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Founder Stories and Low-Paid CEOs

November 15th, 2012
giving  [html]

The default state for charities has been and still is that no one involved really knows how much good their program is doing. It's only recently that measuring the effect of charities has become at all practical, and there are still many causes (education, scientific research, existential risk reduction, ...) that we can't evaluate well at all.

If you can't directly evaluate the effects of a charity you can instead try to approximate that by evaluating the people running it. The idea is that if they're committed and take the cause seriously then they're not going to waste your money. If someone is willing to run the charity for substantially below-market rates, that indicates they really care, while a CEO that requires compensation similar to what they'd get in the private sector could easily be just doing it as a job. A story about a person like you who when met with a case of overwhelming need felt compelled to help, founding this charity, indicates pure motivation.

While these may be good things to look for when you're trying to keep being scammed (though they're pretty easy to fake, especially the founder story) the problem isn't primarily avoiding scammy charities. Two founders, equally committed, with excellent stories and willing to work for little on donated equipment, may have a huge difference in what they can achieve with your money. Not because one founder is better, but because one approach is better. (See 1000x variance: seeing eye dogs vs cataract surgery.)

If the effects of charities vary dramatically in a way you can externally verify, it doesn't make sense to focus on the people running them.

(If we limit our scope only to charities that do very well on the aspects we can measure, however, should we go back to trying to figure out whether the founders have their hearts in the right place? Should we evaluate the people? Is my impression correct that founders/CEOs willing to work for below market rates, in effect donating a portion of their salary to their charity, tend to do better work?)

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