Why nonprofits lie about impact

I was listening to a podcast with Dan Ariely, professor of psychology and behavioral economics at Duke University, about “Why Everybody Lies”. The discussion was really interesting, but what I found especially compelling from a philanthropic lense was a portion of the discussion where Professor Ariely discusses an experiment where people’s lies affected how much money could be given to charity.

The basic point was that people are more likely to lie when the lie benefits a cause.

As the title of this post suggests, the behavioral finding highlighted in the study got me thinking about why nonprofits seem inclined to inflate their program impact claims. I used to more simplistically think that such fudging was the simple calculus that more claim to impact means more money for me. After listening to this podcast, my guess is there is impact inflation is more invovled, as the weight of the cause likely outweighs the knowledge (tacit or otherwise) that impact claims are not quite as they appear.

If nonprofits are right that their impact is large (even if not as large as they claim), then perhaps the subtle dishonesty is not so bad. But what if a nonprofit’s exaggerated claim makes a donor give more to one organization than another that in actuality is more impactful? Worse yet, what if a nonprofit actually does harm while claiming impact?

There are some in the international development space calling for cash transfers to act as a baseline metric that all other interventions should be compared against, an idea I have mulled domestically as well. If it is true that nonprofits inflate their impact metrics, then cash transfers as a comparison point gets necessarily devalued.

The challenge here of course is not just the dishonesty of inflating impact metrics, but the moralizing inherent in all of us that allows us to override fact for what we think is a more just fiction. The risk is that if we allow our rationality to get hijacked by our moralizing, we ironically run the risk of making worse the issues we deem important enough to lie for in the first place.