Charitable Giving: Where to Give? - Part 2
By most accounts, the U.S. economy is doing better. Unemployment is down. Job growth has been robust. Businesses are doing better, and the Dow is hitting historic highs. As companies and people find themselves doing better financially, they are more inclined to want to help those who are less fortunate. However, deciding which charity or charities to support can be a challenge. Determining which charity is the most worthwhile and trustworthy to use the donation wisely is hard for even those most knowledgeable about good causes. There are over a million charitable organizations in the U.S. alone. It is hard to decide which cause is ‘best’ when there are so many worthwhile charities. For example, UNICEF helps protect the world’s children by providing clean drinking water, vaccinations and emergency relief in disaster areas. The Against Malaria Foundation provides bed nets to families in malaria-prone regions. The Seva Foundation treats trachoma and other common causes of blindness in developing countries. The list goes on and on. How does one decide which organization is most deserving of financial support?
The truth is that most people spend very little time deciding on a charity to support. In fact, studies have shown that people spend far less time researching a charity to which they give money than they do researching the purchase of a new appliance or car. If charitable giving were handled like a business decision, the goal would be to donate to causes that can do the most good for the most people. However, even then, the choices are many. Here are some things to consider when weighing options and researching charities.
The Right Mindset
Perhaps the first step before donating to a charity is to start by thinking of oneself as a “philanthropist”. Regardless of how much or how little is donated, anyone giving to a charity is a philanthropist. As a philanthropist, it is important to figure out what cause to support by taking the time to do some research to find out the organization that is doing the best work on a particular problem.
Feeling Led To Give
Research shows that people donate to charities based on emotional responses to requests that tug on their heartstrings. For example, people will donate more to a charity when presented with information about one specific person in need than if presented with information about a million people in need. In one study, people who had earned money for participating in an experiment were given the opportunity to donate some of it to Save the Children, an organization that helps poor children. One group was told things like: “Food shortages in Malawi are affecting more than three million children.” A second group was shown a photo of a 7-year-old African girl, told that her name was Rokia and urged that “her life will be changed for the better as a result of your financial gift.” The second group gave significantly more. It seems that seeing a photo of Rokia triggered an emotional desire to help, whereas learning facts about millions of people in need did not. Similarly, the unknown and unknowable children who will be infected with malaria without bed nets don’t grab emotions like a specific kid with leukemia featured in a brochure. While it defies logic, research confirms that the plight of a single identifiable individual is much more salient than that of a large number of people. That is clearly an emotional decision. While there is nothing wrong with feeling compassion and giving to a charity based on those emotions, it is probably wise to ensure that the organization is legitimate and using the money wisely.
Do Some Research
To that end, once a charitable organization is identified, research the organization. Thanks to the Internet, though, it is becoming easier to determine if a charity is legitimate and effective. Technology has made it not only easier to give but easier to give effectively. Web sites such as GiveWell and The Life You Can Save offer independent evaluations and can direct people to organizations see to it that donations get to those who need it. Another source of free information is Guidestar, which posts copies of charities’ federal tax filings, or state charity regulators. Likewise, CharityWatch (formerly the American Institute of Philanthropy), Charity Navigator, and the Wise Giving Alliance also offer ratings of charities. Another good way to research a charity is to speak to religious and community leaders about what charities they know are doing good work. Also, the Internal Revenue Service maintains a list of all organizations registered as charities.
It also makes sense to ask the charitable organization questions. Charities are required to provide information about programs and expenses. Find out how your donation will be spent? Ask how many people did that charity help last year? Determine in what way were they helped? Just as it is wise to investigate a charity before making a donation, it is also wise to give to charities where that money can do the most good.
Doing Good In The World
In considering local, national and international charities, be careful not to discount those that help abroad believing that the U.S. already gives a lot of tax dollars to foreign aid and therefore there is no need to give to charities helping the needy of other countries. In fact, polls show that Americans believe that much more tax dollars are spent on foreign aid than actually is. In a poll conducted by Kaiser, Harvard University and The Washington Post in 1997, Americans were asked “What percentage of the federal budget is spent on foreign aid?” The average answer was 20%. Fast forward two decades and the answer remains about the same. In a 2013 Kaiser Family Foundation survey on the U.S. Role in Global Health, Americans were asked the same question. Respondents answered that they believed the U.S. donates 28% of the federal budget to foreign aid. Americans consistently overestimate how much the U.S. actually gives in foreign aid. In reality, the U.S. spends only about 1% of the federal budget on foreign aid. Where American tax dollars stop is where charitable giving begins.
Once a charity is chosen, then make that organization a charitable partner for life. Follow the organization’s progress over time. Continue to learn about the organization, and continue to invest in it.
QUOTE OF THE WEEK
"You have not lived today until you have done something for someone who can never repay you."