I’ve always had a few thoughts about charity floating around in my head. This post is a way for me to record some of those thoughts.
Deciding where to give
For me, this has been the most important question when donating any money/time/effort. If you have X dollars to donate, where should you donate this money?
Goal 1: Effective allocation
No one wants to see their money wasted. The primary concerns I had were that the money would not be used appropriately (either the charity is a front for a scam, or just inefficient in the way it utilizes funds). This is solved well enough for my needs by sites like GiveWell, and Giving What We Can. These sites rank charities and give you an easily accessible list of charities that have the highest impact.
In conjunction with these, sites like Charity Navigator tell you how the funds are used, letting you see what affects a charity’s score and ranking. For example, a charity that spends a lot of money advertising and getting its name out is inefficient because that is money that could go towards the cause the charity is fighting for. This is somewhat ironic as those charities, although inefficient, may be better-known. Having data behind the decisions (like ranking charities) be publicly available is super-important (just like open-source code) because then you can verify things for yourself.
Another way I’ve evaluated charities is by noting how responsive they are. This may bias for charities that have enough money to pay people to man their email & social media stations. However, I find having that personal accountability (where a customer/donor can ping the charity with questions & get a response) helps me trust the organization better. I’ve mailed GiveWell a few times with questions and have always received a prompt response. I find this a good way to assess charities until they start targeting quick responses solely to be ranked higher (see: Goodhart’s law)
However, an unintentional(?) side-effect of giving based on effective allocation is that you end up with charities with very similar missions. For example, if you want to optimize for “lives saved for every dollar donated”, then charities that provide mosquito nets rise to the top as nets are cheap, and mosquitoes kill a lot of humans. Which brings me to…
Goal 2: Causes you care about
Charities exist not just to save human lives, but also to improve lives at every “standard of living”. While it should be unlikely that people will want to donate to multi-millionaires, people may still want to donate to causes that aren’t just about saving lives. For example, people may donate to help people find jobs or to help children get education. Charities that address these issues are unlikely to feature on GiveWell, but you can vet many of these on Charity Navigator (link above).
For supporting online creators, I generally use Patreon. I try and ensure that I donate to quality creators who have a very small number of donors (Patrons). Patreon allows you to pay per product created, which allows you to ensure you get your money’s worth.
I’ve also heard people enquire about charities that will benefit communities they are a part of (from local to national levels). For example, Indians asking about charities that benefit people in India. I choose not to factor this in when making a decision as I think optimizing for the world as a whole would lead to greater and quicker improvements in the long-term.
Donating when you have no money
As long as you have time, you can make a significant improvement in the world. Many organizations are strapped not for money, but for time. You can visit/look into volunteering opportunities in your neighbourhood charity. Religious institutions (churches, etc.) may also be looking for volunteers to distribute food. Soup kitchens could use volunteers as could shelters. When looking for opportunities near you, remember that Google is your friend :)
Donating to people on the streets
Although this is a situation that tugs at my heartstrings, I have grown a little wary/skeptical of this. Let me explain. Once, I’d donated money to a couple asking for a few bucks solely to take the bus home. They took the money and started to head for the bus station, but I hung around after pretending to leave and noticed them returning back to the same spot to continue begging. In India, for example, there are begging scams and many of these people/children are victims of trafficking that are forced into begging. A good way to get around this is to only donate food/clothing/other essentials while avoiding the donation of cash.
As a counter-point, I’ve seen many people on the streets who have seemed very genuine. In Madison, a man stood on State Street clutching a bunch of newsletters. When he asked me if I had a moment, I assumed he was selling these. However, all he wanted was for passersby to read the newsletter, as he had been featured in it. The story told of his descent into alcoholism and further into homelessness. The newsletter was published by a local non-profit.
In another case, a man who could barely speak and smelled absolutely foul walked down the queue for the bus asking for some change for food. Every single person ignored the chap (me included), until a lady to my left provided some redemption for our species as she asked him what he wanted, and then offered to take him to Starbucks for food.
For those wondering why homeless people don’t just move into shelters, there are a few reasons: shelters aren’t always that great, and the ones that are, don’t always have room.
The best way to donate large amounts of money (over $5000) is to set up a donor-advised fund (DAF), and disburse money from the fund to charities you want to. This will allow the money to stay invested over time (meaning it can grow tax-free) and you can also get a tax credit on donation. Charities will also not have to pay a tax to receive this money (or stocks).
When possible, donate through companies that will match your donations. Big corporations like Microsoft, Facebook, Google (but notably NOT Amazon) will match your donations to these causes. If your company doesn’t match your donation, try donating through a friend (provided this is legal)
Another easy way to donate some money is to shop through smile.amazon.com instead of amazon.com (just type in smile.amazon.com instead of www.amazon.com). Initial impact may be minimal, but you can increase the impact you have by spreading the word about this (and donating effectively in general). For example, Susan Fowler used to tweet links to books on Amazon. I reached out and asked her to use smile.amazon.com instead. After the second tweet, all her links were to smile.amazon.com instead! The impact may not be huge, but it is something.
Interestingly, the charity Give Directly performed randomized controlled trials and found that just giving money to poor people does not increase their expenditure on vices like alcohol and tobacco. The trial found that when money was given to poor families, they spent the smae amount on vices (alcohol/cigs/other) as an average family would. Further, there was no impact on crime nor inflation.
Charities that provide loans to rural folk/entrepreneurs are not recommended as a good use of your money. However, they do serve some purpose as people who don’t want to part with their money may yet donate through these charities. It may be that these people assume they aren’t losing money, but they are losing interest they could earn on that money.
I usually avoid giving on social media like Facebook or GoFundMe as it leads to inefficient allocation of money. In short, there is neither a guarantee nor an easy way to see that your money is being used well. A positive would be that they do increase donations overall due to social pressure, visibility and ease of use.
It’s also a good idea to set up regular donations so that you budget for the donations and ensure donations are being made.
If I want to donate to:
- A charity that benefits people I identify with (for example: countrymen) : For example, I wanted to donate to charities that benefit Indians. While a personal choice, it should be noted that this is not the most impactful donation possible. If you consider humanity to be one, without borders, then you can probably reconcile yourself with the idea of donating to the most needed causes.
- An organization that then donates to charities: I’d prefer donating to the charity in question (or even the people that need it) directly, but there is one important exception.
- People on the street: Tugs at your heartstrings, but again, remember, it’s not the most efficient way to donate. Most cities (in the US) have shelters set up. Some (NOT ALL) people refuse to go there because they have a no alcohol policy. Many cities don’t have enough shelters.
- A specific cause (like education or remedial solutions rather than preventative): This won’t fall in GiveWell’s lists, primarily because they don’t rate this as impactful (saving lives is far more impactful in their opinion). Possibly could still benefit a lot of people.
- A public library: I use it, so why not give something back? Well, if you pay your taxes, you already are.
- Bloggers/Creators/Open source: If you do, try and choose ones that are getting really little per month (because they likely need it more than others who get thousands of dollars per month).
- Lend money since I don’t want to donate: Just donating would be more efficient & impactful.
- Save money for the future, so I can donate big then: While I haven’t done a mathematical breakdown yet, I assume the interest you earn on the money would not make up for the difference in people’s lives you could achieve (and the corresponding change in society those people would cause by the time you decide to donate in the future).
- Research organizations well before donating: You should. This post should aid with that. As an example of suspicious activity in charities, Propublica advises against donating to Red Cross as they have a sketchy record with past missions.