Suggestions on Giving Responsibly in Tough Times

Snow Berries
The holidays are traditionally a season of charitable giving, and, despite the economic tough times, that does not appear to have changed.  The Red Cross published a survey showing that 57% of Americans still plan to give between this Thanksgiving and New Year’s.  A majority of those surveyed believe that because of the economy it is even more important to give.  Charitable giving is also a critical element of many estate plans, but of the hundreds of thousands of charities, how to choose?

“Giving isn’t easy.”  That’s the motto of Givewell, an on-line charity evaluator.  Givewell provides a series of questionnaires for donors to answer to assist them in finding those charities that meet their giving goals.  Givewell also provides sets of questions for donors to ask charities about how their money is being used, and who or what it is benefitting.

Charity Navigator provides a simpler approach by posting several top ten lists on its home page, including the Top Ten Charities Worth Watching, and The Ten Highly Paid CEOs at Low-Rated Charities.  But Charity Navigator is undergoing its own struggle to clarify its mission.  As reported in the New York Times (registration required), Charity Navigator has been trying to move away from an emphasis on financial efficiency.  It takes very little administrative expense to give money away without regard for what good it is doing.  Conversely, it makes sense for charities to spend resources on planning how their money will be spent, getting involved in how it is spent, and following up on the results.  While such efforts would not score high on an efficiency rating that merely consists of a percentage of administrative costs per dollar received, the extra efforts may actually result in more effective use of money received. 

Of course, Charity Navigator’s goal of quantifying the success and failure of all charities is ultimately impossible.  The good the money is doing cannot be quantified, unless we are content with some narrow Utilitarian definition of doing good.  But I have to believe that accountability will help.  I believe we all will benefit if more donors use services like Charity Navigator and Givewell, and ask more questions. 

Wealth brings responsibility, which, in addition to wise financial and estate planning, also includes responsible giving.  Giving isn’t easy, but ‘tis the season.

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Creative Commons License photo credits:  JoshuaDavisPhotography Nesster

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