GiveWell helps you make savvy donation decisions

closed jar full of pennies

If you won the lottery, what would you do with the money?

I never play the lottery, but even so, I've got big plans.

Once I've paid off our debts, saved for college and bought something frivolous — a little apartment in Paris is my pick — then I'm going to get busy giving money away.

The world's problems will melt when I pelt them with cash!

Or not.

It's really difficult to make wise donation decisions. No one wants to see their hard-earned money wasted or spent on executive perks instead of going to help the people, critters or projects we intend it to help.

With thousands of charities competing for our dollars, it's tough to know which will do the most effective work.

Sites such as Charity Navigator and the Better Business Bureau will give you a sense of whether a charity is reputable and financially strong as well as how much of each donated dollar the charity spends on causes instead of on office overhead.

But these sites tell you little to nothing about how effective the charity's strategies are or whether your money will make any real difference to its efforts.

A pair of escaped hedge-fund traders has come up with an alternative. Their site, GiveWell.com, ranks charities according to a longer list of significant qualities.

In their view, the most effective charities:

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GiveWell got its start when its founders, Holden Karnofsky and Elie Hassenfeld, met at Bridgewater Associates, an investment management company in Connecticut.

In the fall of 2006, they and six colleagues created a charity club, with each member assigned to research charities in a specific area, find the best ones and report back.

They found that there weren't a lot of good ways to distinguish between charities, in part because many charities don't provide the necessary information.

Many evaluations rely on charities' tax forms, but charities get a lot of leeway in how they classify information on those forms.

Top GiveWell Charities

Charity What it does
Against Malaria Foundation Expands access to insecticide-treated
bed nets
GiveDirectly Distributes cash to the poor in Kenya
Schistosomiasis Control Initiative Treats children for parasite infections in Africa

Fascinated by the problem and sure that they could come up with a better way to evaluate charities, Karnofsky and Hassenfeld quit their investment management jobs and launched GiveWell in 2008.

Instead of relying on charities to supply information about their work, the pair decided to work from the bottom up by identifying high-impact strategies, then finding out which organizations use them well.

For instance, there's a lot of academic literature documenting insecticide-treated bed nets as an effective way of preventing malaria.

GiveWell looks for that information, then finds organizations that effectively implement antimalarial bed nets.

If you've just got some money to donate, GiveWell can probably help you find a charity that will put your cash to effective use.