A Guide to Donating Effectively

We have problems with giving. In concept, it taps into a very human and natural sentiment: help those who are suffering. Yet in practice, it is deeply flawed.

Kiva.org, which supports small loans for entrepreneurs in the developing world, seemed like a good organization until the public found out that donations were not going where they were supposed to. Mohammad Yunus, creator of micro-finance, was fired from the Grameen Bank after allegations that he misallocated funds donated by the Norwegian government. Greg Mortenson, founder of the Central Asia Institute, which builds schools in Pakistan and Afghanistan, may have lied in his book Three Cups of Tea about the creation of his charity.

Add stories of government corruption in the developing world to these examples, and it is no wonder that many advocate getting rid of charity (including my PolicyMic colleague Jack Fischl). However, the problem is not the act of giving money; it lies in how the donations are made.

Currently, only 3-4% of U.S. donors do background research to make sure they give to the most effective charities. Instead, giving too often becomes a quick-fix band-aid to lessen guilt. See a homeless guy by the side of the road? Donate $5, and you can return to more pleasant things. However, quick fixes and decisions motivated by guilt will only prolong dependency and injustice.

Let’s compare two charities that aim to repair cleft lips. Operation Smile follows what I call the “handout” method, flying foreign doctors around the world to fix this birth defect, spending large amounts of money on travel, and often turning away children because of a lack of capacity. Smile Train follows the “sustainability” method. They train local doctors and nurses to fix cleft lips; for each foreign doctor they fly in, they can train multiple local professionals, who then keep treating patients even after the foreign doctor leaves. By 2008, just eight years after its founding, the organization was already nearing the break-even point, where the number of people treated in a year would be greater than the number born with a cleft lip in developing countries; they are well on their way to eliminating the problem.

A truly good charity is sustainable. It helps people help themselves, empowering them to use their skills and knowledge to solve the problem. It does not teach them to wait for a handout. A good charity takes the time to find and address the root causes of the problem. Moreover, it is transparent: Donors and aid recipients can access information about where money comes from and what the group is doing. It evaluates programs by how far each dollar went to improve health or education levels. Finally, a good charity seeks to put itself out of business, to do so well that there is eventually no need for it.

It takes time to sift through and find effective charities, but fortunately there are groups that do the work for donors: 

1) For U.S. charities: Check out Charity Navigator, which ranks over 5,500 of the U.S.’s largest charities. They describe their ranking criteria, which measures financial health, accountability and transparency, and results. They also offer helpful top 10 rankings, listing the best and worst charities along different indicators. 

2) For international charities: Check out the Copenhagen Consensus Center, a Denmark-based think-tank which aims to help governments and individual donors get the most “bang for their buck.” Every year, they publish a Guide to Giving, which corresponds to their annual report of the eight most effective uses of aid money. You could also donate to the Proven Impact Fund, a fund established by researchers from Innovations for Poverty Action, to only channel money to programs with proven results.

Of course, donating means more than money. You could volunteer your time or even found your own organization. In short, keep that desire to help – it is healthy and human – just make sure to do it well. Whether you give $1 or $100, you can make it go further.

Some of my favorite charities: 

Freedom from Hunger: Combats hunger and poverty through sustainable solutions.

Girls for a Change: Empowers girls in low-income areas of the U.S. to create social change.

Oxfam America: Operates around the world to help individuals escape poverty.

TechnoServe: Helps entrepreneurs in developing countries create successful businesses.

Vittana: Provides education loans in the developing world.

Women’s Earth Alliance: Empowers women and girls to address issues of environmental degradation.

Your turn: Who do you give to, and why?

Photo Credit: Wikimedia Commons