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 same.
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 your investment.
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 Crouch.
Organizations like Giving What We Can are blazing a trail for individuals but, of course, financial institutions and investment firms have unrivalled resources.