Selling Virtue: How Human Rights NGOs and Their Donors Work Together to Create a Better World...for Themselves
My dissertation seeks to explain a variety of puzzling behaviors within human rights philanthropy: (1) human rights NGOs routinely claim to have a positive impact despite lacking rigorous evidence of it, (2) individual donors do not seek and are not responsive to
rigorous impact information, (3) accountability organizations do not hold human rights NGOs accountable to impact despite claiming to, (4) and human rights NGOs continue to garner money, status, credibility, and authority, despite never providing evidence of their
impact beyond anecdotes that are strongly biased in the positive direction.
I argue that this behavior, while grossly inefficient at achieving the organizations' stated missions, is not irrational. Instead, it is created by reputational self-interest and misaligned incentives. I combine social signaling theory and the reality of market competition to develop a new framework for analyzing the behavior of human rights NGOs. This new framework is a market-oriented model of NGO behavior. I argue that NGOs act like firms, producing and selling social signals to their donors, who are best understood as consumers. The primary product on offer is not the effective production of a public good or public benefit, as is conventionally believed, but rather a reputational or status benefit in the form of a social signal.
A large body of research spanning psychology, economics, and biology demonstrates that individuals donate to charity to send a costly social signal, conspicuously displaying their socially desirable traits in order to attract and maintain allies and mates. Donations are investments in the donor’s reputation, intended to confer status benefits on the donor rather than to finance the effective production of public benefits. In exchange for donor funds, human rights NGOs supply services that have the spirit of benefiting others (e.g. campaigns, reports, protests, boycotts) but ultimately serve to benefit the donor’s reputation by helping the donor appear virtuous and well-intentioned. The beneficiary of NGO programs is not a central player in the economic exchange between donor and NGO. Actions that aid us in appearing virtuous, upstanding, and in possession of good moral character are not necessarily conducive to effectively, let alone optimally, improving the welfare of the needy, disadvantaged, or oppressed.
I use this new framework to explain why donors are not interested in or responsive to information about charity effectiveness and how donor preferences influence the organizational behavior of human rights NGOs. I employ experiments and statistical analysis to analyze demand-side and supply-side features of the human rights market. The findings illuminate (1) why human rights NGOs abstain from rigorously evaluating their impact, (2) why they conceal honest information about their impact from donors and other organizations, (3) why they exaggerate their impact, and (4) why the accountability movement does not hold human rights NGOs accountable to standards of effectiveness, despite claiming to. Put simply, donors reward this deceptive behavior because it is conducive to social signaling. I also revisit the statistical literature on the effect of human rights NGOs and demonstrate that the research suffers from numerous critical problems. A more faithful reading of the statistical evidence leads to the conclusion that human rights NGOs are not very effective. This finding should not be surprising, given that human rights NGOs calibrate their activities to satisfy donor reputational needs, not the needs of the stated beneficiaries.
This work may seem pessimistic, but I actually do not view it that way. For example, I do not argue that NGOs are incapable of being effective or that the pursuit of trying to help others is inherently impossible. There are many extremely effective ways to help people in highly disadvantaged circumstances, as evidenced by the Effective Altruism movement. The upshot to this problem is that human rights NGOs have the potential to do orders of magnitude more good, and they do not need any additional money to do it. I believe, though I do not test, that a demand-side solution will be far more effective at reshaping the practice of human rights philanthropy than a supply-side solution. The key to convincing human rights NGOs to change their current practices probably requires changing
norms, values, and beliefs among existing donors, or at least making it less socially rewarding (and possibly more embarrassing) to donate to ineffective causes. If donors demanded that human rights NGOs be held to high standards of cost-effectiveness, the practice of human rights would look very different. I believe that the key puzzle for future research is to figure out how to make knowledge about program effectiveness socially useful.
rigorous impact information, (3) accountability organizations do not hold human rights NGOs accountable to impact despite claiming to, (4) and human rights NGOs continue to garner money, status, credibility, and authority, despite never providing evidence of their
impact beyond anecdotes that are strongly biased in the positive direction.
I argue that this behavior, while grossly inefficient at achieving the organizations' stated missions, is not irrational. Instead, it is created by reputational self-interest and misaligned incentives. I combine social signaling theory and the reality of market competition to develop a new framework for analyzing the behavior of human rights NGOs. This new framework is a market-oriented model of NGO behavior. I argue that NGOs act like firms, producing and selling social signals to their donors, who are best understood as consumers. The primary product on offer is not the effective production of a public good or public benefit, as is conventionally believed, but rather a reputational or status benefit in the form of a social signal.
A large body of research spanning psychology, economics, and biology demonstrates that individuals donate to charity to send a costly social signal, conspicuously displaying their socially desirable traits in order to attract and maintain allies and mates. Donations are investments in the donor’s reputation, intended to confer status benefits on the donor rather than to finance the effective production of public benefits. In exchange for donor funds, human rights NGOs supply services that have the spirit of benefiting others (e.g. campaigns, reports, protests, boycotts) but ultimately serve to benefit the donor’s reputation by helping the donor appear virtuous and well-intentioned. The beneficiary of NGO programs is not a central player in the economic exchange between donor and NGO. Actions that aid us in appearing virtuous, upstanding, and in possession of good moral character are not necessarily conducive to effectively, let alone optimally, improving the welfare of the needy, disadvantaged, or oppressed.
I use this new framework to explain why donors are not interested in or responsive to information about charity effectiveness and how donor preferences influence the organizational behavior of human rights NGOs. I employ experiments and statistical analysis to analyze demand-side and supply-side features of the human rights market. The findings illuminate (1) why human rights NGOs abstain from rigorously evaluating their impact, (2) why they conceal honest information about their impact from donors and other organizations, (3) why they exaggerate their impact, and (4) why the accountability movement does not hold human rights NGOs accountable to standards of effectiveness, despite claiming to. Put simply, donors reward this deceptive behavior because it is conducive to social signaling. I also revisit the statistical literature on the effect of human rights NGOs and demonstrate that the research suffers from numerous critical problems. A more faithful reading of the statistical evidence leads to the conclusion that human rights NGOs are not very effective. This finding should not be surprising, given that human rights NGOs calibrate their activities to satisfy donor reputational needs, not the needs of the stated beneficiaries.
This work may seem pessimistic, but I actually do not view it that way. For example, I do not argue that NGOs are incapable of being effective or that the pursuit of trying to help others is inherently impossible. There are many extremely effective ways to help people in highly disadvantaged circumstances, as evidenced by the Effective Altruism movement. The upshot to this problem is that human rights NGOs have the potential to do orders of magnitude more good, and they do not need any additional money to do it. I believe, though I do not test, that a demand-side solution will be far more effective at reshaping the practice of human rights philanthropy than a supply-side solution. The key to convincing human rights NGOs to change their current practices probably requires changing
norms, values, and beliefs among existing donors, or at least making it less socially rewarding (and possibly more embarrassing) to donate to ineffective causes. If donors demanded that human rights NGOs be held to high standards of cost-effectiveness, the practice of human rights would look very different. I believe that the key puzzle for future research is to figure out how to make knowledge about program effectiveness socially useful.