The Robin Hood Rules for Smart Giving
By Michael Weinstein and
Columbia Business School Publishing, 2013
$27.95, 158 pp.
In the wake of the stock market crash of 1987, a group of hedge-fund savants led by Paul Tudor Jones came together to plan for what they anticipated would be a widespread economic meltdown, creating a foundation that would use quantitative tools to alleviate poverty in New York City. Although their gloomy expectations for the U.S. economy did not come to pass, the Robin Hood Foundation’s analytical method emerged as one of the leading models of data-driven philanthropy. Disbursing approximately $1.1 billion since 1988, the Robin Hood Foundation claims impact that other funders dream of: an average social return of $15 for every dollar in grants.
In The Robin Hood Rules for Smart Giving, Senior Vice President Michael Weinstein and longtime metrics consultant Ralph Bradburd pull back the curtain on the foundation’s “relentless monetization” practice, leading readers through the basics of their algorithm and describing how they rely on numbers to achieve desired results. Weinstein and Bradburd argue it is possible, albeit difficult, to evaluate all kinds of social interventions, even those that defy easy comparison: Should you make a $10 million donation to teach female high-school dropouts carpentry or invest the same amount in on-campus psychological services for disadvantaged middle-schoolers? The authors claim relentless monetization can help you decide, and compare it to other forms of “smart metrics,” including cost-effectiveness analysis, social return on investment, expected return, and even Charity Navigator. In each case, they note that effective systems count demonstrated benefits, not just spending, and attend closely to “counterfactuals”—whether an outcome would have happened regardless of the intervention.
In a bracing chapter on risk, they admonish funders to consider not only their own tolerance for risk, but also that of the recipients: If my intervention fails, will the target population be irreparably worse off? Weinstein and Bradburd encourage funders to stay on mission, and not fall for the shiny hype of “innovation” claims. Replete with equations and numbers, this book is not for the data-averse. But math aside, the book’s underlying assumption—that there is a measurably “right” way to spend philanthropic dollars—is a challenge to anyone entrenched in familiar and comfortable giving patterns.
For the Robin Hood Foundation, the formula is certainly gaining public support. In June, the foundation’s annual gala raised more than $80 million, and its first-ever Investors Conference in November will feature Henry Paulson, Stan Druckenmiller, Julian Robertson, Daniel Loeb, David Einhorn, and many more financial leaders who are fighting poverty with data: one exact equation at a time.