Tuesday, December 3, 2013

9 Tips for Charitable Giving


Since people like to give money during the holiday season, here are my tips for being an effective philanthropist. Because I believe that the world of animal-related charities is much more complicated, and that our efforts in that respect are best spent advocating veganism, I focus here only on charities helping humans.

1. Choose your charities wisely. There's no such thing as giving to "charity"; you give money to specific charities. Some charities are worse than others, and some are much, much better. Think about how much time you spend considering which car to buy, or which shoes to get. Your choice of charity will likely have a greater impact on the lives of others as these purchases have on your life, so it deserves at least as much careful consideration.

2. Donate to those who are far away from you. If you live in a wealthy nation, your money will go much farther to help people in poorer nations. Not only will a smaller amount go further for these people, but they are often significantly worse off than the people wealthy nations and so in more dire need.These two considerations combined count strongly in favor of donating to foreigners.

3. Don't volunteer your time. People like the idea of volunteering their time rather than giving money, but this is usually not an efficient way to help others. If you have the time to spare, pick up overtime at your work and donate the extra money to an effective charity. As an outside volunteer you will likely be a lot less effective than someone who does the work professionally. It's better that you do the work that someone is willing to pay you for (assuming it's not an evil job), and then use those funds to support the work of those who outstanding charities are willing to pay.

4. Donate money, not things. If no one would pay you for whatever it is you're trying to give away, then it's not worth very much. If someone would pay you, take the money and donate it to someone who wouldn't trade that amount for the object you're giving up. Or rather, give the money to a charity whose effectiveness at providing for essential needs has been extensively demonstrated. (GiveWell has written very persuasively about this topic.)

5. Administrative costs are irrelevant. A lot of people spend a lot of time wringing their hands over how much charities pay directly on programs and how much they pay to administrative costs. This misses the point. Any obligation we have to donate is to the individuals that are helped by the charity. What percentage goes to whom is not nearly as important as whether or not the programs are really effective in improving lives. Though these two factors are related, there is not a direct connection, and whether an intervention is effective should be the decisive factor.

This also creates a perverse incentive. If a charity could hire an administrator who could make their program several times more effective, they might refrain from doing so if they thought they'd get fewer donations in response to higher admin fees. This would result in the people served being left worse off for the purpose of appealing to the donors' sense of institutional purity.

6. Donate consistently throughout the year. This is less a rule than a personal preference. Charities expect to receive the most money around the holidays, so it's not a bad thing to give a large chunk then. But personally I find it much easier to give a smaller amount every month, taken directly from my bank account, than to donate a large sum once a year. It's also easier for me to increase this amount slowly over time to give a larger percentage of my income to others. If you don't think this would be the case for you, this tip can be ignored.

7. Donate now, not later. At least some. If you think there are some investments you can make that will pay off big in the long-term (say, in your education) then it's likely worth it to put off giving big donations now. But it's best to always give something, so that donating is always a part of your life of which you're conscious. It will make giving more natural when you have to ability to give more.

Also, in the same way that invested money will produce greater returns in the future, so will the effects of charitable donations. If you give money to a pregnant woman in poverty now, and her life is improved, then the child will have a better start to life in the future. If you instead waited a year for that money to earn interest, it's not at all obvious the child will be better off now with the somewhat larger donation than she would've have been had her mother received the donation during her pregnancy.

8. Talk with others about donating. Most people don't think too hard about where they donate, but it makes a huge difference. A more informed dialogue about charity would have enormous benefits. Also, don't shy away from mentioning how much you donate. People find exact figures to be crass, so I find percentages to be more socially acceptable. I donate between 10%-30% of my income(rough estimate because of a change in my financial circumstances), and plan to donate more when I'm not saving for my education.

9. Let others do the research for you. Investigating all the ins an outs of charitable giving is extremely time consuming and resource intensive. My views on this topic are greatly influenced by the work of those at GiveWell. They do excellent work and contribute an invaluable service. While I do not completely endorse their philosophical views, I think for the most part our interests are aligned. I recommend using their work as the basis of any research into charities, and personally favor their recommendation of GiveDirectly as a top charity.

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