Effective Giving Guide
America is one of the most charitable countries in the world, giving away $400 billion a year. Donors support a rich array of organizations, from large research universities to local homeless shelters.
For many, giving can be challenging. With 1.6 million nonprofits in the United States, choosing just the right one can be a major hurdle.
This guide is here to help. In it, we tackle some of the thornier issues around giving. Our objective is to share with you some tools that you can apply to your everyday giving choices, and hopefully make your next donation a little bit easier.
We'll cover the following:
Give to a cause you’re passionate about! It’s really that simple.
If you don’t know where to start, we recommend considering international development nonprofits. We compiled a list of highly cost-effective, vetted global health charities and anti-poverty charities. Why international development? Three reasons. First, the need is often greater. Second, because it tends to be much less expensive to operate programs abroad, your dollar goes further. Third, they can be more closely scrutinized than domestic charities, and so can be more reliable. In terms of having your dollar make the most impact, you really couldn’t go wrong with one of our top health or anti-poverty nonprofits.
That’s if you don’t know where to start. If you do know, follow your passion.
Once you have a cause, spend some time thinking about mission. Mission is narrower than cause. Consider the cause, “helping veterans.” There are a lot of missions within that cause — maybe the mission is to help veterans secure a job in the civilian workforce; or to help them recover from a devastating injury; or to provide them with support from a community of people who have gone through the same thing.
If you’re giving away money, it’s worth spending time determining your personal mission. One way we like to think about it: Imagine you got a report back from the nonprofit saying, "Great news, we were 100% successful and so and so’s life changed in X way." What X would make you the happiest?
Next, consider making your own personal charity plan. You can do this on paper or in your head, but thinking through why and how to give is a great way to feel more confident in your giving.
If you’re creating a written plan, start by spelling out your cause and your mission. You can have a couple personal charitable missions — maybe you want to see more arts education in schools and fewer animals in the pound. Try writing down those missions in “I give” statements.
- I give so that a child can experience the joy of art.
I give so that an animal can live in a safe and happy home.
We recommend writing mission statements where the beneficiary is singular — a child, an animal. There are huge problems in the world, but that does not mean your donation can’t be impactful. You are helping a person or animal when you give, even if the overall problem isn’t going away — don’t lose sight of that.
Many of us support two types of organizations: groups we personally participate in, such as our church, and groups that we don’t, like a local homeless shelter. Both deserve our support. If you only give to groups you participate in at the moment, we’d gently nudge you to think about the other type as well.
Giving is a personal choice, and it’s up to you to choose your donation level.
But if you asked us to pick a number, it’d be 6 percent of your yearly income. That’s about how much people think other people should give. We've written more about making the decision.
We recommend a three step process when choosing which charity to donate.
Step 1: Identify the mission of the nonprofit. Focus on the specific thing the nonprofit is trying to change (we often call this the “outcome”). An outcome might be a night of shelter for someone who is homeless or placement of an animal in a home. Often, nonprofits use more visionary rhetoric (“transform the lives of those in poverty”). Poke around their website (or ImpactMatters profile) to see if you can identify the specific change they are trying to bring about (“get a person a job so they earn more and move out of poverty”).
Step 2: Look for results and, crucially, what the nonprofit spent to achieve those results. There are three ways to do this. The easiest is to look at the nonprofit’s ImpactMatters rating (search here). Unfortunately, we haven’t rated every nonprofit. For others, you can start by poking around the nonprofit’s website, looking for terms like “cost-effectiveness.” Odds are low you’ll find much, as most nonprofits don’t publish this sort of information. What we recommend is to instead reach out directly to the nonprofit.
Step 3: Check for signs of waste or fraud. Although you might read about it frequently in the news, the vast, vast majority of nonprofits are well run and suffer from none of those problems. However, it’s quick to check whether there are signs of waste or fraud — just search for the nonprofit in our database here and see if it gets the designation, “Passes governance checks.” If so, you’re good to go.
We recommend tallying your impact annually. The best time is often in the spring or summer, after nonprofits have released their annual reports for the past year. First, create a list of all the nonprofits you donated to over the past calendar year. Then, repeat steps 1 through 3 above ("Choosing which nonprofits to donate to"), but this time using updated data from each nonprofit’s latest annual report and financials. If you're able to roughly estimate the amount of good achieved per dollar of cost, you can estimate your own impact by scaling to your actual donation amount. For instance, if Nonprofit X spends $500 to cure one person of blindness, your donation of $1,000 would have cured an estimated two people of blindness.