Malengo — Core Operations (January 2024)
Note: This page summarizes the rationale behind a GiveWell grant to Malengo. Malengo staff reviewed this page prior to publication.
Summary
In January 2024, GiveWell recommended a grant of up to $750,000 over three years to Malengo to support the core operations of its educational migration program and field two to three additional cohorts of Ugandan students to migrate to Germany to attend university. Our recommendation represents half of the total grant amount of $1,500,000, with Open Philanthropy contributing the remaining $750,000.
We are recommending this grant because we think Malengo’s program could be highly cost-effective and that providing this funding may be beneficial for the long-term sustainability of the organization. We remain uncertain about a number of aspects of Malengo’s program, including its costs and the probability that Malengo students will graduate and remain in Germany. We expect to resolve these uncertainties over the course of the grant.
GiveWell recommended this grant via our policy for small discretionary grantmaking. As a small discretionary grant, this funding opportunity did not receive the same review as larger grants we recommend. Instead, we more minimally evaluated the case for the grant and any potential risks or downsides.
Table of Contents
Published: April 2024
The grant
Malengo facilitates educational migration to high-income countries for students in low-income countries, providing both mentoring and financial support.1 Its flagship program supports Ugandan secondary school graduates in migrating to study for a bachelor’s degree at universities in Germany.2 So far, Malengo has fielded three cohorts, beginning in 2021.3 Quasi-experimental evidence suggests that migration from low-income countries to high-income countries can increase migrants’ incomes4 and generate positive spillover effects in migrants’ home countries, including increasing the educational attainment and migration probability of migrants’ relatives5 and prompting remittance payments that improve close relations’ standards of living.6
In the long term, Malengo aims to sustain its program with little to no philanthropic support. When students join, they enter into an income sharing agreement (ISA). In exchange for Malengo’s support, this agreement requires students to pay Malengo back a share of their income, up to a certain limit.7 Under this arrangement, those students who earn a sufficiently high income would, in effect, provide funding to help sustain Malengo’s program.
Malengo is currently at a point where three cohorts of students have been sent to Germany but none have graduated yet. Without a track record of graduation or repayment rates, Malengo has not yet attracted sufficient private investment or philanthropic funding to cover its fixed costs. The grant we are recommending alongside Open Philanthropy is designed to provide Malengo with bridge funding over the next two to three years until it has a track record of students graduating. By supporting Malengo’s core operations for up to three years, the grant will allow Malengo’s program to operate until ISA repayments start to kick in, which may cover the costs associated with subsequent study cohorts. We estimate this funding would contribute to Malengo sending a cohort of at least 70 students from Uganda to Germany in 2024, and approximately 20 students each in 2025 and 2026.8 We expect Malengo to fundraise to send larger cohorts in 2025 and 2026. Sustaining the program in the short term should also allow Malengo to generate data on ISA repayment rates, which we think will help it raise capital from banks in future years.
Grant structure
This grant was jointly investigated by GiveWell and Open Philanthropy. Each organization is contributing up to $750,000 toward a total grant amount of up to $1,500,000. This maximum figure will be reached if GiveWell and Open Philanthropy jointly decide to cover three years of Malengo’s operations. If not, the total grant amount will be $1,000,000, co-funded equally, to support two years of operation.
The third year of funding is contingent on (a) whether we believe Malengo still needs our support (i.e., in the event that Malengo no longer operates or has raised sufficient private capital that it no longer needs philanthropic support, we do not expect to provide a third year of funding) and (b) its yearly cohorts being of sufficiently large size as determined jointly by GiveWell and Open Philanthropy, since this is a key driver of our cost-effectiveness estimate.9
The case for the grant
We are recommending this grant because:
- This funding may lead to many additional years of impact. We think our support is necessary to allow Malengo to continue sending students to Germany in the short term. Moreover, once Malengo has a track record of students graduating and ISA repayments kicking in, we expect the program to become simultaneously more appealing to potential donors and less reliant on philanthropic support. By setting Malengo up for this longer-term trajectory, we think our grant could be responsible for many multiples of its direct impact (on the specific cohorts it funds), making it extremely cost-effective.
- Even if Malengo’s program does not become self-sustaining, the grant should have additional learning value for GiveWell. Through this grant, we expect we will learn more about Malengo’s graduation rates, country retention rates, and per-person costs, all of which are key uncertainties in our cost-effectiveness estimate. This should allow us to reach a more confident estimate of the program’s cost-effectiveness. If these updates are encouraging, this could lead us or other funders to make additional grants to Malengo in future.
- We think Malengo’s program could be highly cost-effective under optimistic assumptions. Our best guess is that the cost-effectiveness of Malengo is below our funding bar of 10 times cash transfers; however, under reasonably optimistic assumptions about the per-person cost of the program and the probability that students graduate and remain in a high-income country, we think that philanthropic support of Malengo could exceed our cost-effectiveness bar.10
- We have a strong qualitative impression of Malengo’s founder, Johannes Haushofer. Dr. Haushofer founded the Busara Center for Behavioral Economics and conducted high-quality randomized trials of GiveDirectly and the Targeting the Ultra Poor program, and we generally think he is aligned with GiveWell’s values.11
Risks and reservations
Our main reservations about this grant are:
- We are uncertain about several important aspects of Malengo’s program, including the likelihood it is able to move away from philanthropic funding. As mentioned above, we have several major uncertainties around the cost-effectiveness of Malengo’s program. Under our current "best guess" assumptions, the direct impact of the program falls below our cost-effectiveness bar.12 This means the long-term, indirect effects of our funding constitute an important part of the case for the grant, but we are also uncertain about these: we do not yet know whether Malengo's ISA funding model will prove to be both sustainable and legally enforceable, nor whether our grant will be sufficient to generate the data Malengo needs in order to raise capital with private banks. We expect to learn more about these uncertainties both during and after the grant period.
- There is the potential for political backlash in recipient countries as a result of anti-immigration sentiments. We think it is unlikely that this would arise from this grant because Malengo is operating on a small scale; however, we consider this to be the key risk to scaling up a program like Malengo.
Plans for follow up
We plan to check in regularly with Malengo, particularly as we approach the funding decision for the third year of the grant (as described above).
Sources
- 1
- “Malengo means 'goals'. We are a charity that facilitates international educational migration. We offer mentoring and financial support to students from low-income countries who want to complete a university degree in a high-income country.” Malengo, “Welcome to Malengo”.
- “What does Malengo offer its selected scholars?
- Support to take the IELTS test, including tutoring and funding
- Guidance and funding to apply to up to three English-speaking bachelors degree programs in Germany from a list of eligible programs and universities
- Help in applying for and obtaining a student visa for Germany
- A pre-departure orientation seminar to prepare for life in Germany
- Assistance in finding accommodation for the first year living in Germany
- Financial support to cover the first-year living expenses, flight ticket, and related travel costs
- Guidance to find a part-time job to help pay for all costs after the first year
- A supportive mentor and other network staff to support scholars
- Connection to other scholars and wide network of support for social activities and friendship”
- 2
“Malengo’s Uganda–Germany Program prepares Ugandan Secondary School Graduates for admission to an English-speaking full Bachelor’s program at a German university and provides help with financing. We are specifically looking to support students who have limited means and could not otherwise afford to study at a university.” Malengo, “Uganda-Germany Program”.
- 3
“We sent 7 and 17 students to Germany in 2021 and 2022, and are in the process of sending 120 in 2023.” Malengo, “Malengo Update Fall 2023”.
- 4
- McKenzie, Stillman, and Gibson 2010 exploits a random ballot to estimate that Tongan migrants to New Zealand experienced a 263% increase in income, with income rising from $104 per week to $274 per week. "Therefore, controlling for the pre-existing characteristics of the treatment and control groups, we estimate that . . . migrating increases mean income by $274. . . . a 263% increase in income from migrating." pp. 923-24.
- Gibson et al. 2015 follows up on this study, estimating that migrants earn 271% more than non-migrants almost 10 years later. "This results in a NZ$247/week gain from winning the ballot and NZ$340/week gain from migrating. The ballot losers average NZ$126 per week in income in Tonga, so the gain from migrating represents a 271 percent increase in weekly income," p. 14.
- World Bank 2018 estimates that the average income gain for a young unskilled worker moving to the United States is about $14,000 per year: “The average income gain for a young unskilled worker moving to the United States is estimated to be about $14,000 per year,” p. 1.
- 5
Bedasso, Weldesenbet, and Obikili 2022 estimates that being exposed to a migrant in the household increases the probability of one's own future migration and the possibility of completing secondary education.
- "Depending on the instrument used, living in a migrant household increases the probability of completing secondary school by 14–17%." p. 648.
- For the impact of being in a migrant household on the probability of one’s own migration, see Table 5, p. 649.
- 6
- Cooper et al. 2018 estimates that the average Ugandan migrant in the UK sends $4,000 per year back to Uganda. "The diaspora in the UK sends almost USD4,000 per person per year back home," p. 2.
- Yoshino, Taghizadeh-Hesary, and Otsuka 2017 estimates that a 1% increase in international remittances (as a percentage of GDP) can reduce severe poverty rates by 16%. "A 1% increase in international remittances as a percentage of gross domestic product (GDP) can lead to a 22.6% decline in the poverty gap ratio and a 16.0% decline in the poverty severity ratio in the sample of 10 Asian developing countries from 1981 to 2014," abstract.
- 7
“After you finish your studies and take a job, we expect you to make contributions back to Malengo to allow us to continue our work. This happens through a so-called Income Share Agreement. An income share agreement means that you agree to contribute a share of your income for a limited period of time. For the 2023 cohort, the parameters were as follows: Students who live in Germany and earn more than EUR 27,000 per year contribute 14% of their pre-tax income for up to 10 years (but never more than EUR 56,220 over their lifetime). If they to Uganda and earn more than EUR 27,000 per year, they contribute 7% of their pre-tax income for up to 5 years (with the same lifetime maximum). If they do not have an income, or if their income is lower than EUR 27,000, they are not expected to make contributions. All of these numbers are adjusted for inflation on an ongoing basis. The parameters for the 2024 cohort may be slightly different; successful applicants will be informed about the exact details of the agreement.” Malengo, “Uganda-Germany Program”.
- 8
Malengo, Budget (unpublished).
- 9
Specifically, a larger cohort implies lower fixed costs, and a lower cost per person. See our back-of-the-envelope cost-effectiveness calculation here, which models cost-effectiveness under different assumptions, including different per-person program costs: GiveWell, Malengo BOTEC, 2024. Note that (a) our cost-effectiveness analyses are simplified models that are highly uncertain, and (b) our cost-effectiveness threshold for directing funding to particular programs changes periodically. As of early 2024, our bar for directing funding is programs that are about 10 times as cost-effective as unconditional cash transfers. See GiveWell’s Cost-Effectiveness Analyses webpage for more information about how we use cost-effectiveness estimates in our grantmaking.
- 10
See the "Best-guess" and "Optimistic" columns in GiveWell, Malengo BOTEC, 2024. As above, note that (a) our cost-effectiveness analyses are simplified models that are highly uncertain, and (b) our cost-effectiveness threshold for directing funding to particular programs changes periodically. As of early 2024, our bar for directing funding is programs that are about 10 times as cost-effective as unconditional cash transfers. See GiveWell’s Cost-Effectiveness Analyses webpage for more information about how we use cost-effectiveness estimates in our grantmaking.
- 11
- 12
See the "Best-guess" column in GiveWell, Malengo BOTEC, 2024. As above, note that (a) our cost-effectiveness analyses are simplified models that are highly uncertain, and (b) our cost-effectiveness threshold for directing funding to particular programs changes periodically. As of early 2024, our bar for directing funding is programs that are about 10 times as cost-effective as unconditional cash transfers. See GiveWell’s Cost-Effectiveness Analyses webpage for more information about how we use cost-effectiveness estimates in our grantmaking.