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Making money to make a difference - Blog

Making money to make a difference

Making money to make a difference

Most people aren’t wholly consumed by selfish or self-interested motives for their actions. While making money is important for the small business owner and entrepreneur, making a difference to other people’s lives may also be a guiding disposition. In recent times, two kinds of money-makers-for-good have come into the mainstream, social entrepreneurs and effective altruists.

Most people aren’t wholly consumed by selfish or self-interested motives for their actions. While making money is important for the small business owner and entrepreneur, making a difference to other people’s lives may also be a guiding disposition. In recent times, two kinds of money-makers-for-good have come into the mainstream, social entrepreneurs and effective altruists.

Social entrepreneurship

The idea that entrepreneurship should be directed not for wholly self-interested ends, but instead should be commerce that improves the lives of the community in which it is found, is the guiding principle of social entrepreneurship.

Social entrepreneurs direct their entrepreneurial efforts towards solving social, cultural or environmental issues, much like NGOs, but look towards using the market to fund and sustain these efforts. For instance, a person who notices that litter in their community is effecting their lives and their neighbours’ might start a litter collection and recycling business, cleaning the streets of unsightly detritus, and making a buck on the side.

The social entrepreneur isn’t driven by profits alone. Instead, they may use other metrics to understand their own success. In the aforementioned case, the social entrepreneur may look to the number of blocks kept spotless by their efforts, or by the amount of recycling collected. Since social entrepreneurs are community, not profit focused, many are able to collect outside funding to further their efforts. Unlike NGOs however, the social entrepreneur’s endeavours aren’t kept at the whims of donors – they aim to self-sustain.

Effective altruism

For some, the ability to do good deeds may be limited by the circumstances in which they find themselves; not everyone can devote their lives to charities and NGOs. But for many, the desire may remain to have their life be more than just a self-interested race to the top. According to the effective altruism movement, a person can pursue a professional capitalistic career, and make the world better, by means of salary commitments to charitable endeavours.

The effective altruism movement stakes its claim to a justified use of ‘effective’ by sticking to a strict selection criteria for the charitable causes on the end of the professional’s donations. One of the most common critiques of charities in the modern age is that most of the money collected by the charity is directed towards administrative costs, instead of the targets of the charity – the poor, unwell, under protected.

Instead of abrogating responsibility to the charities, effective altruism insists on applying a cost-benefit analysis to causes. The effectiveness of a charitable intervention is, in many cases, determined by doing a randomised control trial (RCT). RCTs are commonly used in medical trials to establish whether a medicine is doing what the researchers planned for it to do.

Groups such as the Jameel Poverty Action Lab organise and perform these trials for charitable interventions. These trials can show that interventions that have been taken to be obviously effective are far less cost-effective and have a smaller net benefit than more unconventional interventions. Among the victims of this approach are disaster relief charities (with the exception of Doctors without Borders). The second most effective charity, according to effective altruism organisation GiveWell’s index, is Schistosomiasis Control Initiative, which treats people for parasitic infections. Those who go untreated can suffer from a host of problems – in children, the developmental effects can be profound, with huge knock-on effects to health, and schooling performance. The treatment is extremely cheap, making this charitable intervention extremely worth-while.

With the support of reliable scientific evidence of the success of the charitable intervention, the effective altruist can find assurance that their donations are making a difference.