Should donors from developing countries give locally or internationally?

Should donors from developing countries give locally or internationally?

A dilemma always arises in the minds of Brazilian effective altruists: Given the difference in the exchange rates and the fact that Brazil is also a country with widespread poverty, is it still more effective to give overseas? After all we have 10 million people living below the poverty line, about 5 percent of the population. Also, whenever the dollar rises our donations seem to be worth a little less.

The problem seems difficult to solve because we don't have an organization that evaluates charities in our country or a national NGO that has been reviewed by foreign charity evaluators. Saúde Criança, for instance, is listed in the organizations considered by GiveWell, but until the publication of this article, it still hadn't been contacted. Therefore, we have only a few hypotheses to evaluate but doubt may persist in knowing whether it is better to donate $0.25 USD to one of GiveWell's top four charities or 1 Brazilian real to an organization that has never been evaluated. (At the time of publication, 1 BRL = $0.28 USD.)

Keeping that in mind, and looking for clarification, we got in touch with representatives from Animal Charity Evaluator, GiveWell, The Life You Can Save, and Giving What We Can, four of the most important charity evaluation organizations from the effective altruism movement. Their answers to our question are presented below.

Animal Charity Evaluators

Jon Bockman from Animal Charity Evaluators explained to us that they cannot give a final word about any NGO before it has been properly evaluated. Based on that he suggests we should seek out groups that, at least, work in similar areas compared with the top organizations they rate as the most effective. Jon noted that Animal Equality does some work in Latin America and put us in touch with Lucas Alvarenga, communications coordinator for Mercy for Animals in Brazil. Lucas confirmed that, on the issue of animal suffering, Mercy for Animals  has a strategic position on their work in Brazil: "We are one of the largest producers and consumers of beef in the world, and 90 percent of Amazon deforestation is due to factory farming."

Despite the important role, he said, regarding efficiency, Brazil is still far behind when we think of NGOs dedicated to this cause, but mentioned that Mercy for Animals is making plans to launch a page specially dedicated to accept donations in Brazilian currency soon.

GiveWell

Rebecca Raible, research analyst at GiveWell, told us that the difference among the effectiveness of charities is so great that even in cases where these donations are subjected to taxes and fees, it still makes sense to donate to one of the top four organizations reviewed and recommended by GiveWell.

While GiveWell does not currently review any Brazilian organizations, Rebecca suggested that we could independently evaluate Brazilian organizations that could be of interest to us. In this regard she suggested a list of questions which can guide donors in their own investigations.

Giving What We Can

Hauke ​​Hillebrandt, director of research at Giving What We Can, emphasized that effective altruism is above all a matter of optimization. He pointed out the most important thing to consider is that there are vast differences in terms of effectiveness in different health interventions and poverty reduction ‒ some charities are literally hundreds or thousands of times more effective than others (see chart below). And this is precisely the reason why the most common strategy within effective altruism is giving to organizations active in the poorest countries.


Comparison between average charities, good ones, and the best. | Giving What We Can

In terms of differences between Brazil (GDP 15,000 per capita) and, say, Uganda (GDP 1,500 per capita), the difference is still substantial enough to support grants to the poorest countries, because this multiplier of 10x cancels any loss of effectiveness by the exchange rate or the fact that the highly effective charities that work in Uganda may not be tax deductible for Brazilians. In fact, Brazil is not as rich as other countries, but comparing the cost of living in Sao Paulo with Kampala, we can see that this difference is still significant.

As to pointing out an organization acting in Brazil, the only case in particular that Hauke ​​mentioned was UNICEF, active here for more than fifty years. He suggested that perhaps we could find organizations with good performance in terms of "dollar per disability-adjusted life years" (DALY) or "dollar per death averted," such as organizations focused on immunization and family planning and to which it would be easier to make a donation. He noted that interventions to prevent maternal and infant mortality generally score very high in terms of effectiveness.

The Life You Can Save

We also consulted with Charlie Bresler, executive director of The Life You Can Save. When asked if it is better for a Brazilian to donate $25 USD overseas or $100 BRL in Brazil, he said: "At any fixed point in time, $100 BRL has a certain amount of "value," and converting it to another currency doesn't change that value. A charity (based in Brazil, the US, or anywhere else) would be equally happy to receive $100 BRL or $25 USD. The only reason they'd have a preference for one or the other is because there might be a cost to convert the donation into the currency the charity uses, but that's not dependent on the level of the exchange rate."

He thinks that, in fact, the exchange rate varies with time and the "value" of $100 BRL also changes. But The Life You Can Save recommends that donors should ignore this issue because if they base their decisions on variation in exchange rates over time, they will be essentially speculating on the floating rate of the exchange market. And, in general, amateurs (and even many professionals) lose money when trying to do this.

Oxfam International is one of The Life You Can Save’s recommended charities, and Charlie recommended that we consider supporting Oxfam Brazil, which has been present in the country since 1965.

Charlie acknowledged that while many Brazilians live in extreme poverty, he noted that there are other countries with higher rates of extreme poverty. As a result, donations to those countries can make a much bigger impact. This impact is so great that organizations suggested by them still are the best options, even considering the possible conversion rates.

Final remarks

In his book Doing Good Better, William MacAskill, co-founder of Giving What We Can, lists five questions that every donor should ask before deciding where to donate:

  1.  What does this charity do?
  2. How cost-effective is each program area?
  3. How robust is the evidence behind each program?
  4. How well is each program implemented?
  5. Does the charity need additional funds?

Will writes that "donating money to the best developing world health charities will reach at least 100 times as many people than if you donate to developed world health causes."

Conclusion

This article aimed to investigate whether Brazil has enough specific characteristics that it doesn't justify implementing what is normally proved to be more effective ‒ giving overseas rather than locally. As we have seen, this could happen for two reasons:

  1. Our donation loses too much value in the currency exchange.
  2. Brazil is also a very poor country, with NGOs working well on the ground.

About the first question Charlie Bresler from The Life You Can Save stressed the difficulty of managing something as uncertain as the fluctuation of exchange rates and the fact that the difference can be overcome by the impact of the donation. This impact could be much higher if we compare good charities to those which are excellent, as highlighted by Hauke ​​Hillebrandt from Giving What We Can and Rebecca Raible from GiveWell, which also answers the second question. That is, even considering the possible loss of donation value due to the exchange rate, the donation to an organization working overseas can still be justifiable, if it is more effective than the local one.

Still, with all these reservations, Brazilians who intent to donate to organizations active in their country must ensure that these are proven to be effective, either because they have already been assessed by methodical evaluation (as in the case of Oxfam Brazil) or thorough independent research.

This is a subject of broad interest among effective altruism members in Brazil and it is possible that the situation may change in the future, so we will keep a look out in order to be able to publish updated information.
Thiago Tamosauskas
Thiago Tamosauskas
Thiago Tamosauskas works at the communication department of Universidade Metodista de São Paulo in Brazil. He is a active member of Effective Altruism São Paulo and has pledged to give 5 percent of his income to The Life You Can Save's top charities.
The views expressed in blog posts are those of the author, and not necessarily those of Peter Singer or The Life You Can Save.

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