I was unable to quickly find the details of how the UK Institute of Fundraising's studies were conducted. Are there more details somewhere? I'd want to check for survivorship bias, etc.
Also, can I get a page number for the claim pulled from Achieving Excellence in Fundraising?
You're right that the evidence for fundraising is a bit spotty. That's why this project is a trial-run rather than a project for which we're actively seeking funding.
None of us are members of the UK Institute of Fundraising. We don't have enough staff to benefit from their reports and it's not worth the $150 fee. And even if it were, they require one to be fundraising for two years, which we have not done. Therefore we also can't see their methodology and agree that this is suspicious. Though, this report is available.
Additionally "Fund Raising: Evaluating and Managing the Fund Development Process" provides another citation that are all throughout the book. The table of contents are pretty clear, but I can dig out page numbers if you'd like.
Furthermore, Wealth Engine has a report says there is 5:1 returns on grant fundraising. NFP Consulting Resources, Inc. repeats this claim and cites AAFRC Trust for Philanthropy, but they don't say where.
Have you heard something different? I imagine MIRI has been involved in fundraising -- how has that gone?
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Also, can I get a page number for the claim pulled from Achieving Excellence in Fundraising?
I made a mistake here. I didn't actually read this book, but a friend passed it along as a potential citation. Now that I've gone through it on Google Books, I notice it doesn't have any information on fundraising returns. My bad.
"Fund Raising" does have the citations, though. I'll update the post.
A great website, but I'd like to quickly point out that one of the core claims on this website doesn't make sense at all - "It is a hard task to make the world a better place and many of the best possible things to do are unmeasured and unquantified. This means we can take guesses at how much impact we are having, but it is quite difficult to know for sure. We’re walking forward with blindfolds. A huge benefit of fundraising is that it is one of the easiest fields to quantify with a quick feedback loop and a clear metric of success - money moved. We can take off the blindfolds and see where we’re going."
You can see how much money you're raising, which is important, but you can't see what the impact of the funds raised are, so you still don't know where you're going. Probably the target of your donation - even within a category like global health and development, or animal welfare - is much more important than the amount of money donated. The effect of a fivefold increase due to efficient fundraising could be dwarfed by this effect. This is even more the case when you talk about comparison between categories eg development vs x-risk.
Saying that fundraising takes off the blindfold because you can evaluate how much money you're making is like saying that a speedometer takes off the blindfold when you're driving, because you can tell how much you're accelerating.
I still love this charity and the idea of effective fundraising, but this claim should be fixed.
The quoted claim was in the blog post "Why fundraising". It was intended to talk about why fundraising as a meta-activity is quantified vs other more speculative meta-activities. You're very correct that it is also massively important to have quantified charities as this ultimately dictates the impact we have. That being said we use Givewell's estimates of lives saved as well as keep track of our counterfactual money moved and get a fairly quantified estimate of how much good we are doing.
All this being said I agree that its unclear what the paragraph is referring to and we will improve it.
Disclaimer: I am the Co-ED of Effective Fundraising.
FYI: There has been a discussion on 80,000 Hours (started by me) about the value of this project and how to maximise it.
No one at Effective Fundraising has prior experience with fundraising. What you're saying sounds plausible.
Slight correction here. No one at Effective fundraising has large amounts of fundraising experience. I have fundraised for other charities but not effective ones before. We do not expect the full average ROI in the first year (as you can see from our cost estimates). We are also consulting with several very experienced grant writers that will help speed up our learning process.
Disclaimer: I am the Co-ED of Effective Fundraising.
I would have sworn (although despite that, this may be a false memory) that you were not listed on the About Us page at [link removed] the first time I went to it, but were listed the second time, in which case I suppose I should say "Congratulations on being accepted as a volunteer, so shortly after you posted about them: You should update your post to reflect that, since most people would consider that both material (you are now working with the organization you are discussing), and neat (You talked about them and they they accepted you as a volunteer so soon)"
That being said, it does feel sort of unlikely that it would update with your name literally as I am browsing it, so I suppose I might just be suffering a memory gap and you were there the whole time, and I just hadn't noticed it until I had looked over your post and their site enough to see the "Peter Hurford" in both places, and I am just confabulating by assuming you had only been added just now.
Edit: Link became outdated.
I would have sworn (although despite that, this may be a false memory) that you were not listed on the About Us page at [link removed] the first time I went to it, but were listed the second time, in which case I suppose I should say "Congratulations on being accepted as a volunteer, so shortly after you posted about them:
This is actually correct. I know the people who run the organization personally, and have now decided to do more work for them going forward. Therefore, as of today, I'm an official volunteer.
Are we worried whether the compartmentalized accounting of mission and fundraising related financial activity via outsourcing to a different organization can incur PR costs as well? If an organization is worried about "look[ing] bad" because some of their funds are being employed for fundraising, thus lowering their effective percentage, would they be susceptible to minor "scandals" that put to question the validity of GiveWell's metrics by, say, an investigative journalist that misinterprets the outsourced fundraising as misrepresentation of effective charity? If I found out an organization reported a return of $15 on every $1, but in fact received a lot of money from outsourced fundraising which returned only $3 on every $1, their "true rate," when the clever accounting becomes opaque, may be significantly lower than $15, say $5 or $8. If I am a candidate donor that made his decision through an organization like Givewell, and my primary metric is ROI, I may feel cheated, even if that feeling is misplaced.
I suspect the above consideration is not very likely to be a big issue, but I did want to bring it to our attention as to give pre-emptive awareness. In the unlikely case it is worth thinking about, it may point to the different issue of measuring charity effectiveness by pure monetary ROI being equivalent to measuring the effectiveness of software by lines of code. If that is the case, perhaps a hybrid measure of monetary ROI and non-monetary but quantitive mission-related metrics can be employed by Givewell. Looking through their full reports, however, I sense this may already be the case. Anyway, this shows one has to be very careful when employing any one-dimensional metric.
So I think the complaint about "clever accounting" is wrong. The counter-argument is somewhat technical, so it might still incur a PR penalty, but it's not actually true.
As an individual donor considering where to donate based on ROI, you don't actually care about the ROI that includes fundraising, because the fundraising doesn't target you. The fundraising is targeted at people who currently don't choose their charity based on ROI, so it actually makes sense to treat it as a completely exogenous process for the purposes of marginal ROI calculation.
(EDIT: because the average ROI is the integral of the marginal ROI, it's clear that the marginal ROI has to get lower somewhere for the math to work out. I think the right way to do the accounting is to say that the low-marginal-ROI donations are those that come from the people whose minds are changed by Effective Fundraising. I smell some weird decision theory stuff going on behind the scenes here but I'm not quite sure if it's interesting or important.)
A helpful thought experiment is replace "fundraising org" with "org that creates additional people who donate to the highest-ROI charity" (because that's what they'll be doing; if EF discovers a higher-ROI charity, then they'll switch to fundraising for that one instead, hopefully). This might make it more clear that you shouldn't include fundraising costs in the cost of a particular charity--the charities "just happen" to be where the newly-minted altruists are donating their money.
EDIT: By the way, this objection has been raised both times EF has been brought up to a wider audience. So if anyone can think of a cleaner/more intuitive way to explain the counter-argument above, it would probably be quite high-value.
Many people know about GiveWell and their top-ranked charities. But how easy would it be to make a better one? In "Why It Should Be Easy to Dominate GiveWell's Recommendations", Rob Wiblin notes the simple solution -- fundraise for whatever organizations GiveWell recommends, and raise more than a dollar with each dollar you receive.
Edited on 22 July 2013 to correct a mistaken citation.