Getting the Most from your Charitable Donations: Focus

It’s a daunting task to begin taking on the challenge of figuring out to be more effective at making a real difference in the world, so I’m going to start slow, and spend the first few articles talking about a few simple ideas for using donations as a more effective tool for activism.

The first thing I’ll suggest is focus.  Simply put, “don’t spread your donation dollars too thin.”

There are an enormous number of tragedies and injustices being done in the world, and an enormous number of ways of making the world a better place. But if you are going to donate $250 dollars total in a year to different causes, there are a couple problems with spreading that out into twenty-five ten dollar donations.

First there’s overhead.  Each donation costs the charity involved something to process, while numbers vary outsourced donation collection services usually charge a fraction of the donation plus $.20-$.30 per transaction. Moreover, once you’ve made a donation to a new organization they are going to start sending you additional requests for contributions, and those will cost them money as well.  A $100 donation doesn’t really cost any more than a $10 donation to process and open, but a $100 donation costs a factor of ten less than ten $10 donations to process. Making fewer, larger donations allows charities to spend more of your money towards their mission, rather than on administrative overhead.  This also reduces your overhead–most of the charities you donate to will ask you for donations again in the future, filling your mailbox (electronic and/or virtual) with solicitations, which come with a cost in money, to the environment (for paper donations), and a cost of your time.

But overhead may not be the most important reason to stick to a limited number of organizations.  A better reason may be your time. Most of us have a limited amount of time we’re willing to spend researching an organization, seeing if it’s effective, seeing if it’s fraudulent, keeping track of whether it’s lost its way. The more charities you donate to (beyond a certain point), the more likely it is you’ll be shoving a few of those dollars to something ineffective or fraudulent. I have a friend who some years back showed me their list of charitable deductions, they’d put money (less than a thousand dollars total) to over forty organizations within a year. While many of those were fine and reputable organizations, a few of them were towards organizations that were allegedly working toward animal welfare, but most of the dollars involved were ending up in the hands of a third-party marketing firm.

I certainly don’t mean to suggest about being an absolutist about this. Most of us passionately want to improve the world in a number of ways, it’s unlikely that any of us will ever be single-minded enough to be able to entirely focus our donations on a single source. I’d just suggest that you don’t spread your wealth so thin that you end up throwing away a lot of money on fraud and overhead along the way.