Wise Giving

By - September 19, 2011

I previously wrote a post titled, Give Until it Hurts? My answer to the question was no. Humans who develop normally are generous and will help others when their own needs have been met, but to alleviate suffering at the expense of your own is ideology, not love, and it makes no sense. Today, though, I want to look at wise giving.

How do we choose charities wisely? How do we do the best we can to do the most we can with the money we have to give? Here are a few of my thoughts on this...

First of all, if you want to help other people, it is most efficient to choose just a couple causes and devote your money to these, rather than give a little money to many organizations. This is because there is a cost to each organization for having you as a donor. This is mostly a set expense, and it eats up little of your donation if you give $1,000 annually to an charitable organization, but a large percentage of smaller contributions.

For example, when you donate $20 annually to a cause, the organization that gets your contribution will maintain your name, and send out reminders for your contributions. This costs money. If they are like most charitable groups they are also likely to send regular mailings asking for special or extra donations. In all, they may spend as much as $12 or $15 each year, meaning the programs they support get as little as $5 in net benefit from your contribution. It may seem nice to be able to support 50 causes with that same $1,000 by way of these small donations, but the net effect can be that you only really put $250 to work in those causes. Donate the thousand dollars to one organization and if they spend $15 on mailings and donor costs, they still have $985 to work with.

Which Charities Are Efficient?

How much of your contribution to a charitable organization is actually used for programs? You can find out this and more at the Better Business Bureau Non-Profits Page. They list data like what percentage of money raised goes to fundraising, how much the chief executive makes, and how many people are employed by the charity. Be aware, though, that what they call program expenses can include expenses and wages for employees in the offices in foreign countries where the money is destined to go, so the true net to programs (which can be measured in many ways in any case), can be substantially less than shown.

I find it a bit disturbing just how much money they pay the top people in most of these organizations. I also find it upsetting that so much of the money collected goes to marketing. I understand the argument that you have to let people know you exist to get them to donate, but the net effect of all of these organizations competing for dollars is that a significant percentage of all the money raised for good causes is diverted into advertising and marketing.

One solution I've been considering is to send a check to my favorite charities along with a letter requesting that they remove me from their mailing list and put my name on their "do not contact" list. That stops them from wasting money on the usual ten mailings per year. I just have to remember on my own if I want to make an annual contribution.

Helping people more directly is another approach to wise giving. Sadly, my own experience tells me that we can rarely help people with money, in this country at least. But occasionally people really do need just a bit of cash to turn things around or to get off the street. Good luck guessing which ones.

When working on this more personal and involved level, there are some ways to be fairly certain more good than harm is done. For example, you could share a healthy meal with people who are living on the street, rather than giving cash. You can offer a job rather than a handout. Or, to help animals, rather than giving to a charity you might adopt a dog or cat from a shelter.

Over the years I have watched generous people "help" others into all sorts of trouble, so wise giving is not just a nice thought, but a necessity if you want to actually do good with your generosity.

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