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Improving the Effectiveness of Your Gifts

January 22, 2014

What impact is your donation really making?

The people of the United States are among the most charitable in the world. Over 64% of us donate money to charities, with much of that intended to help people we do not know and have never met. However, a question that occurs to more and more of us is how effective our charitable giving? With an ever increasing number of needs, the question we seek to answer is: “Where will our money do the most good?”

There are a number of resources including websites that purport to assist the donor in answering these questions. Charity watchdog groups attempt to highlight organizations with less than stellar records. Other resources attempt to identify organizations with exemplary track records. Each December (the height of the giving season), various publications produce articles weighing in on the question of where your donation might do the most good. One such article appearing in the Wall Street Journal caught my eye this past December.

GiveWell, a charity review organization, was the feature of the WSJ article. The GiveWell website indicates that “thousands of hours have gone into finding our top-rated charities. They’re evidence-backed, thoroughly vetted, and underfunded.” The GiveWell founders indicate that they wanted to do the same thing for charitable giving as they could for any online purchase – get the best deal for the money. GiveWell is part of the trend toward “evidence-based giving”. They would like to transform philanthropy from one where decisions are frequently governed by emotion to one whose work is measured, tested and constantly optimized to produce the most good. I believe this may be where the problem for American charities lies.

GiveWell’s recommended charities tend to be international where they point out the incontrovertible evidence that you can get significantly more done by putting your money in a developing region than anywhere in the Western World. While it may take $10,000 to $20,000 to increase a single child’s academic performance in the U.S., a single dollar given to a deworming initiative in Africa has a profound positive impact on that child’s life.

While one cannot argue with the GiveWell conclusion, I can only hope that donors do not universally adopt that philosophy. Should the cost of living here in the U.S. deny its charities future donations just because the cost of success is so much higher here than it is in developing countries? Will arts and cultural charities ever be able to compete for financial support in the GiveWell world? Should donors have remorse because they prefer to improve the world in which they live rather than the globe in general?

I support “evidence-based giving” but I do not support the GiveWell proposal. Like everything in life, balanced thought about giving should include evidence-based research along with a variety of criteria that goes along with ensuring that our communities locally and globally are improving for everyone. Where do you stand?

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