Imagine this scenario: a charity succeeds in diverting a young person away from crime and into a job. The costs of police action, court cases and prison are all avoided. The young person now earns a wage, pays tax and contributes to the economy. Potential victims and members of the community he lives in benefit from a reduction in crime.
That’s a lot of impact from one intervention – and a lot of money saved and value created for society. So how can philanthropists find interventions like this that are high impact, have a high return on investment and save society money?
More and more philanthropists are thinking about how they can create the biggest impact through their donations. An economic approach to analysing giving can highlight some of society’s toughest problems, identifying where there is potential to save money through effective interventions. These are not popular causes, but the good news is that solutions exist. Economic analysis then makes the case for greater investment.
Barclays Wealth has today published Early interventions: An economic approach to charitable giving, which NPC has researched and written on its behalf. We compared 30 human welfare issues, prioritising them based on cost, reliability of data and scale of issue. We then focused on cause and effect: what lay behind issues around crime, substance abuse, mental health problems and worklessness?
Family problems emerged as a root cause of myriad social issues, and in any case chaotic families cost the UK government £12 billion a year in services, never mind future costs. Crimes committed by adults who had conduct problems in childhood cost £51 billion a year, so why not try and overcome such difficulties before they become entrenched? Nurse-led support for vulnerable young mothers is a proven method of setting good parenting habits early on. Both families and children benefit, and the savings identified in US trials amounted to US$5 to every US$ spent. Unemployment and low productivity associated with mental health problems cost £45 billion. As appropriate work is good for mental health, we found organisations that incorporate support to find work or stay in work as part of a therapeutic recovery programme.
Private funders have a key role here. Although government is very interested in these issues, private funders have the advantage of being able to take risks. They can test new ideas and support organisations to prove success. When it comes to intervening early and preventing problems, private funders come into their own. Benefits of early or preventative approaches are often only evident over a very long timespan, seen through carrying out longitudinal studies over many years. It is NPC’s observation that government struggles to take a long-term view: it wants impact here and now. But private funders can invest in these riskier, long-term interventions, and reap the rewards of high social returns for decades afterwards.
However many of the funding opportunities require highly engaged funders – it’s not for cheque-book philanthropists wanting to give a chunk of money and leave it at that. Finding the right organisation delivering the right intervention, and potentially partnering with other charities, government, or social enterprises to make things happen, takes time and effort.
The difficult, gritty subjects in the report offer funders an opportunity to create real change. Neglecting these problems until they reach a crisis point is an expensive and ineffective way to tackle them. Investing in early intervention may be risky, but if funders are willing to take the risk the rewards can be very attractive, not only for those individuals helped, but for society too.
Iona Joy is Head of Charity Effectiveness at New Philanthropy Capital