Yes, it’s thinking about social impact bonds and the like that started me thinking about paying charities for results. What I would note, though, is that, at the moment, individual donors/investors can invest in social impact bonds. What they cannot do is offer money for the payouts to investors in social impact bonds. So, you can put money into a bond which pays out if charities are effective at, eg, reducing the number of children who go into care homes in the UK. (this is a real example). But you’d only want to do that if you were confident that the charity was effective, otherwise you’ll both lose out financially and have achieved no good. I’d be more interested in adding money to the fund which pays out for results I care about, thus giving investors who might have a better idea of what is and isn’t effective incentives to put money into the charities they think will produce good results.
You may want to read up on the burgeoning area of charity success or social impact bonds: http://www.nytimes.com/2011/02/09/business/economy/09leonhardt.html http://en.wikipedia.org/wiki/Social_impact_bond
Note that the metrics have to be carefully designed to avoid the obvious principal-agent problems/Goodhart’s law/Lucas critique.
Yes, it’s thinking about social impact bonds and the like that started me thinking about paying charities for results. What I would note, though, is that, at the moment, individual donors/investors can invest in social impact bonds. What they cannot do is offer money for the payouts to investors in social impact bonds. So, you can put money into a bond which pays out if charities are effective at, eg, reducing the number of children who go into care homes in the UK. (this is a real example). But you’d only want to do that if you were confident that the charity was effective, otherwise you’ll both lose out financially and have achieved no good. I’d be more interested in adding money to the fund which pays out for results I care about, thus giving investors who might have a better idea of what is and isn’t effective incentives to put money into the charities they think will produce good results.