Overseas Aid – A new approach?

Gerard O’Neill, who is an economist and a director of a market research agency in Ireland (Amárach Research) wrote in the Sunday Times over the weekend that he believes that there is a new approach needed in the way the Irish Government distributes its overseas aid. He believes the people should have their say.

In the article O’Neill says he believes that people give to charity because…

Fundamentally, it’s because it makes them feel good about themselves… charities could go a lot further with this insight and make the case that donating money to charity will make you happy.

For some reason this statement really annoyed me, at best its a simplistic conclusion and if it was this simple….well fundraising wouldnt be so hard now would it!  O’Neill tries to back it up with some research

….at the University of British Columbia, which gave participants a $5 (€3) or $20 bill and asked them to spend the money by 5pm that day. Half the participants were instructed to spend the money on themselves, and half to spend the money on others. Those who spent on others reported feeling happier at the end of the day than those who spent on themselves.

So now O’Neill believes we should apply this principle to Irish Overseas aid

Why not let every citizen in the country decide how to spend Ireland’s aid budget? That way we get the benefit of spending that reflects the wishes of the electorate, as well as the buzz from doing good. This approach to public policy is based on the insights of behavioural economics and has been called “libertarian paternalism”.

How will we do this?

I see it working like this: at the start of the year each registered voter is given a voucher worth their part of the total Irish Aid budget — about €286 each, given a population of 3.2m aged over 18. Each citizen can “spend” their voucher during the year, by giving it to any one of the Irish NGOs registered with Dochas. The charities can advertise their activities in developing countries (as they already do) in order to attract voucher donations. Citizens should also be able to elect to pay their voucher directly by standing order to a charity of their choice, giving the charities some sense of continuous funding.

Now something I neglected to mention was that O’Neill contends all the Irish Overseas Aid should go to Irish NGO’s. Currently a lot of aid goes to the likes of Unesco and O’Neill believes this is not an affective way of spending Irish Aid.

Aside from O’Neills simplistic view to why people donate to charities I dont completely disagree with what he is saying. Although I do have some questions:

  1. Surely by giving to Irish charities there will be additional costs in getting the money to the source to those that need it
  2. Will the bigger charities get a bigger slice of the pie, simply because they can shout louder
  3. Will the bigger charities bombard voters with DM and DRTV to get their vouchers
  4. If each citizen is allowed spend their own tax, giving it to the charity of their choice, will this affect other charitable giving?

Im not totally against this idea, its a different and new approach and that’s always good. I do think that the questions above would need to be addressed. I would also rather see that we take an approach that gets the funds directly to those in need. Talk about engaging the Irish Donor if we were to set up a government site that allowed us to spend our vouchers similar to the site Modest Needs (if you arent sure what that is it’s a site where people can donate directly to projects, read my post about it here)

Read the full Sunday Times article here and let me know what you think

Modest Needs

I came across this on the AFP blog (great source) who link to an article on Forbes.com.

 Originally this was a small site set up by Keith Taylor, a teacher, who was willing to give away some of his annual salary to help people in need, so he would get emails from a woman who needed $65 to help pay for her sons glasses to be repaired. Now the website has developed into a more sophisticated giving mechanism and is another of these sites that is giving directly to those in need (I have spoken about some other examples of this before).

So how does it work, well you can make a donation and for a once off donation you are given points for each dollar you donate. You can then invest your points into a project or individual that you think is deserving.

What a great idea. I know I have said before that I worry a bit about something like this being abused, but these guys seem to have covered the angles.

Is this the end for Charities (I ask again!). No of course not….what charities need to do though is look at sites like this and recognise that they are popular tools for people and see how they can adapt this form of donating into their organisations. How great would it be for charities to list the projects they are working on and empower donors to invest in the ones that they feel passionate about. I would love to see a charity set this up….if you know of one please let me know?