,” by Katherine Boo; “Due Diligence: An Impertinent Inquiry into Microfinance,” by David Roodman. (Roodman now works for GiveWell though he didn’t at the time he wrote this book.); and “Millions Saved: Proven Successes in Global Health” by Ruth Levine.]
What do you tell people who ask, “How much should I give to charity?”
It’s not the thing we think about most. I think the default is to look at Peter Singer’s website. He has a pledge that I think tries to be optimized to challenge people while not asking them to do too much. I think it’s a few percent for people who are making between $50,000 and $150,000. I think that’s one reasonable answer.
My personal thinking has been, I want my charitable gift to feel like I’m spending something that I wouldn’t ever really spend on something I’m buying for myself. I wouldn’t go out and spend a few thousand dollars on a new T.V. or computer unless it was something that was really essential, and I want my charitable gift to be this really big purchase that I’m making every year. It’s something that’s really important to me.
How does GiveWell compare to Charity Navigator, another more established group that also evaluates charities?
Charity Navigator is useful if you hear about an organization and you want to know whether it’s a scam or not. Charity Navigator is a way to quickly get that information. It’s easier to get it from them than by finding the group’s tax forms. But I don’t think Charity Navigator tells you anything other than that. It’s not particularly useful to answer the question, “Where should I give to do the most good?”
Transcription services by Tigerfish; now offering transcripts in two-hours guaranteed. Interview text has been edited and condensed.
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Source: Huff Post
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