Time to start treating international aid like an investment

Solutions
"What if every nonprofit that focused on poverty alleviation had to prove they could do more for the poor with a dollar than the poor could do for themselves?" - Jacquelline Fuller, Google

RCTs stand for Randomized Controlled Trials and in the international development world, they are a golden ticket to legitimacy. Mention an aid program and sure you are likely to get some support for investing in a good cause. BUT, mention that your program has been tested in RCTs and results show a positive impact — Boom. Your cause is automatically considered a “legitimate” one. 

RCTs are used to evaluate the impact of an intervention against a control group, or a group that remains unchanged. This method is common in medical experiments to reduce bias and has become a popular method in development economics since the mid 90’s.

The idea is that, after finding eligible people to participate, you randomly assign people to one of two (or more) groups. The only difference between the groups is the treatment received. There will always be one control group that receives no treatment.

For a simple, hypothetical example of a project that wants to give sheep to poor families, an RCT might look like this:

Eligible families are picked and randomly assigned to group one or two

  • Group one receives two sheep per family

  • Group two, the control group, receives nothing

Researchers collect data for a given amount of time to assess how differently the sheep have impacted those that received them than families that received nothing.

Evidence generally plays a small role in the international charitable sector so the mainstreaming of RCTs is promising. RCTs have become synonymous with effectiveness; however, many economists claim that using control groups to compare development interventions is setting the bar too low. Instead, they argue for measuring by using cash benchmarking.

In the cash benchmarking method, the effectiveness of a project is compared to a group that receives cash equivalent to the cost of the project as well as a control group.

If a sheep in the example above costs $10 (considering all overhead expenses as well) then you could benchmark the project by introducing a third group of people who receive $20 per family instead of two sheep. 

Paul Niehaus, associate professor of economics at UC San Diego, mentions a common sentiment expressed by proponents of cash benchmarking: if we spend ten million dollars on a project, we should make sure that the project is more effective in doing good than handing out ten million dollars in cash to people.

Non-profits have already started using cash benchmarking. The United States Agency for International Development (USAID) recently made news for using cash benchmarking to measure the effectiveness of some of their programs. The results have come back for the first study suggesting that their Gikuriro program was not more effective than just handing families cash.

Other projects are more effective than cash which is why it should be a benchmark and not treated as a magic bullet. In a study comparing unconditional cash transfers to Building Resources Across Communities (BRAC's) Transfers to the Ultra-Poor (TUP) graduation program in South Sudan, consumption increased from both interventions in the short-run but there was a persistent wealth effect in the long-run for those receiving the graduation program.

It's time we start thinking of giving as critically as we think about investing. It's easy to think about donating as just handing over money that you would never see again. This approach might lead to not really caring about where it goes or where it will have the best impact. 

On the contrary, when we invest, we carefully research where our money will have the most return, not just if it will have a returnWe should approach donating just as we do investing, with meticulous research.

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  • Bollywood's PadMan challenges the stigma around periods in India

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    "America has Batman, Superman, and Spiderman; but India has PadMan.”

    Arunachalam Muruganantham is an innovator from India who first became known in 2012 thanks to his machine that produces cheap and durable menstrual pads for women in India. Six years and a lot of success later, his story is now a Bollywood movie by the name of PadMan.

    Muruganantham first started to work on his innovation thanks to his wife. Upon seeing her use old rags that he “wouldn’t even clean his two-wheeler with”, he started experimenting with different materials using his wife and sisters as test subjects.

    Menstrual pads in India, at the time of Muruganantham’s first foray into the research, were too expensive for most women to use regularly and the social stigma around menstruation added to the lack of access to hygienic menstrual products.

    Still, 40 percent of women in India don’t have access to sanitary products during their period.

    Back in his homemade lab, Arunachalam Muruganantham’s first tries weren’t going so well and, eventually, his wife and sisters got sick of their roles as guinea pigs and went back to their rags.

    He tried to find volunteers to test out his inventions but as menstruation was and still is a taboo in India he had trouble finding anyone who was willing to speak to him about her experiences.

    Thus, Muruganantham decided to test his ideas on himself, devising a concoction from rubber and animal blood. However, some people from his village caught him and he was ostracised for both his “crazy” ideas and his openness about the topic of menstruation.

    Even his wife broke up with him.

    Despite all of this, Muruganantham kept on with his research, believing that he was onto something. And he was indeed. It took him years but he ended up inventing a machine that can produce low cost sanitary pads.

    In 2014 Muruganantham was on the Times list of 100 most influential people for all his contributions to women’s health in India; In 2016 he was given the Padma Shri by the Indian Government, the fourth highest civilian award.

    Muruganantham’s research and invention not only brought affordable and hygienic menstrual products to women in India but his work also has contributed greatly to the fight against the social stigma against menstruation in the country.

    PadManis another step towards defeating the stigma. Only a few years ago even talking about menstruation was frowned upon in the country but now it is the subject of a Bollywood film starring one of India’s most prominent leading men Arijit Singh.

    Talking about menstruation, along with providing women and girls hygienic, and affordable, menstrual products both saves their lives and greatly improves them.

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  • 'Hi, I'm Rosa, I'm 14, and I'm worried for my generation'

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    "My name is Rosa Anders. I’m 14 years old and I am afraid for my generation. I am afraid of the environmental chaos climate change will bring and how it will impact me and my peers' lives. I’m just a teenager so I don’t have the solutions to these major world problems, but I believe part of it lies in individual actions.

    I am a member of the youth council of War Child. War Child is an organization that helps children who are or have been in a war. They do this by giving the children a safe place where they can play, get an education and psychological support.

    I am not a child of war. On the contrary, I had a very safe and privileged childhood, so why am I on the council? I believe if policies are made for children, they should have a say about them too.

    The youth council of War Child advises the organisation on policies. War Child is in the process of creating a youth council in each of the fifteen countries they are active in. This way, eventually there will be youth advising War Child around the world. Until then, since children at war can’t speak up directly, we — the free children  — should do our part.

    I was always interested in War Child and find what they do very important, and I always wanted to help them, but I never really knew how. I think this is a common issue that young people have.  There are so many world problems that need to be solved: Child marriage, discrimination, war, climate change, the list does not end. But I don’t think we are helpless.

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  • Forbes introduces a philanthropy score to their 400 richest list

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    Every year, Forbes magazine publishes a list of the 400 richest people in the US. How the list is compiled is pretty straightforward: it is a list of US citizens (and permanent residents) who have made the substantial majority of their fortunes in the US. It’s a list of billionaires.

    Forbes doesn’t explain in detail how they calculate the net worth of the people on the list but we know that they take into account both the assets these people have  (companies, cars, boats, planes, islands,...) — and their debts.

    Each year, the list is pretty much the same. Same names switching ranks, making a few more or a few less million each year; mostly men, mostly white, mostly above 40.

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    The two main factors behind Forbes’ methodology in calculating philanthropy scores are an estimate of each individual’s total lifetime giving and the percentage of their fortune they have donated. In some instances, Forbes explains, billionaires have been bumped up or brought down based on other factors like personal involvement in their charitable giving.

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    • Out of 400 people who have a net worth of at least $2.9 billion, only 29 received the highest score of five.

    • In terms of percentage, right-wing media’s favourite boogeyman George Soros was the most generous: giving 79 percent of his wealth, $32 billion, to his own philanthropic network Open Society Foundation.

    • In not-so-surprising news, Bill Gates has donated the most with $35.8 billion, 27 percent of his fortune.

    • Jeff Bezos, who moved from the second richest in 2017 to the richest person in the US in 2018, breaking Bill Gates’ 24-year streak, only received a score of two out of five.

    • 76 of the 400 richest received the lowest possible score meaning: to date, they gave away less than one percent of their fortune or less than 30 million.

    • Amongst these 76 is US President Donald Trump, the first billionaire president in US history.

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    Second, Forbes only calculates the amount and the percentage of donations. Where these donations go and their impact isn’t a part of Forbes’ methodology.

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