[rjshade]

This is great. Something people often disregard, but which is hugely important, is charity effectiveness. This boils down to measuring the impact that you can make with a given donation: it turns out some charities are literally thousands of times more effective than others.

A lot of people don't realise how much good they can do with modest donations to the right charities -- until a year ago I really had no idea myself. There are a couple of groups which I know of which do analysis of charity effectiveness:

* Giving What We Can (http://www.givingwhatwecan.org/) are an Oxford, UK based organisation who estimate that you can save a life for ~£300.

* GiveWell (http://givewell.org/) are a US group who do similar research

They both publish lists of the most effective charities they've researched, and Giving What We Can have a calculator which shows you how much you can achieve by donating 10% of your income each year:

http://www.givingwhatwecan.org/resources/what-you-can-achiev...

I think these stats are astonishing and it's really changed my approach to charity. Worth checking out if you're interested at all in philanthropy!

[rjshade]

Oh and this is similar to the approach that the Gates foundation is taking. As far as I can tell Gates approached this as an optimisation problem: given that he has X billion dollars to give to charity, how can he maximise the effect that his donations have? How many lives can he save* with that money?

* lives saved is of course the wrong metric: no-one has ever saved a live, just prolonged it, but it's a convenient shorthand for maximising the number of quality adjusted life years (QALYs)[1] that a donation could buy.

[1] http://en.wikipedia.org/wiki/Quality-adjusted_life_year

[jessriedel]

All good stuff, but I'd want to emphasize that directing your philanthropy based on doing the most good does not require you to be a utilitarian, nor (if you are) does it require the utility function be denominated in QALYs.

[hprhpr]

Agreed about the importance of making sure you donate to the right charities, which is why I was disappointed to read this: "And, to begin, they have sprinkled $1 million on Silicon Valley nonprofits that focus on everything from urban forestry to homeless families."

Another good essay about this stuff is here: http://lesswrong.com/lw/3gj/efficient_charity_do_unto_others...

[pmarca]

For what it's worth, those six nonprofits weren't just chosen randomly. Each GP picked one he and his family had direct experience with.

For my part, I don't know as much about this as some people, but my wife teaches philanthropy at Stanford and has studied, written about, and taught the topic of effective giving for her whole career, so that works out nicely for me. (Can't resist plugging her recent book "Giving 2.0" for people interested in the topic.)

[waterlesscloud]

Thank you for taking the questions here seriously and taking the time to address them thoughtfully.

This sort of topic brings out high emotions on both sides, and it's good to bring the rhetoric level down a bit. Certainly it's the way to win people over to your way of thinking and have even more of an impact.

I'm curious, has your wife written about the sorts of topics raised here? Would she do so on the web, if she hasn't already? There's a notable portion of the entrepreneurial community that has these sorts of legitimate questions and it would seem like she'd be in a unique position to discuss them and sway hearts and minds.

[zmitri]

Hey Marc, speaking of giving 2.0, do you think there's some value in making it easier for companies to promote positive initiatives like this? Or do you think the action is more of a means in itself?

For example, if a16z said "Hey users of instagram (or users of a16z product that just sold), we're going to let you decide which cause some of this money goes to," would that create a delta in value from the original proposition?

[pmarca]

I'm not an expert (and don't want to comment on any particular company or product), but it's an intriguing idea. I think Marc Benioff was an early innovator in this area. It will be interesting to see what new ideas entrepreneurs -- or their investors -- come up with along these lines.

[nikcub]

a16z would be giving a lot of money towards capturing Kony if you did that.

[rdl]

Given that "how people donate money" (or spend money, or invest money seems to conflict with what they claim are their stated preferences, I wonder which is more representative. I'd bet on the revealed preferences by actions.

Basically no one would say (or is allowed to say in polite company) that they care more about having art available locally than the lives of a thousand people in some third-world country that they'll never meet. Yet, it seems pretty obvious that donations to local art save fewer lives than the anti-malarial mosquito nets, and should be obvious to the people donating.

[hprhpr]

Agreed about nobody saying they prefer local art over thousands of lives, but I don't think that means their revealed preferences are more representative of what they really want, I think it just shows how irrational they are. Most people don't sit down and think about what they want most and construct a plan to achieve that, so it shouldn't be surprising that they end up doing such drastically sub-optimal things as donating a lot of money to a museum when someone asks them to. It seems like a good thing to do, so they do it. They don't consider whether it's what they actually most prefer.

[astrofinch]

There's an article on Less Wrong about that too ;)

http://lesswrong.com/lw/2p5/humans_are_not_automatically_str...

[rdl]

I also thought a lot of the art donations (at the high end) were weird tax dodges, or done for the ancillary benefits of donating (getting your name on a building or bench, access to high end parties, cute art girls, etc.)

[jimmyvanhalen]

clearly a PR ploy. it's a waste of capital imo. Reduce your management fee and carried interest income and return them to your LP. or re-invest that capital in start-ups to create even more jobs.

edit: it's their money and what they do with it is their business. but they're in the venture capital business, not in the charity business. their job is to deploy capital and maximize returns to their investors (they create jobs and companies in the process).

Horowitz shakes off the potential for such troubles at Andreessen Horowitz, saying that half of firm earnings will be more than enough to satisfy its partners' lifestyles. "We don't play polo," he says. "And our skills are better suited for doing this than working full-time at a non-profit... I think this works out better for both us and the nonprofits."

Again: If they think they're earning too much. reduce their management fee and carried interest income and return the money to their LPs.

[lotharbot]

> "they're in the venture capital business, not in the charity business"

They're in the business of being human.

As is true for any of us, that means something complex, multidimensional, and personal. It's not some sort of affront to venture capitalism to use the profits it generates for something other than more venture capitalism. It's not a "waste of capital" to use your own capital for whatever you find important.

[jimmyvanhalen]

the money they make for their LPs goes to pension funds, universities, businesses, etc. which in turn creates more jobs, start-ups, investments, donations to charities, etc.

If you're going to donate to charity, do it personally and without all the media hype.

[lotharbot]

The money they give to charity goes to researchers, consumers, and so on. That money gets spent, moving back into the economy, which creates more jobs, start-ups, investments, donations to charities, etc. It's hard to say which route generates more benefit down the line; I have yet to see a robust economic model that handles even second-order effects well.

Media hype can be a good thing or a bad thing. If it's about your own ego, I agree, STFU and give privately. But hype can also convince others to change their behavior. Consider the use of "matching funds" as an incentive to increase charitable giving. Various publicity techniques (such as somebody famous emphasizing philanthropy) can increase giving or help direct it to where it can do the most good.