Higher Education Philanthropy Priorities

Hollis-Hall-Harvard-Yard

April’s big higher education philanthropy news left me grumpy. I mean, yes, it’s nice that financier Ken Griffin has pledged a gift of $300 million to Harvard University. In exchange Harvard will rename its Graduate School the “Kenneth C. Griffin Graduate School of Arts and Sciences.” Higher education is good, philanthropy is good, and Harvard is good. It should be all good.

Hollis-Hall-Harvard-Yard
Hollis Hall, Harvard Yard

Still, here’s why I’m grumpy. Harvard is the least worthy use of hundreds of millions of philanthropic education dollars I can possibly think of. They need it the least.

Among universities, Harvard already boasts the largest endowment of any university. With $50 billion under management, cynics (like me) have long quipped that Harvard is a world-class hedge fund with a fine educational institution attached to it. 

Harvard does not really elevate learning in our larger society, except in the most extreme trickle-down kind of way. The profile of a student actually boosted by Griffin’s donation is extremely narrowly selected. A $300 million gift seems like a bizarre over-allocation of resources to people for whom resources are truly not scarce.

Among 4-year colleges, Harvard is already quite generous with families of demonstrated financial need. But these students admitted from low socioeconomic strata are extremely few. The path into Harvard is so narrow that only rarely does a student from a lower-income family gain admittance. Second, these narrowly selected students – rich, poor, or middle class – probably would thrive wherever they went. Third, most of Harvard is made up of students from relatively privileged backgrounds, making the institution far less impactful on society as a whole, when considering it as a recipient of philanthropy.

Griffin giving $300 million to Harvard helps an organization that doesn’t need it, which in turn serves mostly students who largely don’t need it, or students who would succeed without it.    

Ken-Griffin
Ken Griffin

What Ken Griffin mostly bought for his $300 million was naming-rights as a monument to himself in perpetuity, burnishing his own reputation as a “success,” via brand-affiliation with Harvard. A personal monument and a name brand. It’s Griffin’s money and he gets to prioritize what he wants. But the gift just struck me as the worst kind of higher-education philanthropy. 

Meanwhile, the contrast with the very best in higher education philanthropy is very stark. 

In the midst of the pandemic in 2020 and 2021 MacKenzie Scott – author, philanthropist and via divorce from Jeff Bezos a 4 percent owner of Amazon – set a new and better standard for higher education philanthropy. Scott’s lessons were ones that Griffin either didn’t notice or chose to not learn.

She gave billions in total to organizations vetted for accomplishing great work but that suffer from insufficient resources. The opposite of Harvard in terms of need. She gave to hundreds of organizations that actually needed the money.

She thoughtfully targeted institutions – like Big Brother Big Sister, or community colleges, that serve a broad and inclusive swath of people who themselves had insufficient resources. Again, the opposite of Harvard. People who actually needed the support.

Because social and economic class is self-reinforcing (in contrast to our national myth of social mobility) higher status and more selective higher education institutions matriculate students from higher income families, on average. Also, higher status and more selective institutions generally cost more. As a result, if you want to help social mobility through increasing educational opportunity, the place to focus is regional and community colleges. So that’s what Scott did. That’s where the transformation in people’s lives and in society is likely to take place.

At Harvard, less than 12 percent of students come from the bottom 40 percent of households by income. A larger cohort at Harvard, 15 percent of students, come from the top 1 percent of households by income. All of this is according to research done by Harvard’s own Raj Chetty and a team of economists.

At UT Austin, 15 percent of students come from the bottom 40 percent of households by income. Which itself is a result of its highly selective status. At UT San Antonio, 26 percent of students come from the bottom 40 percent of households by income.

In Bexar County’s Alamo Colleges, 43 percent of students come from the bottom 40 percent of households by income. So that’s where Scott gave. Where the students with the most financial need are actually studying.

The socioeconomic origin of families of students is just one measure – but an important one – of the role higher education does, or does not play, in creating pathways to social mobility. 

For all of Harvard’s successes in championing lower socioeconomic access to higher education – a pitch made with just about every alumni solicitation for donations that it sends out – a much more effective way to support this cause would be to donate to higher education institutions that truly serve middle and lower-income families. Like community colleges, or public universities that serve a region or state.

In San Antonio, Scott gave $20 million to San Antonio College, and $15 million to Palo Alto College, both part of the Alamo Colleges District. 

Mike-Flores
Dr. Mike Flores

Dr. Mike Flores, Chancellor of the Alamo Colleges District, admires Scott’s philosophy of giving to under-resourced communities. Further, Scott allows the recipient institutions full discretion in how to best spend her gifts. 

Scott’s donations went into programs such as $4 million to support students in high-demand degrees in tech or nursing that will likely transform their lifetime economic prospects for the better. $5 million went toward the $75 million endowment for AlamoPROMISE, which provides scholarships to make an Associates degree affordable for most area high school students. 

I think what MacKenzie Scott got for her $25 million to Alamo Colleges was life-transforming social mobility among people who need it most. And they didn’t name anything after her. She doesn’t really get bragging rights through brand affiliation with a community college. Instead she just gets to make a difference. 

A huge priority for Alamo Colleges is to make sure any area high school graduate can get free or greatly subsidized tuition, with wrap-around services, on the way to getting an Associates degree, what Dr. Flores deems the “moonshot” program known as AlamoPROMISE.

Dr. Flores, when asked how he thinks about transformational gifts in higher education, “Just imagine, an $80 million dollar gift could guarantee graduating high school seniors access to AlamoPROMISE in perpetuity for Bexar County graduates for decades.”

Scott didn’t build a monument to herself when she gave her gifts, but she demonstrated a far better philanthropic model than the old one Griffin followed this month.

Harvard is not a bad institution. It represents greatness in many fields and is a cool place for a fortunate few. As a destination for philanthropic dollars, I just would personally place it last on my list.

Disclosure: In 2022 I offered consulting services – online personal finance lessons – for employees of the Alamo Colleges District.

A version of this ran in the San Antonio Express News and the Houston Chronicle

See related posts:

On Ukraine Philanthropy 1

On Philanthropy 1

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Ukraine Philanthropy Part II – Using Airline Miles

I wrote recently that helping Ukrainian people survive and resist the Russian invasion is the most philanthropically worthy project I can think of right now. But a key question remains: How can I help?

I found a surprisingly easy and satisfying way last week, through an organization called Safe Passage 4 Ukraine

They accept donations of hotel miles, credit card reward points, and airline miles. If you only have a small number of saved miles, the organization can aggregate donations from many people to purchase travel or hotel stays for refugees from the war zone.

Their online form is very easy to use.

For small amounts of miles in airlines I rarely fly, I filled out their form with my pledge, then clicked a button, and the website took me to my own airline miles account. From there, once logged in, I clicked the charity to complete the transfer of miles. The charity then sent me a confirmation email, asking me to click once more to confirm the transfer. Less than 5 minutes of “work” at my desk. Easy peasy.

SP4U

JetBlue’s minimum donation is 500 miles. I really can’t use my roughly 2,000 miles with them so I donated them. United Airlines’ minimum is 1 thousand miles. I pledged the roughly 2,500 miles I had. 

The Most Satisfying Thing

Then I did an even cooler thing. Although I only had a few JetBlue and United Airline points, I travel American Airlines more frequently. I had accumulated a little over 50 thousand miles at the beginning of last week.

Shortly after I pledged to donate at least 30 thousand of those points, a travel specialist from Safe Passage 4 Ukraine requested over email for me to stand by, as he’d be sending me further details shortly.

With at least 30 thousand American Airlines to pledge I became eligible to purchase a transatlantic flight for an individual Ukrainian refugee.

Two days later, on a Friday afternoon, my assigned travel specialist sent me an individual’s profile, just as promised. It was a Ukrainian woman’s name, her birthdate, and a specific multi-city flight plan – Warsaw to London (Heathrow) to Philadelphia to Orlando, with flight numbers and times. The specialist had already worked out that this one-way transatlantic flight could be purchased with my 30,000 miles, plus $96.15 from me. Very affordable. By the time this column goes to print, she will have arrived in Orlando.

Incidentally, I don’t know about you, but whenever I try to book my own travel with my miles I find I never have quite enough. If I have 25 thousand miles, my flight requires 50 thousand. If I have 50 thousand, my flight needs 90 thousand. I feel like it costs 50 thousand miles just to go from San Antonio to Dallas and back, whenever I search for it myself. To my delight, booking this ticket for a stranger to fly out of Warsaw to Orlando actually cost exactly what the Safe Passage 4 Ukraine travel specialist told me it would cost. Somehow, they found a 4-city transatlantic flight for 30 thousand miles, plus $96.15. 

Actually, initially I had a problem when I went to book it and I found I couldn’t get the flights for less than 79 thousand miles. Then I realized that I’d mistakenly searched for a round trip ticket. I’d forgotten to book just the one-way flight. Right. The Ukrainian refugee just needs to get away right now. She isn’t looking for the round trip yet. 

So Who Gets Safe Passage?

I spoke last week with Rachel Jamison, the founder and Director of Safe Passage 4 Ukraine. Jamison says her organization has flown 505 Ukrainians overseas, fleeing the war. They have flown or housed (with hotel points) 41 injured volunteers. They have flown 39 wounded soldiers receiving prosthetics.

Rachel_Jamison
Rachel Jamison, SP4U founder

They have aggregated 17 million airline miles and approximately 2 million hotel points. Because they mostly work with points and miles, their actual financial donations have remained small, an estimated $350 thousand to date.

By day, Jamison is a law professor working for New York University based in the United Arab Emirates. We spoke by Zoom despite the 10 hour time difference. With an all-volunteer organization, she retains her full time job. “I’ve been in a lot of tough places,” she says, “but [Ukraine] is the hardest environment.”

“I come in as an atypical person, not from Ukraine. But this is what I’m most proud of, professionally. Safe Passage 4 Ukraine is also atypical, in that it involves Ukrainians working in partnership with foreigners, and military folks working with civilians. That’s very rare.”

Because they have many more people trying to flee the war than they can serve, their partners on the ground in Ukraine asses criteria for safe passage flights, which are a combination of 

1. A safe landing destination, 

2. Legality, and

3. Need

To determine a safe destination, Jamison says the “most common thing is people have family in the US or Canada, and they need to be reunited with them.” This is especially true as most people they help are women, and women with children.

Ukraine_refugees
SP4U mostly helps women and women with children

Next, their partners on the ground in Ukraine do assessment of their legal status.

“Every person we help move to the United States or Canada has a documented legal right to move, and has a sponsor when they arrive, usually a family member,” explains Jamison.

And then finally, there’s the prioritization of the most needy. “There’s an overall needs assessment that starts with: ‘if we don’t help this person, what will happen?’ All of them have been through things that you and I have never experienced,” Jamison continued. “So we are drawing the line at who really needs our help.” 

That often means the recipients of the flights are ill and in need of treatment, or they are people traumatized by bombing or Russian occupation. In the next phase of the war – which may mean towns newly liberated from the Russian army – Jamison expects a huge uptick in people desperate for help. 

“Right after Kharkiv was liberated [in September 2022] there were suddenly many people with serious needs. We are going to need everything we can get.”

An SP4U volunteer

Chris Schools is an ex-marine with operations experience who lives north of Dallas (Celina, TX). He has known Jamison from before she went to law school. Schools deployed to Afghanistan 2010-2011 with the marines as an ordinance specialist but has been out of the military since 2011. When Russia invaded Ukraine, he knew he wanted to help, but asked himself how? 

I asked him whether he considered going to Ukraine? “It runs through your head, but with a 6 and a 3 year-old now, my life is different. I can’t be going into combat zones.”

Instead, when he heard about what Jamison was doing, he reached out online and asked he how he could help. As he told me, “nobody is more action-oriented than Rachel, in everything she does. It was very easy for me to get bought in and know we were on a worthy mission.”

In April 2022 he volunteered to work on partnership outreach, and then extended his work to helping, along with others, to set up their financial systems, managing their PayPal account for incoming donations, as well as making disbursements for example to reimburse partners inside of Ukraine. 

As a logistics guy with a background in working in a complicated war zone, Schools was effusive in praising what Jamison created in a short time. “The organization is unique in that they found a way to give back that hadn’t been done. Anybody can say they need money, but they put together a complicated system in a manageable way, to be innovative and move quickly.”

The Appeal

This charity really appeals to me. I had an extra spare resource – airline miles – that I’ve traditionally found difficult to use. Safe Passage 4 Ukraine did the hard work to find and vet the person from a war zone who most needed them. They found the exact flight on the exact day that could serve her needs. All I had to do was book it with my miles under her name and personal information. They did the rest. 

I don’t know any of the back story of the woman whose ticket I purchased with my airline miles, only that she was from Mykolaiv, a previously Russian-occupied but now Ukrainian-liberated city. That’s all I need to know. 

Without this organization as a matchmaker, I would have virtually no way to personally help an individual in the Ukrainian war zone. I found it very emotionally satisfying doing my small part to help remove one person, desperate to get out of a war, to a safer place in the United States.

Here’s the link again to pledge miles.

A version of this post ran in the San Antonio Express News and Houston Chronicle.

Please see related post

Ukraine Philanthropy I – A Scrappy Group

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Ukraine Philanthropy Part I – How You Can Help A Lean Scrappy Group

I wrote recently about what would be on the bottom of my list of philanthropic priorities. 

What is on the top of my list? I have only just begun to act on it, but the short answer is Ukraine, my geopolitical obsession for a little over a year.

My main honest thought in February 2022, during the first week of the invasion, is that I would have fled the fight. I fully expected Ukrainians to do the same. Their resistance to the Russian invasion, and their relative success in not being rolled over by the successor to the feared Red Army, astonishes me. 

ukraine_war_map
Ukraine key locations

The conflict may last many more awful years. One of my main questions over the past year is how can I, and by extension how can Texans equally obsessed as me, support Ukraine?

Official Channels

Two official sites exist to gather international private support for Ukraine’s resistance. As a first response to my question I think people could and should consider these. 

Ukrainian President Zelensky created United24,

which solicits donations for one of three purposes: 

  1. Defense and Demining,
  2. Medical Aid, and 
  3. To Rebuild Ukraine

Mark Hamill, who portrayed rebel Luke Skywalker in the Star Wars epic about scrappy resistors fighting an evil empire against all the odds, has signed on to this official effort to support Ukraine. They accept credit and debit cards online. As of April 2023, Ukraine24 says they have raised $321 million this way.

In addition, the National Bank of Ukraine created a site for private direct donations to support the Ukrainian Armed Forces.

The National Bank of Ukraine claims that as of April 2023, it has raised the equivalent of $677 million (25 billion Ukrainian Hryvnia) through direct donations. 

Unofficial Channels

One of the unique features of this invasion is how technology – through social media, and on-the-front-lines communications for example – enables individuals to offer material support in a less official capacity. There are likely thousands of small-scale efforts that have sprung up since February 2022 to support Ukraine.

Austin-based television director Dax Martinez-Vargas met fellow advertising director Mykola while shooting television commercials in Ukraine. Following the 2014 Russian invasion of Crimea, Mykola’s television work dried up. As Martinez-Vargas tells it, Mykola over time built a discussion group on the social media platform Discord to call attention to Ukraine’s situation. When Russia invaded in February 2022, US-based members of that Discord group asked Mykola how they could help get supplies to where they were needed most. The discussion widened to others interested in Ukraine’s plight on the social media platform Reddit, where Mykola continues to build his international audience using the alias “JesterBoyd.”

jester_boyd
JesterBoyd

Dallas-based entrepreneur Steve Watford joined with Martinez-Vargas and a Nevada-based entrepreneur Anders Boyd to found Ukraine Front Line, Inc. 

Their original common bond was Mykola’s Discord group, and a desire to help as directly as possible. Boyd built the group’s website. Watford became President and got the organization recognized by the IRS as a 501(c)(3) charity, eligible for tax-advantaged giving from US citizens. 

Since then, Watford reports, about $50 thousand from 200 individuals and two trusts have been sent to support Mykola’s efforts to deliver needed supplies to the soldiers and medical personnel at the front. As their man on the ground in Ukraine, Mykola arranges purchase and pickup of materials, often in Poland, and sees their delivery by himself, or via couriers. They’ve purchased and delivered supplies such as combat medical supplies, cold weather uniforms, and reconnaissance drones.

It’s all very scrappy, lean, unofficial, and grass-roots. Watford, Martinez-Vargasa, and a third board member Robin Rohrback with whom I spoke, all prefer the efficiency of direct support to Ukrainians over more official charities or big established international charities. 

Compared to larger organizations, the material delivered by Ukraine Front Lines, Inc is tiny. But as the volunteers see it, with no overhead and volunteers who cover their own administrative costs, 100 percent of donations go to where it’s most needed in Ukraine.

The risks

The New York Times reported last month on Ukraine charities that have popped up since the invasion began 14 months ago that have raised eyebrows.

Accusations include lying about the biographies of key members, claiming official registration or pending registrations as an official charity when that wasn’t true, or exaggerating accomplishments or deliveries of supplies. A year ago I sent a small amount of money via PayPal to a Ukraine-based American with an active Twitter presence who represented just such a grassroots organization. He was mentioned as a controversial figure in that recent New York Times article, and he has since gone dark on Twitter. For small organizations, one should always maintain some level of skepticism. 

For what it’s worth, Ukraine Front Lines is a registered 501(c)(3) organization. Mykola and his in-country couriers do an admirable job of photographing and documenting their deliveries, posting on the Ukraine Front Lines blog and Reddit. 

One upside of supporting small organizations is efficiency. Another is that supporting small increases the chance of engaging in a philanthropy that is emotionally satisfying, through a narrative and personal connection. 

My donations

I am of the opinion that the US government and our NATO should support Ukraine generously with government funds. As of this writing, official US government support is above $75 billion, a combination of military, financial, and humanitarian aid. But I also hope and think Americans – who give close to $500 billion dollars in philanthropy per year – could make a difference as well.

Last week, I was successfully able to donate a small amount of money to Zelensky’s United24 for “defense and demining” through my credit card. 

Then I tried to donate a small amount using my credit card to the National Bank of Ukraine, but the payments didn’t go through. After three failures I tried to communicate via online chat, but the site’s chat function was in Ukrainian, so I was not able to complete that donation. 

Zelenskyy
Zelenskyy as civilian leader and leader of a country at war

Finally, I gave a small amount to Ukraine Front Line, Inc after speaking directly with three of their members, and after viewing Mykola’s very specific communications online. 

As we grind into the second year of a brutal invasion and defense, I hope and think the philanthropic power of Americans should and could be a force multiplier. 

Watford brings a very Texas attitude toward his support for Ukraine through Ukraine Front Line, Inc.

“We [Texans] bleed freedom, that’s our nature, and God help anyone that threatens it,” says Watford. “This same trait has been heroically demonstrated by the people of Ukraine. They were backed into a corner staring straight down the barrel of a loaded gun and said, ‘do it.’ They have and will continue to fight to preserve their freedom, and they’ll die before they give it up. That’s about as Texan as it gets.”

A version of this post ran in the San Antonio Express News and Houston Chronicle.

Please see related post: Ukraine Philanthropy II – Using Miles for Refugees

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Charitable Deductions and New Tax Law

Happy Final Tax Filing Day everyone. How charitable do you feel right now?

My accountant filed for an extension for me, so I’ll let you know in mid-October how I’m feeling, thanks for asking.

Anyway, one of the potential big changes resulting from the 2017 Tax Reform is the treatment of household charitable contributions, starting in 2018. Quite possibly that changes how much we all give every year.

At tax filing time, taxpayers may list all their charitable contributions and receive a deduction from income for that contribution. If for example I give $1,000 to a charitable association like the Society For Redundancy Society, and I am in the 25 percent tax bracket, I could expect to receive a $250 reduction in my taxes at tax filing time. A few other categories of things, like mortgage interest, get similarly rewarded via reduced taxes. It has often made sense to go to the hassle of listing these tax deductions, as long as they are larger than my household’s standard deduction, previously set at $12,700.

I can still do that, but the new tax policy passed in 2017 changes my incentive for itemizing deductions.

tax_policy_centerFewer of us will itemize deductions because the standard deduction – which allows people to skip itemizing – nearly doubled in 2018, up to $12,000 for individuals and $24,000 for couples. I’d have to give a lot more money to the Society for Redundancy Society, in addition to my mortgage interest deduction, for my charitable contribution to have a specific effect on how much I pay in taxes.

The Tax Policy Center estimates that the number of tax filers claiming itemized deductions for charity will drop by 50 percent in 2018 versus 2017. That by itself is probably a helpful increase in efficiency, since fewer itemized deductions means simpler tax filing for taxpayers as well as less work for the IRS.

At the same time, however, the Tax Policy Center estimates charitable giving will drop by 5 percent as a result of fewer households receiving the tax incentive from itemized deductions. That’s potentially problematic.  Charitable donations in the US totaled an estimated $373 billion in 2016, so a 5 percent drop ($18.65 billion) is a lot of lost philanthropic dollars.

Dr. Joyce Beebe, fellow in public finance at the Baker Institute for Public Policy at Rice University, published a paper last month “Charitable Contributions and the Tax Cuts and Jobs Act of 2017” detailing the effects of changes.

joyce_beebe
Dr. Joyce Beebe of Baker Center, Rice University

I followed up with Dr. Beebe to get a fuller picture of what we should expect in terms of charitable giving in response to changes in the tax law in general, and changes due to higher household standard deductions in particular. In the course of the conversation I learned a few things about changing views among economists on tax policy and charitable giving.

Before the 1990s, economists had developed a consensus around the belief that incentivizing charitable giving through taxes resulted in greater revenue for charitable organizations than was given up in terms of lost government revenue. The result would be more money overall in society for social services for example, if charitable giving increased more than tax revenue decreased. So that tax incentive toward charitable giving was believed by economists to be efficient.

That earlier view among economists also happened to align with a certain a view of American society as unique in the world. What I mean by that is the particular pride we take in what Alexis de Tocqueville noted as a strong civil society and the tendency to solve problems without government intervention.

De Tocqueville famously wrote in Democracy in America in 1835, “Americans group together to hold fetes, found seminaries, build inns, construct churches, distribute books, dispatch missionaries to the antipodes.” De Tocqueville continued “They establish hospitals, prisons, schools by the same method. Finally, if they wish to highlight a truth or develop an opinion by the encouragement of a great example, they form an association.” Tocqueville argued that what we call charitable organizations is a key component of what makes democracy work in the United States.

Dr. Beebe’s paper notes an estimated 80 percent of global private philanthropic giving for developmental purposes came from US foundations in 2015, indicating that our unique civil society approach – rather than solving problems by government intervention – continues more than 180 years after de Tocqueville’s book described us.

I mention all this to say that charitable giving is at the heart of US political culture, and economists previously believed we had good reason to support that with tax law.

Since the 1990s, however, either because of better data or better measuring techniques, economists have come to believe that the effects of tax policy on charitable giving is much more mixed. We know less than we thought we knew before. But we know some more precise things, according to Dr. Beebe.

Certain types of giving, to one’s church for example as well as giving among lower-income households, is not driven by tax law. That happens despite changes in tax incentives, and we wouldn’t expect that to drop with a higher deduction. Dr. Beebe points out, however, that giving from upper income and upper wealth households tends to be much more responsive to changes in tax incentives.

It’s from upper income households that economists believe the drop in charitable giving will come.

Dr. Beebe estimates that the expected drop in charitable giving will mostly come – maybe 70 percent – from upper income households responding to the higher standard deduction. A smaller, but still notable effect – maybe 30 percent – on charitable giving will come from changes that create a disincentive for wealthier folks from making bequests in order to reduce their estate tax bill.

A 5 percent drop in charitable giving next year isn’t the end of the world. But if you appreciate de Tocqueville’s description, it’s just a small chipping away of something at the foundation of American democracy.

 

A version of this post ran in the San Antonio Express News and Houston Chronicle.

 

Please see related posts:

On Philanthropy I – Giving Money Away

On Philanthropy II – Asking For Money

 

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Cash Transfers and Hurricane Relief

rose_city_underwaterIn response to the extraordinary needs of their city after Hurricane Harvey, Houston philanthropists John and Laura Arnold first gave $5 million to the “Greater Houston Community Foundation’s Hurricane Harvey Relief Fund,” aka the “Mayor’s Fund.”

Following that gift, however, the couple made a second $5 million gift to an atypical organization named GiveDirectly one that had neither previously operated in the United States, nor had worked on natural disasters.

Through their philanthropy, the Arnolds are posing an important question – what’s the best way to deliver resources to a hard-hit community after a natural disaster like Hurricane Harvey? We won’t necessarily all agree, nor is there just “one way,” but it’s an important question to keep asking.

Before Harvey, GiveDirectly had only worked in East Africa. Their mission is to give money, unconditionally, to the most poverty-stricken people in the world. They don’t do “development work” the regular way by building clean-water wells, or houses, or hospitals, or give goats or chickens or food or clothing or solar-powered generators. They do “unconditional cash transfers” (UCT), and they trust the recipients know best how to use it to alleviate their own poverty.

GiveDirectly’s operation in Texas following Harvey is a test of whether that theory of “unconditional cash only, not stuff” could apply to disaster-relief in the United States.

As John Arnold explained to me, he and his wife’s thought process for supporting GiveDirectly was as follows:

First, the private sector can do a great job with the logistics of delivering needed goods and services to Texans, even in the face of catastrophic flooding, as occurred following Harvey. He marveled at watching ten fully-stocked Wal-Mart tractor trailers arriving early after the rains, ready to supply Houstonians.

give_directlySecond, the missing piece for many people hurt by the storm is simply: money. Wal-Mart, Arnold reasoned, will figure out how to provide the right stuff, as long as people have money in their hands to pay for that stuff.

Third, the best relief is probably a group that can just deliver money into the hands of people who need it.

“Everybody’s highest priority is different,”

Arnold told me.

“Some people’s car was damaged and they can’t get to work. Others had their work interrupted and they just need temporarily help to cover next month’s rent.”

So the Arnolds chose GiveDirectly for their $5 million.

Funded by the Arnolds and other donors, GiveDirectly set up a plan to deliver pre-loaded Visa debit-cards with a $1,500 value to impacted households in Texas. In Rose City, a badly-flooded town next to Beaumont that I wrote about last week, GiveDirectly arrived in October to deliver $1,500 to each one of the estimated 210 households, without conditions.

Rose City Mayor Bonnie Stephenson confirmed working with GiveDirectly to reach substantially all households in her town, holding town meetings and community gatherings to help get the word out. GiveDirectly reports successfully distributing 180 cards to the intended 210 households, according Catherine Diao, Communcations Lead for the organization.. In a few households, says Diao, they simply could not locate eligible recipients despite multiple efforts to do so.

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Laura & John Arnold

GiveDirectly next expanded its giving to the Lakewood area of Northeast Houston. As of now they have handed out and estimated total of 1,200 pre-loaded cards of $1,500 each, with the intention of distributing up to 3,000 total.

Their methods are still evolving. In Rose City, the cards were meant to be “universal,” meaning that everyone with a household address in town qualified for the funds. In the Northeast section of Houston, GiveDirectly is attempting to target the $1,500 pre-paid Visa cards to only those who have demonstrated property losses.

As John Arnold explained, a classic problem of relief is to design a system that is restrictive enough to prevent fraud, but not overly restrictive that it prevents delivery of resources. It’s safe to say no system is perfect.

The normal model of disaster relief is that a combination of the federal government (primarily FEMA), big organizations like the Red Cross, and state and local officials coordinate major resources, while more locally-focused groups fill in the gaps with stuff at hand, like food, water and blankets.

Problems plague each of these responses, of course. One recurring problem with the smaller “stuff at hand” solution is that the stuff may not reflect what people actually need most, at any given time. The appeal of UCT is that recipients decide exactly what they need, not donors.

At the larger scale, FEMA and Red Cross have far more capacity than local groups to deliver resources. But one recurring complaint about the bigger organizations is whether the big infrastructure and big dollars are efficiently spent. In addition, qualifying for substantial FEMA grants, or even $400 Red Cross payments, involves engaging with a bureaucracy that may seem confusing or overly strict, a bundle of “red tape,” to use a word I heard repeatedly from folks in Rose City, including Mayor Stephenson. GiveDirectly’s attempt with UCT is to make delivery simple.

GiveDirectly, by their own estimation, regards their efforts in Texas as exploratory, but in line with their dual purpose of giving relief and pushing for more efficiency among relief organizations.

As President and co-founder of GiveDirectly Michael Faye wrote me,

“Recipients prefer cash and are frustrated with the opacity and efficiency of the traditional options, and want a direct giving alternative. With donors wanting it, and recipients preferring it, why shouldn’t it exist? At worst, it’ll help people rebuild their lives, and at best, it will force a conversation and potentially shift the [philanthropic] sector.”

John Arnold also explicitly called out the dual purpose of his gifts. First, there’s the charitable reason, which he defined as just providing help to people in Texas who need it the most. Second, there’s the philanthropic reason, which he defines as attempting to be thoughtful about solving problems at their root causes. The combination of charity and philanthropy, I gathered from our conversation, is why GiveDirectly appealed to him and his wife.

 

See related posts:

The Populist Approach to Hurricane Relief

The Red Cross and Other Disasters

GiveDirectly and Unconditional Cash Transfers

Universal Basic Income – A Radical Right Wing Idea?

 

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The Red Cross And Other Disasters

red_crossFor people with resources to give for Hurricane Harvey relief, an important question has arisen this month: How do I decide where to give money? Among people who live in coastal Texas cities and towns, many donors probably already choose an organization they personally know, with a well-defined and limited mission, a local network of workers, and specific knowledge of affected communities. Think church groups, local food banks, self-organizing neighborhoods teams for clean-up and rebuilding, or local foundations.

For Americans without specific ties to the area, however, the first recipient of giving is often the Red Cross. And the Red Cross, as the largest non-governmental disaster relief organization, has come in for special scrutiny in recent years, following natural disasters.

Pro Publica, a non-profit investigative journalism group, reported multiple times since 2014 on specific failings of the Red Cross, following disasters such as Hurricane Sandy and Hurricane Isaac in 2012, earthquake relief in Haiti, and floods in Louisiana in 2016.

One charitable interpretation of these reports is that, as the highest profile organization in any business that inevitably involves improvisation and mistakes – specifically, emergency disaster relief – the Red Cross becomes just the biggest target of criticism. Everybody makes mistakes in the midst of disaster, the thought goes, and bigger organizations make bigger mistakes and come in for bigger criticism.

A less charitable interpretation of the Pro Publica investigations is that there’s something inherently worse about the Red Cross than other, smaller, relief groups. A summary critique from Pro Publica is that there’s a lot public relations “show” from the Red Cross instead of a lot of actual relief on the ground, in these past disasters.

red_crossIf you haven’t read the Pro Publica investigative reports from 2014 and 2015, well, they are scathing. Their deep investigations include a trove of internal documents produced by the Red Cross itself, which were also damning.

After Hurricane Sandy, for example, there was the deployment of 40% of emergency response vehicles to non-critical areas, in order to make them visible during press conferences on Staten Island. After Hurricane Isaac, a Red Cross truck driver reported being told to drove around the affected areas specifically to give the appearance of activity, but with no particular mission beyond public relations. There was the deployment of volunteers into the post-Sandy disaster who themselves were not fit enough to accomplish physically demanding tasks. In Haiti, Pro Publica reported in 2015, the Red Cross raised half a billion dollars to build housing after a devastating earthquake, but only 6 houses ever got built.

Less systemically, but still indicating ham-handedness, there was the truck full of pork lunches delivered to the Jewish retirement-community high rise in New Jersey after Sandy.

One of the recurring arguments in the ongoing aftermath of reporting on the Red Cross and other relief charities is what percentage of an annual budget gets dedicated to “programs” (the actual relief effort delivery) versus ”overhead,” or organization costs. The Red Cross self-reports that 91 percent of its $2.7 billion in 2016 went to programs, with only 9 percent dedicated to overhead, and that figure represents its typical spending in other years as well.

The non-profit reporting group Charity Navigator gives the Red Cross a respectable three out of four stars on their scale, for a combination of financial efficiency as well as transparency.  Pro Publica itself challenges the 9 percent overhead figures, however, citing sub-contracting relief work to other organizations, which tack on their own administrative overhead costs, and thus obscuring the issue.

The larger point may not be arguing over what precise level of overhead costs is appropriate for what organization or what mission. Reasonable people could disagree on these issues. The larger point is probably whether they fulfill a needed role, at a crucial time, better than anyone else.

Hurricane Harvey
Monday, Aug. 28, 2017, in Houston. (AP Photo/David J. Phillip)

And maybe for a high-profile organization like the Red Cross, the key is whether they respond to past criticism by improving their delivery of services in the wake of Hurricane Harvey. Do they inarguably succeed at providing the best relief instead of the best public relations efforts? Time will tell.

I don’t even think that all public relations efforts are bad. In the last few weeks we’ve all watched elected public officials and other high-profile personalities conspicuously “helping” in front of cameras during post-Harvey relief, and this “help” is both an obvious public relations ploy but also an important show of societal solidarity. Healing includes seeing our leaders see the pain and chaos directly, and us believing that at some level our leaders “get it.” We accept a certain amount of show, to go along with the actual work, among government leaders.

With a non-governmental relief group like the Red Cross, however, maybe we expect a higher ratio of actual help to public relations show, since their role is less a symbol of our collective society and more about just delivering results? I don’t know exactly what’s fair.

When I dropped a few bucks into the collection bowl at my CrossFit gym to help send a fellow gym-buddy with his food truck to the Texas coast to provide hot meals, I expected a certain amateurish approach, producing a limited impact with our limited resources. If I elect to send money to a huge professional organization like the Red Cross, I expect an almost militaristic deployment, efficiently solving huge needs with their vast resources.

Right now, given all the immediate needs, all help is appreciated without an overly critical eye on “efficiency.” But as the post-Harvey recovery stretches into months and then years, we’ll need an assessment of which large groups delivered best on their promise of disaster relief.

pro_publicaIt’s probably too early to assess, just two weeks after Hurricane Harvey passed through the region, to know which organizations made the biggest impact and which organizations did not. A natural question we will want to keep asking ourselves, however, is who helped the most with our dollars, so that we know who to support now, and in the future.

 

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