A Development Disappointment

The GiveWell blog ran some disappointing news yesterday. They took a look at the Grameen Foundation’s village phone program. The village phones program is much beloved; it’s been highly touted as an effective way to lift people out of poverty. The foundation gives a loan to an entrepreneur (usually female), who then rents the phone to people in her village. It gives her a new source of income, and provides access to telecommunications for her village.

Here’s the problem; it doesn’t seem to work. The phones aren’t that useful to the people living in the villages. Having access to the phone had “absolutely no impact of the phones on trading activity or availability of goods in local markets” and very small (non-significant) impacts on profits and measures of well-being (school enrollment, consumption of meat, etc.).

They also don’t provide significant income to the phone owners. “Their hours worked rose significantly both for their new phone business and for their already-existing businesses, but their profits and wages paid did not rise…” In other words, the phones were a bad investment.

Combined with the recent studies finding that microfinance doesn’t have the hoped-for impact on poverty, we’re rapidly running out of magic bullets.

Givewell was an organization which attempted to promote transparency in charity and giving, started by two college kids with a hedge fund background. Like Charity Navigator, but different. Somehow using business practices to evaluate NGOs. I didn’t really try to research all the details, but it sounds like more of the same to me.

The interesting part is, the organization’s founder, Holden Karnofsky, just ran into trouble for praising Givewell all over the internet without stating that he was the founder.

So much of what I write here is P2V (person-to-void), I can understand the temptation to fake up some discussion about a venture that seems important. However, I have never faked comments because that would be unspeakably lame. From an organization that supports transparency, it’s just ludicrous.

The one thing I have to say is this: if they were applying business knowledge to the nonprofit world, why had Holden never heard of John Mackey?

The internet makes some people stupid.