Over the course of U.S. history, an ethic of transparency about organizational performance has taken hold in private industry, the legal and medical professions, and, most recently, on account of public demand, the financial sector. It is time for this level of transparency and accountability to take root in the aid industry, and it will when small donors demand it from the organizations they give to.

Concern for the poor is a fundamental pillar of Christian identity and calling, a constant theme throughout the Old and New Testaments (Deut. 15:4; Prov. 14:31; Gal. 2:10; James 2:2-6). A definitive mark of the church throughout history is its members caring for the poor in their midst.

Today, thanks to economic globalization and the Internet, those who want to care for the poor overseas enjoy a plethora of attractive options: sponsoring a child, donating a farm animal, making a small loan to a budding entrepreneur, installing a well in a village, getting a morning caffeine jolt with fair-trade (instead of free-trade) coffee—among others.

But what are the best ways to help those living in developing countries By “best,” I mean most effective: things that actually help people rise out of poverty, and that carry with them a sizable “bang for your buck”—programs in which the impact on the poor is significant per donated dollar.

Answering this question proves more difficult than you’d expect.

The Economist’s Challenge

Measuring the performance of a for profit institution is straightforward: you look at its profit. Measuring the performance of a nonprofit program is much more difficult. Most relief and development organizations carry out self-assessments and measure impact based on self-studies. But donors (and Christians at large) should know the deficiencies of these self-studies.

For example, many relief and development organizations measure results based on studies that compare outcomes of program participants to those of nonparticipants. Such studies typically yield biased results, because program participants are routinely a self-selected group of motivated individuals who would likely have improved even without the program. In other words, their success cannot be attributed to the program alone.

Other organizations conduct before-and-after studies and interpret the difference as “impact.” But this also leads to bias: individuals tend to turn to development programs when they want to improve their lives. Just as the impact of a substance-abuse program cannot be judged by “before and after” outcomes (since the main causal effect is the addict deciding to enter the program), neither can poverty programs be assessed in this way. For example, people take micro-finance loans when they want to improve their lives; in a recent study, we find that 75 percent of the apparent impact of microfinance, based on practitioners’ before-and-after observations, is an illusion (although the 25 percent that remains is not insignificant).

Some development programs rely on the perception of impact. But even honest attempts to self-evaluate are affected by what’s called “confirmation bias”: we naturally gravitate toward evidence that confirms a prior belief, especially a belief about our own effectiveness. People and organizations also suffer from “illusory superiority,” which causes us to systematically overestimate our performance. For example, over 90 percent of us believe ourselves to be above-average drivers. (Apparently even those of my own species are not immune: another study found that 68 percent of university faculty rated themselves in the top 25 percent in teaching ability.)

Development organizations are run by human beings. Like all of us, they tend to attribute their successes to program effectiveness and their failures to forces outside their control.

Donors’ subjective impressions of a program’s effectiveness are even less accurate. Jesus tells us that “it is more blessed to give than to receive” (Acts 20:35). But too often Christian antipoverty organizations have worked overtime to ensure that we feel blessed by our giving. Nonprofits tend to market themselves to potential donors through success stories, anecdotes, and narratives that emotionally connect. In doing so, they want our giving to feel good. But these carefully selected anecdotes virtually always exceed the average impact on a program participant, creating a bias in donors’ minds about the impact of their giving.

The difficulties in assessing the impact of antipoverty efforts only magnify the need for understanding the impacts of different types of programs. Love, understanding, and giving are deeply intertwined. Genuine love motivated to action is concerned about the consequence of its action. If I truly love my wife, I study her needs and desires carefully to understand the effect of my actions toward her.

Giving that gives in response to feelings but which disregards consequences can turn into a narcissism that is only semiconscious of motives. Genuine love carefully considers how an action affects the recipient. In some cases, love may call us to acts of compassion even when there is little hope of a life-changing result, such as when we stay by the side of a dying person. But in many cases, it is more feasible to measure tangible impacts of our giving, especially when it comes to helping the poor. In these cases, we are not being good stewards if we give blindly without understanding the impact of our giving. The blessings of givers should be rooted in the blessings of receivers.

Measuring Blessings

In recent years, development economists have made remarkable progress in measuring blessings to receivers. I have been fortunate to belong to a generation of development economists who are borrowing tools from the field of medicine. For example, the use of randomized controlled trials to evaluate development programs has helped us understand the relative merits of different approaches to poverty alleviation. Other new methods that mimic the impact-identification power of the randomized controlled trial have also proven fruitful in this area.

So what are the best ways to help the poor in developing countries?

To answer this question, I polled top development economists who specialize in analyzing development programs. I asked them to rate, from 0 to 10, some of the most common poverty interventions to which ordinary people donate their money, in terms of impact and cost-effectiveness per donated dollar.

Today, those who want to care for the poor enjoy a plethora of attractive options. But what are the best ways to help those living in developing countries?

Sixteen researchers responded to the survey. They are from Cornell, Duke, Yale, the University of Maryland, UC-Berkeley, Stanford, George Washington, UC-Santa Cruz, the University of Minnesota, Brandeis, Michigan State, Tufts, and the World Bank. Of the respondents, five are members of the Association of Christian Economists. And they showed remarkable consensus in their ratings. Virtually none of the highly rated poverty interventions received low marks from any of the responders. Likewise, virtually none of the lowly rated programs received high marks. I did not include my own rankings in the survey, but I do comment on each. The following are the results in order of greatest estimated impact to the least, followed b organizations that use that strategy (= faith-based).

Ranking 10 Strategies

1. Get clean water to rural villages. (Rating: 8.3)

One million children die from drinking unclean water each year. Clean water can prevent legions of child health problems and dramatically reduce infant mortality.
Scientific evidence is overwhelmingly positive on impact. A World Health Organization study estimates that the availability of clean water in a rural village reduces infant mortality by 35 to 50 percent, at a cost of roughly $10 per person per year. Because infant mortality rates in the poorest countries often range from 60 to 110 per 1,000 live births, the cost of saving a child’s life by providing clean water alone may lie in the range of only $180 to $400. To development economists, cheap-plus-effective is an endearing combination.

A growing number of development organizations working to provide clean water in rural villages now receive online donations. Funds are used to drill wells, lay plastic pipe, and install pumps.
Living Water International†
LifeWater.org†
GlobalWater.org
WaterAid.org
TheWaterProject.org†
Flowing Streams Ministries†

2. Fund de-worming treatments for children. (Rating: 7.8)

Intestinal worm infestation affects one in four people worldwide and is responsible for chronic poor health, listlessness, and learning impairment among children in developing countries. Albendazole and other medications are stunningly effective and very inexpensive, making de-worming another great case of “bang for your buck” effectiveness.

Measuring the performance of a for-profit institution is straightforward: you look at its profit. Measuring the performance of a nonprofit program is much more difficult.
A study by researchers at Berkeley and Harvard found that regular de-worming treatment in worm-infested areas of the developing world can reduce school absenteeism by 25 percent at a cost of only 50 cents per year per child. The only caveat: In most instances, de-worming drugs need to be administered repeatedly, especially to shoeless children, as worms typically enter through the soles of the feet.

DewormTheWorld.org
ChildrenWithoutWorms.org

3. Provide mosquito nets. (Rating: 7.3)

Malaria is a leading killer of children in developing countries, accounting for nearly one in five deaths of children under age 5 in sub-Saharan Africa. The claim is that every 45 seconds, a child dies from malaria. The good news is that, like health problems from dirty water and worm infestation, malaria can be prevented cheaply and effectively.
Bed nets cost only $5 to $10 each. Because of their cost-effectiveness, they have created quite a buzz in the nonprofit world in recent years. The scientific community strongly supports the intervention; insecticide-treated bed nets have a proven positive impact on malaria prevention. Modern nets last for years and are proven to reduce instances of malaria by 50 percent and malaria mortality by 20 percent.
HisNets.org†
NetsForLifeAfrica.org†
NothingButNets.Net

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