A short comparison of starting an effective giving organization vs. founding a direct delivery charity

By Joey 🔸, CE @ 2024-01-11T18:29 (+109)

CE has recently started a new program to incubate Effective Giving Initiatives (EGIs). Although this is a sub-category of meta charities, I think it has some interesting and unique differences. I expect a decent percentage of people who are interested in the Effective Giving Incubation Program are also considering founding a charity unrelated to effective giving, so I wanted to write up a quick post comparing a few of the pros and cons of each - as I historically have had a chance to found both.
 

A brief history

About ten years back, I co-founded Charity Science (later renamed Charity Science Outreach) to raise money for effective charities that had extremely limited marketing and outreach. We used GiveWell and ACE recommendations, selecting AMF and THL specifically as the targets. We did several experiments, diligently keeping track of the results of our time spent and the results. After a couple of unsuccessful experiments (e.g., grant writing, which raised ~$50k in 12 FTE months), we hit some successes with peer-to-peer fundraising (e.g., supporting people donating funds for their birthdays). Depending on how aggressively you discount for counterfactuals, we raised a decent amount of money (in the several 100,000s). Although this was pretty successful, we pivoted to founding a direct charity where our comparative advantage was strongest and could bring the most impact and handed off the projects. 

Eight years ago, some of the same team members (and a few new ones) founded Charity Science Health. This was a direct implementation charity focused on vaccination reminders in North India. We got a GiveWell seed grant and became a reasonable-sized actor over the course of three years, reaching over a hundred thousand people with vaccination reminders at a very low cost per person (under $1). The trickiest part of this intervention was to (cost-effectively) get the right people to hear about the program, as the signup costs were about 70% of the entire program cost, and targeting was extremely important. A few interventions we tried did not work (mass media, government partnerships), and a few worked well (hospital partnerships, door-to-door surveys). This project eventually merged with Suvita after the founders left to run other projects (including Charity Entrepreneurship itself). 

In many ways, I feel starting an effective giving org was very useful for later starting a direct implementation charity, as many of the skills overlapped, and it was a less challenging project to get off the ground. In the rest of this post, I’d like to pull out the main takeaways that can be learned from these projects and would be cross-applicable to those considering both career options.
 

Odds of success

Founding any project carries a risk of failure. Failure in the case of an effective giving org would most commonly mean spending more than what gets raised for effective charities. Failure with a direct NGO can result in the people you are trying to help being harmed, making the stakes higher and there being more of a downside. In general, founding an Effective Giving Initiative I would expect to have higher odds of success. There are just more points of failure for a direct NGO. It could struggle with fundraising (an issue equally important in EGI) and implementation even if fundraising succeeds. In my view, this, among other factors, makes EGIs have higher odds of success than direct NGOs. 
 

Net impact

The net impact is tricky to estimate, as the spread is considerable, even within pre-selected CE rounds. This also means that personal fit could overrule this factor. My current sense is that a direct charity has a higher expected impact and a longer tail, landing more on the high-reward, high-risk camp. An EGI, on the other hand, is a safer bet (relatively speaking) but with a lower absolute upside. This means that a top direct org might have a higher impact than a top EGI, but the latter might have higher odds of success (see above). I think both are highly impactful careers when compared to a more general set of options.
 

Learning value

Although I learned more from founding an EGI (due to launching that first) hour for hour, starting a direct NGO taught me more and would teach the average person more than founding an EGI. However, both roles focus on developing slightly different skill sets, while direct NGOs focus on multi-skill generalist development, and EGIs allow narrowing down the focus on skills like fundraising/communications/networking. In my experience, direct delivery NGOs are more stressful, but that stress causes a lot of growth and development over a short stint of time. In comparison, EGIs can bring a more steady and less steep learning curve. 
 

Flexibility

One criterion I had really high up on my list when I founded an EGI project was the flexibility of the skills I had built. At that point, I did not know I would be a lifelong entrepreneur, and communication skills (very important for founders of EGIs) were one of the most cross-applicable skill sets regardless of career path in the long term. I still think this is the case and that communicating ideas compellingly and inspirationally is helpful in virtually every career. EGI also keeps open knowing about a range of cause areas, so I would give EGI the win for later career flexibility. 

Ideal skill set

I think the skill sets of these projects overlap quite a lot (moving quickly, making 90/10 choices, project management). However, there are areas where they differ. 

EGI plays a heavier role in both written and verbal communications. It’s important to communicate well about a wide range of ideas to a wide range of people. The feedback loops are usually clearer and thus require less effort on impact evaluation relative to direct orgs, and the number of countries you can be based in is larger. You will generally be speaking about such a wide range of projects that you will not need to be an expert in any of them, but you will have to be good at thinking on your feet to give a reasonable response in various settings. Being polite, professional, and organized are all traits that can make your EGI project thrive. In some ways, EGI is about getting good at communicating with many people about many orgs.

On the other hand, NGOs typically require more problem-solving, implementation skills, and creativity in dealing with the local context. Measurement is complex, so it often requires one of the co-founders to be strong and slightly obsessed with it. You have to be able to become an expert in your field, dive deep into research, and talk to experts and academics in the field about tricky questions. In some ways, NGOs are about gaining a vast amount of knowledge and skills to solve a highly specific problem in an efficient way. 

Overall, both of these roles are pretty top-tier jobs, and the better choice ends up being based on personal factors. E.g. a founder who is a stronger fit for direct NGOs but has a locational requirement that they have to be based in one of the target EGI countries would be more valuable as an EGI founder.

P.S. Few days left to apply for the Effective Giving Incubation program. Apply here by January 14, 2024. The next round of applications to our classic Incubation Program will open in February 2024. For people who get an offer for one of the programs but are considering both, we are also happy to chat one-on-one about it.