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How to choose a charity
MR reader Jeffrey Drucker writes:
I'll be graduating college in just a few weeks and entering the real world. That is I'll be a salaried employee making all budgetary decisions for myself. Aside from the necessary components of spending, saving, and repaying my college loans I'd like to set a portion of my earnings aside for charitable donation. I've always thought that charity was a crucial element of any caring libertarian's mindset. Now that I will be able to spend my own money, I wondered if you could provide any insight into the economic considerations of charity.
Obviously, the decision to donate is based on personal considerations and evaluations of the relative merit of different organizations. But economically is it more sensible to donate to a wide number of worthy causes or champion just one. Should I focus on issues closer to home or those who are in the most need the world over? How large a percentage of my income is it reasonable to donate, what issues should I consider (value of investment opportunities, lifetime consumption)?
Putting political and intellectual non-profits aside, here are some principles for purely charitable giving:
1. Published information on budget ratios devoted to programs and fundraising expenses is not reliable. Many charities manipulate the data.
2. Consider neglected but long-simmering problems; read my earlier analysis of whether you should focus on the crisis of the day.
3. Hardly anyone gives enough to charity and you won't either. Pick a cause or causes you will become addicted to. Tell others you won't back down from your cause, so that you will lose face if you do.
4. My preferred approach is pure cash transfers to rural Mexicans, vis-a-vis Western Union. You don't get the tax break but administrative expenses are very low. Think of Western Union as a for-profit charity.
5. In-kind aid sounds inefficient to the economist, but the commitment may make you happier. You are wasting most of your time anyway.
6. Don't give money to beggars, the explanation is here.
The comments are open for other suggestions. Analytical principles are especially welcome.
Posted by Tyler Cowen on December 1, 2005 at 07:46 AM in Education | Permalink
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Comments
0) Pick a target percentage of your income. Typical values range from 3-5%, with 5% levels typically coming from people in the lower quintiles (who are probably seniors, see the Statistical Abstract). The goal drives your giving (a Schelling point?), and knowing that you have a plan makes it easier to say no to unwanted solicitations.
1) Choose charities that reinforce rather than undermine property rights, e.g. Habitat for Humanity and The Nature Conservancy
Posted by: Eric H at Dec 1, 2005 8:02:31 AM
Oops, I forgot
2) Divide your target up among your chosen charities and give regularly. Like the "pay yourself first" principle in personal finance, it's easier to write monthly checks for $20 than one check for $240, and it avoids the reliance on crises. If one should arise, and you can afford it, by all means give, but the regular spending plan means that you won't suffer from guilt if you can't.
I also forgot that I charted the data from the Statistical Abstract here:
http://www.zianet.com/ehusman/weblog/2004/10/charitable-spending.html
Posted by: Eric H at Dec 1, 2005 8:32:46 AM
I believe it is a moot point attempting to assess efficiency in the non-profit market. One of the fundamental principles of that market is that donors neither require nor receive:
a) accountability in the classic sense (shareholders get no say in operational decision making, and often will have no idea where the money goes specifically at all.)
b) greater returns to investment between 2 different charities
Given that, I recommend an alternative set of criteria.
1) Give to organizations whose missions generate the greatest personal utility for you. Give to an organization that utilizes a model you like, champions a cause you are passionate about, or targets a population you have a special interest in.
2) Avoid earmarking your funds - earmarking hinders the ability of organizations to fund important causes over urgent or glamorous ones. If you trust an organization with your money, trust them the whole way.
3) I like to fund organizations that don't spam me with incredible amounts of literature. Junk mail and spam lower my personal utility from giving to charities.
Posted by: Dave U at Dec 1, 2005 8:44:11 AM
I believe it is a moot point attempting to assess efficiency in the non-profit market. One of the fundamental principles of that market is that donors neither require nor receive:
a) accountability in the classic sense (shareholders get no say in operational decision making, and often will have no idea where the money goes specifically at all.)
b) greater returns to investment between 2 different charities
Given that, I recommend an alternative set of criteria.
1) Give to organizations whose missions generate the greatest personal utility for you. Give to an organization that utilizes a model you like, champions a cause you are passionate about, or targets a population you have a special interest in.
2) Avoid earmarking your funds - earmarking hinders the ability of organizations to fund important causes over urgent or glamorous ones. If you trust an organization with your money, trust them the whole way.
3) I like to fund organizations that don't spam me with incredible amounts of literature. Junk mail and spam lower my personal utility from giving to charities.
Posted by: Dave U at Dec 1, 2005 8:44:45 AM
Don't give to beggars - good advice.
Earlier this week some blog with ads plastered all over it had the nerve
to beg for money. I didn't give any.
Posted by: Michael H. at Dec 1, 2005 9:20:15 AM
Do not give to charity. It creates a moral hazard whimsically papering over social needs that would better be supported by higher taxes and government solutions.
Posted by: theCoach at Dec 1, 2005 9:33:23 AM
Sorry to take advantage of a comment thread, but there are people who would love some followup to your debate with Max. A response to Kevin Drum would be a good start. Thanks.
Posted by: theCoach at Dec 1, 2005 9:36:39 AM
I would start with the place you are soon graduating from. No one pays the full cost of education in a college or university and investments here pay off to the greater society.
BUT, I would modify one of the earlier comments. Here restricted gifts may be appropriate. If you have had an excellent experience, give to the general fund. If you have been in a place of political correctness, give to the department or program that you trust.
Posted by: drtaxsacto at Dec 1, 2005 9:36:53 AM
A third property-rights charity to consider is the Heifer Project, http://www.heifer.org , which gives livestock to poor farming families around the world -- i.e. a direct infusion of the most important form of capital among the rural poor.
I love Habitat, but they have been criticized for their cost effectiveness and for mortgages which allegedly undermine the property rights/resale opportunities for homeowners, by giving Habitat rights to rebuy the houses cheaply if the homeowner wants to sell. I am not familiar with the details, but so far I continue to support Habitat.
The Nature Conservancy has been _heavily_ criticized for tax deals with their board members/major contributors. Check out the Washington Post series on them.
http://www.washingtonpost.com/wp-dyn/nation/specials/natureconservancy/
Form your own opinion from the stories, but the general allegation is that they acquire large undeveloped land parcels, allow rich people to build houses on them, and then put in deed covenants preventing other development (which give the rich people tax breaks.)
Personally, I prefer to give to the international church charities -- Episcopal Relief& Development for me, but Catholic Charities, Lutheran World Relief, and other groups for every religion and denomination are available. I like these b/c the churches already have an organization on the ground which (1) keeps additional overhead costs down -- instead of sending expensive American consultants to Kenya, you use local Kenyan priests to run things; (2) provides good information on small, local needs, such as the individual poor people Tyler gives to; (3) provides a supervision system with strong moral norms. Obviously, your mileage may vary here depending on your religious belief and/or trust.
Posted by: DK at Dec 1, 2005 9:39:42 AM
One thing I see quite frequently (via such things as collection cans at the 7-11) are ad hoc funds created to help a specific person, for exampl a local child with a serious illness. It should be safe to assume that most of these funds have minimal administrative expenses. A contribution to one of these is probably an excellent way of seeing that your money goes right to the recipient, though you may not get a tax break if the fund isn't registered.
Posted by: Peter at Dec 1, 2005 9:53:12 AM
Given that for many people part of charity is to make one feel better about oneself, I'd recommend giving to one charity each year instead of ten. Otherwise it's likely that at least one of these charities will share your information with other organizations and you'll be annoyed every day from the dozens of solicitations you'll be getting each month.
I also second the recommendation for the Heifer Project. One of the best things about them is that when you give money to them you know how your money's going to be spent.
Posted by: Hei Lun Chan at Dec 1, 2005 10:18:15 AM
Some of the most effective charities I've seen are Oxfam and Unicef. Even $10 could end up saving someones life.
Peter Singer has an excellent essay on the moralities of charitable giving, titled "Famine, Affluence, and Morality". http://www.utilitarian.net/singer/by/1972----.htm
Posted by: Macneil at Dec 1, 2005 10:23:36 AM
There's a case out there - and two minutes of google research failed to reveal it to me - that one should give to one charity only. Something about economies of scale? I dunno, but single charity giving does limit the expressive, self-regarding upside of donating smaller sums to a variety of causes one likes.
Posted by: David Zaring at Dec 1, 2005 11:19:57 AM
Here is the "one charity" argument.
http://www.slate.com/id/2034/
Posted by: David J. Balan at Dec 1, 2005 11:27:32 AM
DK
I do know about Habitat and their issues with the "restrictive covenants"
Basically, Habitat homes are rent-to-own. They are a great deal, but the
"lease" puts a lot of conditions on the homes that make them much less valuable to homeowners. For example, you cannot rent rooms out.
This last point brings up the very most objectionable thing about Habitat: they beg local goverments to waive property tax. The reason they claim this need is because their homeowners are responsible for the increases in tax due to the increases in appraised value (something very relavent around the country recently). They claim that their homeowners are unable to pay the extra tax because they are not able to rent rent rooms or get a home equity loan or otherwise profit from the increase in their home value (until the end of their 20 year covenant). But this condition was created entirely by Habitat! It is ridiculous for Habitat to beg for charity for their homeowners when they created the problem in the first place.
Btw, the previous comment was intended as a joke, but may not have come off that way.
Posted by: Michael H. at Dec 1, 2005 11:36:00 AM
One rule I try to follow: give generously whenever someone is offering to match my donations.
As an example, my employer offered matching for donations both for this year's hurricane victims, and for last years tsunami victims. I figure: even if the organization I give to is less efficient than some other organization, that's almost certain to be more than made up by the 2X multiplier due to my employer's match.
Posted by: Alex R at Dec 1, 2005 11:58:37 AM
Expected utility dictates a single charity until you believe that your chosen charity is adequately funded. Economically we should use each dollar to buy the good which provides the greatest marginal utility. In general in life we buy a varied basket of goods because the marginal utility of a given good diminishes as consumption of that good increases. With our first dollar we buy good A (food prehaps, or possibly a drug), as the utility of the first unit of A is greatest, then, after consuming 3 or 4 units of A, its marginal utility has fallen beneath that of the first unit of B (some clothing? fuel?) you spend your next dollar to buy a unit of B. For charitable giving, given typical donors and much larger typical charities the marginal utility of a donation is strictly linear with size (increasing slightly at first due to the initial disutility of getting on a mailing list unless you like being on mailing lists more than you like your preferred charity saving the money it costs them to send mail out, a feature of your potential character that you would loose utility by recognizing if it is true of you now that I have pointed it out ). The charity will do as much good with your second $1000 as with your first. It follows that a rational donor will always a) donate exclusively to charities that he/she can fund to an extent sufficient to reduce their marginal utility for a dollar or b) donate to only a single charity. It also follows that a rational donor will, before tax and social considerations, and ignoring response to disasters, never donate anything until their other net consumption (consumption on goods which do not raise their economic productivity) exceeds a threshold, and subsequently donate all of their surplus earnings. However, their gross consumption (typically simple called consumption) may continue to rise. For instance, they may invest an increasing amount in capital goods which increase their earnings potential by raising their status, self-esteem, productivity, or time efficiency even after passing the donation threshold, because as their income increases the utility of such goods may rise above that of money donated to a charity due to the goods being complements of income. Also, a rational entity with only partial control of their utility function will invest in retaining their current utility function, so if they sense that donating another dollar to charity X will cause them resentment which will undermine their desire to donate to charity X in the future they may refrain.
Posted by: michael vassar at Dec 1, 2005 12:05:57 PM
Michael Vassar,
That's a good analysis, but I'd like to add that we ought to be specific about whose utility we mean. The utility to the charity may be strictly linear, but the donor might receive diminishing marginal utility (and possibly, as you point out, receive negative marginal utility). One might like giving to a specific charity, in general, because one likes to be the sort of person who gives to that charity, but not receive much additional utility for giving additional money. In this case, giving to multiple charities might make a great deal of sense (though pointing this out might also reduce one's own utility).
Also, a previous poster advises against earmarking funds, because doing so reduces the charity's flexibility. I disagree. Money is fungible, so unless you are giving more money to a specific project than the charity would have otherwise spent given complete flexibility, you do not affect their behavior or actual flexibility. Since you may receive additional (if irrational) utility from the perception of control over your funds, earmarking might make a great deal of sense. This is why charities offer earmarking in the first place: offering the perception of control increases a donor's utility, and so is likely to increase total donations.
Posted by: Ryan Peterson at Dec 1, 2005 12:30:58 PM
The Motley Fool generally has a good list of capitalist-friendly charities each year with "Foolanthropy".
http://www.fool.com/foolanthropy/2005/foolanthropy2005.htm
Another Heifer mention! And on a personal note, I volunteed for them once and milked a goat :)
Posted by: Joel at Dec 1, 2005 12:31:29 PM
Ryan Peterson comments that the fungibility of money means that earmarking doesn't decrease the utility of your donations, so you might as well increase your personal utility by choosing something that meets your fancy. But this requires that the charity have enough non-earmarked funds to shift to their preferred uses. I derive my additional (and not entirely irrational) utility by choosing to provide such funds... :-) (Similarly, other people or organizations may choose to provide "matching" funds so that people like me can earn extra utility by having their donations matched. Whether my extra utility is rational or not depends on what those who donate the matching funds would have done with the money if I hadn't donated...)
Posted by: Alex R at Dec 1, 2005 12:58:31 PM
We should distinguish between _charity_ and (also voluntary) _tipping_. IMHO, giving to your college or your favorite blog should not be in the same category as giving to starving 3rd world children. Instead, it is a tip you give (a) to signify your gratitude/received utility for service and (b) to show you are a good member of a community and not a free-rider. Thus, I do not see giving to your college as fulfilling your moral obligation to help the poor, only as fulfilling a different obligation.
I had some friends at my (richly endowed ivy) undergrad college who declared that they would never donate to the school, b/c their endowment was already sufficient for all reasonable needs, while starving children in the 3rd world have real needs. Their reasoning was wrong b/c it ignored the tipping/free-rider aspects of the problem. But I still have sympathy for their viewpoint, b/c the school in question really does have enough money to make tuition free forever if they so chose.
p.s. this is largely a response to Michael H's joke and the college-giving comment above, but yes, I realize it is a joke, and I laughed.
Posted by: DK at Dec 1, 2005 1:46:59 PM
Another reason to give primarily to one charity, year after year is the cumulative effect. Charities must constantly make choices as to which supporters' view should have the greatest impact. Organizations note not only how much a person has given but how a long a person has been giving. Over time you will have much more impact on a organization, particularly a smaller one (like, say, your local Planned Parenthood affiliate) if you have a history of steady donation.
Posted by: Tylerh at Dec 1, 2005 2:27:26 PM
By the way, a few charities combine small size and high expected utility to such a degree that they break down any issues of altruism. Donations to the Singularity Institute www.singinst.org , and the Methusaleh Prize http://www.mprize.org/ constitute rational investments based on expected payoff and lack of correlation to other investment payoffs. If you care about the well-being of other people, that's simply a multiplier effect that makes the expected utility of giving to them even higher. The only reason not to donate is the variance of expected returns and the possibility that their actual expected value is lower than it appears because of time discounting or subjective time discounting. Do you discount the utility of your 100 year distant future self by 1,000,100 years if he has been living at a 2000-fold accelerated rate for 50 of those years?
Posted by: michael vassar at Dec 1, 2005 2:52:47 PM
DK, if you simple treat charity and tipping as "goods" like any other then it seems that your analysis simply adds a third category of "good", one with the normal diminishing marginal returns to utility, the good of having bought off your conscience/lubricating the social machine. It is possible that this "good" has greater or lesser utility in your utility function than the utility of the potential recipients of charity or of tipping. Either way my analysis still holds. This new good has extreme diminishing marginal returns to utility. People who consume none of it, or even not very much of it, are several steps more dangerous than sociopaths. Not stealing what you want whenever you could get away with stealing it is, from an economic perspective a form of consumption. OTOH, calculating whether you can get away with stealing any particular thing is an investment, and having a heuristic against making that investment is not a form of consumption but rather an investment strategy.
Posted by: michael vassar at Dec 1, 2005 3:05:10 PM
Michael Vassar, in your last post, I'm not I follow you. do you mean that what I call "tipping" is "This new good", that not tipping is effectively stealing, and that therefore not tipping is equivalent to consumption (of some form of social capital?) I think I agree with you, but I am not entirely sure.
My point really is just that to me, charity and "tipping" your alma mater are not substitutable goods. If I send Princeton a check, I might gain a good feeling, but I will never feel that it gets me off the hook for sending a check to feed starving children. This may just be my own personal preference, though, and not applicable to many others.
Posted by: DK at Dec 1, 2005 3:55:44 PM
Shouldn't an economist be concerned about getting the maximum benefit out of each dollar? Like the Copenhagen Consensus the Economist did, if you can save 15 lives from diarrhea for $1000 or one life from tuberculosis, send the dollar to water and sanitation. That's what I do -- 10% of my gross to WaterAid (http://www.wateraid.org/what_we_do/how_we_work/default.asp).
Sending the money directly to rural Mexicans is not paternalistic, and it lets them efficiently pick what they need most. But it's not the most efficient way to give. Is there bad economics in the "teach a man to fish" argument? Why not something like a water pump? A rural Mexican might not buy one, first because of the externalities, second because his financial profile wouldn't suggest large capital outlays like that.
What about that Kiva charity (http://www.kiva.org/about.php) you linked to that lets you loan money directly to poor businesses? Doesn't that leverage your money better and make use of markets to help people?
Finally, I use a contrarian impulse. Most people give locally? I give internationally. Most people give to visual or immediate crises? I give to long-term growth. Most people give based on appeals? I give only to charities I select. Think of it as the "value investing" of charitable giving. Maybe someone should make a market of professional charity evaluators so we could invest in an "index fund" spread out among their picks.
Posted by: Noumenon at Dec 1, 2005 4:00:50 PM
I like Noumenon's idea of a charity "index fund". Basically there are economies of scale in researching really good charities from bad ones and specialists could find good charitiable investments just like a mutual fund manager picks good stocks. Except there might be more value-added from the labor of a charity fund picker because market there is no real reason to think that the return on all charitable investments is nearly the same.
Who would start such a fund. Maybe Fidelity and Vanguard and the others could. I think that is an excellent idea.
Btw, wasn't that kind of the idea behind United Way?
Posted by: Michael H. at Dec 1, 2005 4:32:16 PM
In my 11 years working in D.C. I have been approached by beggars hundreds of times. Only twice have beggars asked me to buy them a meal, rather than ask for money. Both of those beggars got what they asked for. The rest weren't so lucky.
Posted by: Paul at Dec 1, 2005 4:33:44 PM
I think it might be necessary to specify if the question is about only one person or any, and eventually every person.
If the recommendation is for everyone I would suggest not to give for charity. Tipping makes salary fall and makes noise in labour market. Charitable society makes similar problems.
Political advise: I live in a Third World poor rural area. We would prefer no subsidies in USA and EU and real free-trade (labour too) more than free cows and charity aid.
Posted by: WMCW at Dec 1, 2005 5:16:20 PM
Eric H says to give regularly. I disagree. There is added benefit to you to give infrequently. Let me explain.
As an example let's say you want to give money to the Smithsonian through the Young Benefactors.
http://youngbenefactors.org/donate.htm#how
If you give 100 a year for 6 years, you will get 6 thank you letters. And, unless you already itemize, it will be unlikely you will get a tax write off.
But if you save that money and give it all in the 6th year, you will be an Individual Gala Sponsor and get all kinds of special treatment (invitations to parties and special showings etc...) Many charities have such extra benefits for big donors. In addition one large donation every few years has a greater chance of pushing your total charitable giving high enough that you're itemized deduction becomes larger than your standard - giving you a tax benefit that you could then give to the charity of your choice.
Sadly, I actually do this.
Posted by: washcycle at Dec 1, 2005 5:40:32 PM
A wesbsite, CharityNavigator provides useful financial information on charities. But there is a desparate need for information about the relative efficiencies of charities. Objective informnation on this would be hard to obtain, but a survey of professionals in the field might yield some useful, albeit biased, information.
Tom Mayer
Posted by: Thomas Mayer at Dec 1, 2005 6:49:05 PM
This is a slightly updated post from
The Motley Fool I made under my
nom de net several years ago.
How strongly will you agree with me
when you read my comments and view
http://www.grameenfoundation.org/ ?
Several micro-credit agencies -- most of whose
people are out meeting with the poor, getting them
loans, and helping them succeed in their businesses --
have already been nominated on this board.
I have clicked the "Recommend it" button for
several of them and have posted favorable replies
which may encourage people to make direct
individual contributions to some of those agencies.
But I believe that as Foolanthropists we should
again make the Grameen Foundation USA one of
our chosen Foolanthropies and send our
contributions to it.
You may well ask, "John, why have you been
encouraging us to contribute to a variety micro-
credit agencies when you are going to state a case
for choosing only one?"
Because I know that the choices we make as
individuals are not always the same choices we make
as Foolanthropists.
Many people are more likely to contribute when
they feel a connection to the communities where
they live or where they grew up and their families
and friends still live.
An American working for Apple in Chicago might
go to the Grameen Foundation USA web page
http://www.grameenfoundation.org/replications/domestic4000.html - LIST
and look for agencies in Illinois. After looking
further into those agencies he might contribute to
one of them.
An expatriate from Kyrghyzstan working for Intel in
Singapore might go to the Foundation's page
http://www.grameenfoundation.org/replications/international.html
where she might find a micro-lender to contribute to
in Kyrghyzstan.
An expatriate form Bangladesh working for
Advanced Micro Devices in Germany may already
be contributing to the Grameen Bank in Bangladesh.
All of their contributions will help people lift
themselves out of poverty.
So I applaud all of those contributions even though I
have no relatives in Kyrghyzstan or Bangladesh nor
have I ever lived in Illinois.
But, you ask, "if those contributions are so good
why then urge us to make just that one micro-credit
agency, the Grameen Foundation USA, a choice of
Foolanthropy?"*
Because by supporting the Grameen Foundation
USA (GF-USA) as individuals we do more for
micro-credit overall than by giving the same amount
of money to any other micro-credit agency.
(Let me put this another way. It's better to give
something to a micro-credit agency where you feel a
local connection than to give nothing at all. And it's
better to give, say, $100 to a local agency rather
than $75 to GF-USA and nothing to a local agency.
But if we consider only the amount of good we are
most likely to do for each dollar we contribute, it's
best to give all the money we are going to give to
micro-credit to GF-USA.)**
Also, by supporting GF-USA as Foolanthropists, we
are doing the most Foolish Foolanthropy.
Most micro-credit agencies are designed to
concentrate directly on helping the poor people in
the communities they serve. GF-USA is set up to
increase and improve micro-credit anywhere there
are poor people. Anywhere in the United States.
Anywhere in the world.
Its mission includes educating multitudes of people
in the value of micro-credit and getting them to
support it.
This makes GF-USA more Foolanthropic in two
ways.
First, it makes them more involved in education,
because a central part of their mission is to train
people to run micro-credit agencies and to help them
educate their staffs and -- where necessary -- to
educate their borrowers in how to succeed.
Second, it makes them more involved in spreading
the word. As David Gardner says, "The most
Foolish charities" are "broad ranging" and "they
have a strong capacity to involve the public at large
in their mission." And David Gardner says, "the
Foolish charity can lay legitimate claim toward being
epic in its grandeur, in the grandeur of its idea and of
its mission." In its international scope, GF-USA
most definitely is and does just that.
GF-USA also fits Foolanthropy well with the
standard Motley Fool financial method of Long
Term Buy and Hold. Last year during the drive
Foolanthropy raised $762,750 in total. GF-USA
received $185,000 -- the second highest amount.
But after the drive closed, a Foolanthropist offered
to donate $500,000 for micro-credit in India if GF-
USA could raise matching funds. They raised
$700,000 in matching funds, so $1.2 million went to
micro-credit in India. Recently another
Foolanthropist has offered to match $500,000 for
micro-credit in Mexico. It is less likely that this
would have happened for any local micro-credit
agency. ***
By featuring GF-USA, Foolanthropy has already
given support for a longer term than the drive itself.
I believe we will do our best by extending that long-
term support.
Then there is this practical reason. Any unrestricted
money GF-USA raises (from any source, Foolish or
otherwise) beyond what it uses for training and
involving the world at large, it sends to those micro-
credit agencies which can make the most rapid
improvements or where a crisis needs to be averted.
-- To the agency just starting up.
-- To the agency that has just proven itself in the
field but has yet to document that proof and
convince potential financial supporters.
-- To agencies in countries that have just been hit
with a flood, an earthquake, a hurricane, or a war
and need credit immediately to restart businesses
and rebuild lives.
This post is too long already. So I will conclude it by
saying, as I intend to make more clear soon: "by
every rule of Foolanthropy, by many tuggings on the
heart, by every reason of practicality, GF-USA is my
choice for Foolanthropy 2000. I hope it will be
yours as well."
John
*Please understand I am not saying my wife and I
are making only one contribution this year. Far from
it. It's just that GF-USA will be our most
Foolanthropic contribution.
**This is particularly true for people paying income
taxes to the United States Government.
Contributions to most of the micro-credit agencies
based outside the U.S. are not tax deductible under
the U.S. Code. Contributions to GF-USA are as
deductible as 501(c)3 allows. They are deductible
wherever GF-USA does the training or sends your
money.
***These figures are, alas, on a now broken link.
However you can find further information on the
Grameen Foundation USA at
http://www.grameenfoundation.org/ .
Financials are at
http://www.grameenfoundation.org/intro.html
Grameen Foundation USA
1029 Vermont Avenue, NW, Suite 400
Washington, DC 20005-3517
Phone: 202-628-3560
Toll Free: 1-888-764-3872
Fax: 202-628-3880
Posted by: ShakespearesFool at Dec 1, 2005 7:21:01 PM
Check out how much the CEOs are paid:
Red Cross $600,000 per year
United Way $300,000
Salvation Army $13,000 plus board
The Kennedy that runs a non-profit for discounted heating oil $400,000 per year.
Posted by: davod at Dec 1, 2005 8:17:13 PM
Wow, great discussion. I've got a few short comments:
1) "In-kind aid sounds inefficient to the economist..." Donating your time can provide other benefits besides "charity"--including new experiences and new friends.
2) Some commenters emphasized the importance of having others contribute. Check out Fundable.org (I probably heard of Fundable from Marginal Revolution)
3) I saw "libertarian" and "charity" in the original post, and several commenters emphasized the benefits of supporting charities that reinforce concepts such as property. Check out the LibertarianWiki section on charities. It's not totally developed, but it could be useful.
http://libertarianwiki.org/Libertarian_charities
Posted by: Adam at Dec 1, 2005 8:28:46 PM
The awful truth is that you could give $5 more right now. Why aren't you? There is a job you could take instead of watching TV, there is an opportunity to make more money instead of spending time with your family.. But you don't.
If capitalism is the best way for society to flourish, why is charity necessary? At what point does you giving $5 more for 3rd world medications become equivalent to government Medicaid outlays? When you and a friend make it $10, or when you and 280 million not-friends make it 5 billion?
Posted by: pb at Dec 2, 2005 12:18:09 AM
I have also recently gradated, and my plan is this. I am currently putting a percentage aside each month into a MicroFinance loan. In doing this, I am not tempted to spend the funds on myself, I retain the rights to those funds, and they are still benefiting our world's poor. In time, I should buy a house or a condo, where I would pay enough in interest to meet the IRS standard deduction. I can then donate this money to charity, collecting a nice tax gain, and potentially a few nice perks.
Posted by: Mike Hester at Dec 2, 2005 2:02:58 AM
Getting back to Noumenon's idea of a charity "index fund", there is the National Philantropic Trust:
http://www.nptrust.org/
Posted by: Michael H. at Dec 2, 2005 7:53:08 AM
Mike,
One way around the tax issues is to give two years of charitable donations in a single year. You take the standard deduction in the off year and itemize in the giving year. It also saves on your tax prep costs or headaches, at least until you buy that house. It works even if you give enough to itemize each year (since you are getting the difference between your non-charity deductions and the standard deduction in the off year).
Posted by: Adam at Dec 2, 2005 8:31:04 AM
10% of my income isn't a lot; it doesn't look like the NPT would be interested in setting up a donor fund just for my biannual $6000. (I do the alternating standard/itemized donation thing too. You can't deduct more than 33-50% of your income for that year, though.)
Posted by: Noumenon at Dec 2, 2005 11:08:27 AM
Give to local, community charities/non-profits:
1) smaller sized donations have a greater impact on the programs they offer.
2) money from private sources help them get away from the political strings that are attached to government grants.
3) Getting involved in your local charity/non-profit groups provides great social and networking opportunities
4) leadership opportunities; making it onto the board of directors of a local non-profit is easier the making on to the BoD of the red cross.
Posted by: Jason at Dec 2, 2005 12:09:51 PM
The Danish International Development Agency (DANIDA) sat lots of clever bods down one day to decide who they should give money to. They ranked aid projects on the basis of bang-per-buck. The result was the Copenhagen Consensus (http://www.copenhagenconsensus.com/). Also, there was a post on the PSD blog about a 'market' for charities a while back, but I've lot it, I'm afraid.
Posted by: Ross Parker at Dec 2, 2005 12:56:37 PM
Gift income under $10,000 is untaxed, so give up to $10,000 to a friend who already itemizes with instructions to give it to a chosen charity.
Posted by: michael vassar at Dec 2, 2005 4:45:44 PM
One more reason to give to one charity than many: it will reduce the number of charitable appeals you receive in the mail (see http://www.charitynavigator.org/index.cfm/bay/content.view/catid/68/cpid/254.htm).
Posted by: Cathy at Dec 2, 2005 11:15:21 PM
I'd also recommend to fund locally, which means that you rather give charity to institutions or NGO's you can visit and controll (orphanages and such). There you can control, whether your money really goes to something worthwhile or is wasted (at least it is easier than spending it on something in Africa or Asia).
I prefer helping people who are closer to me and thus can be reviewed personally, than spending to say SOS Children Villages or so.
Posted by: Max at Dec 3, 2005 7:55:48 AM
The Salvation Army is a very good choice. Absolute rock-bottom wastage of resources on overhead, and very cost effective delivery of services to the bottom rung of our society. Their performance during Katrina was very impressive. If your criterion is to maximize bang-for-the-buck then they are hard to beat (at least when you confine your attention to domestic charities. ... Internationally, you can do an awful lot with a very small amount of money.)
Posted by: Terry at Dec 4, 2005 2:54:54 AM
Steven Landsburg has an article here:
http://www.slate.com/id/2034/
"CARE is a noble organization that fights starvation. It would like your support. The American Cancer Society is a noble organization that fights disease. It would like your support, too. Here's my advice: If you're feeling very charitable, give generously--but don't give to both of them."
Posted by: Martin at Dec 5, 2005 2:00:35 PM
Hi every one!
My name is lemon, and somebody of this group is known person, and they are in my friendlist, And i have known about this group from one of them, At first i wanna thanks her! Actually i feeling shame to write here such kind of letter but i am ready to write anywhere yet it looks silly!
At first i beg ur purdon to waste ur important time, actually from last month i have changed my mind, and now i have no sense about right or wrong! true or false! because i am standing on that point where human can't do anything, can't think anything, can't take decission instantly , and may be from this point a great maxim has created by someone "Man Cannot Live Alone!"
So i also need help of someone, i need support , i need strength to fight with my present condition, because at present i need help for my father's treatment,he is heart patient, i need help for my baby,she needs food or cloths which is her basic rights, i need help for my whole family to assure their sleep in own room in bed, someone already heard about myself, and i am writing breif to those peoples who dont know my probolem yet!
Bank is gonna capture our home with our all properties even if a chair! because two years ago my father was taken bank loan for business purpose, and he was swiftly controlling his business and paying bank installment as well, but our country political condition is not healthy, and for our forthcoming election everywhere is spreading political movement and chaos! and ultimately the business condition was going decrease, and my father was also lost his business for strike, chaos, slogan etc. I know may be u will think that there was a lots of victims in those days, ya i agree with u, there was a lots of middle class business man has lost their business and there are a lots of family in our country is suffering such conditions, but someone is sacrificing their family and going to be finished silently, and they are cursing destiny for all happening, and someone is still trying to save their family and they are ready to sell their blood, i also was tried to get instant help from our country local charity organizations, if u ever read news about our country may be u know that our country is 5 times champion in corruption! so no need to say that the charity organizations will help poor undone family from that fund; which they got free!Huh!
I don't wanna write long my story , may be someone is already has stopped reading! Only one request to u all that if anybody of this world can give me just one chance to turn back from present situation, then i can save my family, i don't need help continue, i am not expecting money continuously, i could arrange those money but i need instantly because will not wait for me , already they gave us chance for human being! how long i will press them for awaiting?
Thanks all for give me the time. Just bless for me and my child, and bless to God so that he keep my father alive! because only for his family he was suffering. God give me the chance to pay back a little to him.
Bye. and thanks for create such kind of group.
Md. Fazlel Mahbub Lemon
Bangladesh.
lemon_880172837556@yahoo.com
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