Impact investing is taking off. Taking a
lead from shareholders and investors, banks, like Morgan Stanley and UBS, are beginning to
realise that the capital markets can play a central role in
addressing socio-economic disparities while reaping
a reputation dividend.
But the impact of the individual shouldnt be
underestimated either. Organizations such as Giving
What We Can (GWWC) put individual altruism into practice by
maximizing socially responsible returns through identifying
efficient charities while donors pledge to surrender a portion
of their income to charitable causes.
I have always considered myself to be relatively rich
compared to others, says moral philosopher Toby Ord.
My research encouraged me to look into how I could
actually help those less well off than me. I realised I could
give some of my income to the most efficient charities and this
would have little effect on my life but a great affect on
theirs. Now I am trying to convince others to do the
Founded by Ord, GWWC is a community for individuals dedicated
to eliminating poverty through pledges to give at least 10% of
their income to some of the most cost-effective charities. So
far GWWC has distributed $1.5 million to the charities they
deem to be the most effective. To-date, on the basis of pledges
over the past three years, GWWC could eventually disburse $45
million in charitable donations.
| Toby Ord, moral philosopher
The genesis of GWWC lies in Ords undergraduate studies at
the University of Oxford in 2005. In fact, half of GWWC members
are students who have attended talks by Ord himself. Part of
the reason for this is that students are relatively more open
to such ventures, says Ord.
After attending a talk by Toby Ord, I realised myself
that I could do a lot of good without having to make huge
sacrifices, says current student and prospective
investment analyst at Orbis, a mutual fund, Ben Todd.
Giving 25% of my future salary will not affect my own
life too much Ill still have everything I value
but can affect those in need enormously. As a
student, Todd already donates 10% of his income to charity. If
he furthers his career in asset management, Todd hopes to
donate up to half of his total income to philanthropic
projects. Psychological research shows that giving to
charity makes you happier, says Todd. Buying
expensive things doesnt.
For philosophers like Ord, efficiency is central to personal
charitable donations. I cannot overestimate the
importance of efficiency when it comes to giving to
charity, says Ord. There is absolutely no point in
giving to inefficient charities what so ever. He adds:
There is a great amount of disparity between charitable
organizations. Part of what we do is to try and discover which
charities offer the best value for money and the best return on
Peter Singer, another prominent moral philosopher and aid
donor, agrees: Efficiency is of utmost importance when it
comes to giving to charity. If giving is morally good, we
should maximise how much good we do by giving to the most
cost-effective charities, he says.
Through his work with GWWC, and his own personal research,
managing director of GWWC and Phd candidate William Crouch
founded 80,000 Hours, an advocacy organization
encouraging people to become effective altruists. 80,000 Hours
and GWWC are grooming young donors by hard-wiring socially
responsible investments into their spending priorities upon
graduation while steering their career decisions.
We spend 80,000 hours working in our career, and
its of crucial importance for many of us to try to work
out how we can use them not just to make a difference, but the
most difference, says Crouch.
While some members are encouraged to be teachers or
professional philanthropists, some deliberately pursue
high-earning careers so that they can give away more of their
income. According to research conducted by the group, a fairly
average banking income would allow a banker to donate around
£5 million over the course of their career while still
taking home twice the median salary.
For example, if you dont become an aid worker,
its likely someone else with similar skills would take
your place and nearly exactly the same amount of good would be
done. But if you dont become a City worker who gives
a proportion of their salary to efficient charities, the person
whod take the job instead would probably not donate a
large part of their salary. This would not save lives. The
difference you make is not just what you do, but the difference
between that and what would have happened anyway, says
Organizations like Giving What We Can are blazing a trail for
individuals but, of course, financial institutions and
investment firms have unrivalled resources.