[b]How can you give more effectively?[/b]
[b][url=https://soundcloud.com/givology/givology-impact-series-effective-ways-of-giving]Click here to listen to our ~7 minute Givology impact series podcast[/url].[/b]
Andrew Tisch at a recent meeting of the Board of Advisors to the Harvard Business School Social Enterprise Initiative said, No one gives away money as intelligently as they made it. While large foundations have the ability to conduct rigorous due diligence on financial and social impact, there are still many steps an individual donor can take to give more effectively. Here at Givology, we spent a lot of time thinking about maximizing impact per dollar and curating our grassroots partnership network to present to our supporters highly effective grassroots education causes around the world. While we wont go into examples specific to our organization today and our process for screening projects, here are our top 4 tips that any individual donor can benefit from.
1) Prioritize your cause
According to the National Philanthropic Trust, the average American household gave $2,974 in 2014. Americans typically give between 2.5-3.5% of their annual income. Especially since individual contributions represent 72% of total charitable funds, if each person can budget effectively and maximize impact per dollar, collectively we can be much more effective. To give effectively, identify your priorities and the key issues that matter most, balancing subjective and objective perspectives. We mention objective and subjective because while certain causes make us feel good because they are very personal to us, if we can take a more rational approach (thinking independent of ourselves), we can collectively do much better. As discussed in a recent article entitled The Global Good in the Atlantic, the wisest question to ask is not, Where is the greatest good? but rather, Where is the greatest good where the next dollar could have the greatest impact? Whether time or money, the most important aspect is to make giving part of daily life and to recognize that just $34k per year equates to a global 1%, which makes the average middle class American highly empowered to make a difference.
2) Do some basic calculations
While there are plenty of innovative and effective charitable organizations, there are also some truly terrible and wasteful organizations out there. All US charities are required to file form 990 annually so a little bit of digging on Charity Navigator, Give Well, GuideStar, and Charity Watch, among other sources, can really go a long way.
To give you some important ratios:
Program expense ratio - of the total expenditures made by a charity, look at what % goes directly to mission related activities as compared to overhead and administrative expenses. If the program expense ratio falls below 50%, its not worthwhile to give
Fundraising expense ratio and efficiency ratio - charities need to fundraise in order to cover program costs, but if they end up spending most of their money on fundraising rather than mission activities, its not a good organization. Fundraising costs really should not be higher than 20% of total expenditures. Also, check how much it costs for an organization raise a $1 - the lower the fundraising cost per dollar, the more efficient the organization
As an example, the Center for Investigative Reporting releases an annual table of the worst charities. Even though the causes sounded worthwhile, from cancer funds and wish granting networks for sick children to veterans support and police unions, many of these worst charities manage to raise millions of dollars annually but spend less than 5% on the underlying cause and much more on consultant fees, salaries, and expensive public image-boosting fundarisers. We urge you to do some basic research to make sure that you dont get duped.
3) Focus on the outcomes not inputs of the organization
But good financials and metrics alone arent sufficient. To cite an example from Toby Ord, an Oxford researcher in moral philosophy and founder of Giving What We Can, the cost of training a seeing eye guide dog dog is $40,000. This can certainly improve the life of one blind person here in the US, but if we spend that same money abroad on $20 surgeries to cure trachoma, you can cure 2,000 people of blindness in sub-saharan Africa. This is certainly a simplification and I dont want to get into the details of calculating disability adjusted life years (DALYs as they call in global health studies), but the simple point is that there can be dramatic differences in the impact effectiveness of different interventions. Ord goes on to argue that in a hypothetical example of different interventions funded equally, 80% of the benefit comes from 20% of the programs.
While its true that the individual donor does not have access to the same data transparency as the large foundations and that the charitable industry as a whole is still in the early stages of impact assessment, you can still do some research to learn more about effective programs. We really like reading the research at the MIT Poverty Action Lab, which compares different types of programs. Does the organization frame their impact in terms of counting inputs (IE: $ spent, facilities built) or in terms of output and impact (IE: the outcomes achieved by the beneficiaries of the program)? What is their track record in the community? How do they measure the sustainability of the program or benchmark their progress? These are all important questions to ask.
4) Time matters just as much as money - everyone has something to give
This will be the subject of our next podcast about different ways to give back, but giving does not have to come in the form of dollars. Time, donation of skills and talents, commitment for advocacy and shared communication are all extremely valuable. Were 100% volunteer-run at Givology and weve seen how the passion, dedication, and commitment of our team has led us to help thousands of students around the world.
In the classic Peter Singer example, imagine that you are in route to work and you notice that a child has fallen into a shallow pond and appears to be drowning. To wade in and pull the child out would be fairly easy, but you would ruin your clothes and be late to your meeting. Nearly everyone would unanimously agree that the right thing to do would be to step in and pull the child out, but when Singer modifies the scenario to include a child far away in another country (also equally easy and within means of a middle-class American), caveats start to arise.
Poverty is an ethical issue. We all have something to give - whether 5 minutes, $5, 5 miles, 5 letters...these small dollars and small hours can aggregate into a powerful force for change.
Joyce Meng's Blog
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