Why There's More Than Meets the Eye With Some Charities
In the video below, Ken Stern, former CEO of National Public Radio, discusses why some charities are popular despite little evidence of effectiveness. While this certainly isn't to say that all charities are ineffective, Stern shares a few stories below about how some charities have played up their actual effectiveness. Stern also gives his take on how people can find charities that are making a difference.
The full version of the interview can be found here, in which Stern discusses his new book, With Charity For All. In the book, Stern takes on the charitable sector, which he says, "operates with little accountability, no real barriers to entry, and a stunning lack of evidence of effectiveness." Stern discusses in detail what's broken in the charitable sector, how to fix it, and how Americans can best make a difference. Given Stern's unique perspective from his time at NPR, we also discussed with him the future of radio, and the technologies that are disrupting it.
If you're hunting for a great stock idea, The Motley Fool's chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the brand-new free report, "The Motley Fool's Top Stock for 2013." Just click here to access the report, and find out the name of this under-the-radar company.
Brendan: A couple of the individual charities, or at least individual charitable sectors you talk about -- one is D.A.R.E., another one is the water charities in Africa and Latin America -- could you talk about those specifically, and what's going on with them? Maybe more than meets the eye?
Ken: Yeah. I'll tell you a couple of stories. There are lots of stories in my book. It tells you in loving detail; I'll give you the skim read of it.
D.A.R.E., which is -- sorry, I can't actually remember what the acronym stands for -- is the principle educational charity in this country for educating children about the challenges of drug abuse. There is 20 years of high-quality research that shows that D.A.R.E. is actually ineffective, and, in some cases, harmful, because it's where kids actually can learn about drugs.
What is extraordinary to me, it's actually on a list of social programs that don't work, yet it still remains because it has a good public narrative, it has good political connections, and good ties to local police departments and schools. It still remains the principle charitable educational program in this country and, because no district is going to have more than one drug awareness educational program, it blocks other more effective programs from getting in.
Water charities to me are very interesting, because water charities are very good ... what you'll find is charities are very good at the stories that sell. The stories that sell are drilling whole wells. The stories that don't sell is maintenance and repairs -- an engineer going out to tighten bolts -- so what you have is lots of wells and lots of wells that fall into disrepair and don't work anymore. It's actually a tragedy across Asia and Africa.
One story I tell in the book -- I'll try to tell this fairly quickly -- is the story of a group called Play Pumps, which was a very hot charity about 10 years ago. They had the idea of putting in merry-go-rounds that doubled as pumps so you'd have kids get on the merry-go-rounds. They'd go around and that would drive the pumps and water would come up into a tank.
It was this grand idea, great idea. Lots of money for the Case Foundation, it was a big star of the Clinton Global Initiative one year. They installed thousands of these across Africa, until someone said that, "The emperor has no clothes."
The kids weren't using it. They had taken perfectly good pumps out of service to put on these merry-go-rounds, which no kids used, so it left the women of the village laboriously pushing these heavy playgrounds around.
No one thought to actually test these things on the ground before they went and instituted 4,000 of these across the continent.
Brendan: I think one of the main things that confuses people is, not necessarily all water charities are ineffective. Some have to be effective, but which ones are they? What's the best way for an individual to know that they're giving to a charity that's actually going to make a difference?
Ken: It's very hard. It is very hard because, as of today, there is no one single source for finding information. If you're an investor into the stock market, you go to The Motley Fool, you go to Mutual Funds, and there are lots and lots of resources.
There are 150,000 people whose jobs it is to help individual investors in the mutual fund industry make personal investments. There are less than 100 people across the country whose jobs are to help individuals make donations.
It's very hard to know. There's no substitute for doing the work yourself. I often encourage people to band together into groups, sort of like investing clubs -- charitable investing clubs -- and start sharing ideas and information and doing the work, and figuring out what the best charities are.
I will give a shout out, if I can, to Charity Navigator. It's one of the charity rating services which I was unbelievably hard on in the book, because mostly what they rate are things that are actually irrelevant to charitable effectiveness -- overhead, and things like that.
I told the story about the American Red Cross, which needs more overhead, so I actually think they've been a disservice, but they announced last month, after my book was to print, that they are launching something called Charity Navigator 3.0, which is the first attempt by any organization to rate effectiveness.
It's going to take a couple of years for them to roll out, but it's something I think everyone should keep their eyes on.
The article Why There's More Than Meets the Eye With Some Charities originally appeared on Fool.com.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.