When it comes to managing your personal portfolio, economists will tell you to diversify. When it comes to handling the rest of your life, we give you exactly the same advice.
So why is charity different? Here's the reason: An investment in Microsoft can make a serious dent in the problem of adding some high-tech stocks to your portfolio; now it's time to move on to other investment goals. Two hours on the golf course makes a serious dent in the problem of getting some exercise; maybe it's time to see what else in life is worthy of attention. But no matter how much you give to CARE, you will never make a serious dent in the problem of starving children. The problem is just too big; behind every starving child is another equally deserving child.
So once you decide the worthiest cause, you are best to dedicate your resources to that cause. Contributions elsewhere are vanity.
I think the argument is too black and white, but it does bring up questions on how to decide what charities are worthwhile and what goes into that decision process.As our income has increased, our projected giving has increased, but I've struggled to make that leap from giving $100 to a charity to giving them $500 (or more). Couple of reasons for that. First, I/we are not so committed to a cause that it feels "right" to write a large check. Indeed, it feels almost more philanthropic to write a lot of little checks--helping all those "good" causes. But apparently that's a bad idea--little checks mean lots of extra mail. The costs of following up with small donors is great, and those are the names/addresses that get sold. Large donors are too valuable and their information gets protected so that they don't get wooed away by some other charity.
The information at Charity Navigator helps, but it has limitations, since some of their scores do not intuitively follow from the data provided. Still, the transparency in fundraising expenses is a key data point. One positive I recall is finding out that a collection of health charities based in Clarksburg, MD exist to be a charity (ie fundraise), not to address a problem.
Still we struggle with how much to give to Mercy Corps versus the American Diabetes Association versus United Food Bank versus 6 or 7 others that we've given money to in the past. So the Landsburg thesis is an interesting perspective, but it doesn't solve the problem then of how to pick just one. Maybe three?
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Another (selfish) consideration in Arizona is: "How can I contribute that maximizes the benefit to the charity with little or no effect on myself." Seems counter to the whole "charity" thing doesn't it? Regardless, in some sense I consider taxes to be a contribution to charity, and in this state, if you choose the right charity, you can divert a significant amount of money from one charity (the government) to another (in our case the Child Crisis Center). Since you don't get a choice on taxes your minimum is 2 charities.
This is more rambling since I haven't really considered this before. In general I believe in diversity in investments (owned items), and simplicity in providers for many of the reasons listed here. Better service as you are a larger customer, less paperwork.
IMHO, you must be selective in who you give to. As referenced in the "paradox of choice" entry from a few months ago, our ability to make cogent decisions diminishes as the number of options increases, and there is a nearly unlimited number of worthy charities. Identify a small number of groups you feel strongly about, and give as much as you can to them. Review your list annually.
As mentioned in Keith's original post, larger donations are more valuable to charities than smaller donations. Collecting money from donors is a labor-intensive effort, so return for the organization is much higher when you give more. In theory, this means they can spend more of your money fixing the problem, and less trying to get more money.
There is also a self-serving advantage to larger donations: you get invited to the swanky events the charities put on for their major donors in order to a) shmooze you for more money later and b) let you see the positive results of your giving. Habitat for Humanity and the Humane Society have particularly nice events. $500 seems to be the magic number for most groups.
One of the greatest moments of the short-lived series "SportsNight" addresses exactly this issue. The two leads, both affluent sportscasters, are discussing their giving habits. As prominent public figures, they receive more requests than most others. One of them handles this (IIRC) by saying no to all of them, reasoning that once he gives in to the first the floodgates will open. The other gives to as many as he can, at modest levels, for fear of rebuke combined with superstition that the one evil he declines to fight will come back to bite him. One day, #2 simply tosses out the solicitations he receives, to the shock of #1. He explains that the effort of caring about all of the charities, day after day, is grueling, and that he can only manage the other 364 days of the year by designating one day as a purely selfish day when he can disregard the ocean of need that surrounds him. My writing is somewhat less evocative than Aaron Sorkin's, but the scene was a brilliant character study that evoked much of the complexity that would become apparent when he moved on to West Wing.
Okay, so I wandered away from a couple other things I wanted to say.
First, remember that there are more ways than money to support charitable organizations. Almost all welcome volunteer involvement, whether that is mentoring at-risk youth, helping to build low-income housing, bringing therapy animals to hospital wards, or countless other options. Giving your time can be a good way to get an up-close look at what a charity does with their donations, and help you decide if you want to give them your money, too. It can also be a way to stay in support of a group you have previously donated to if your money starts going somehwere else.
How many to choose? Depends on how much you have to give, but 3 seems like a good start. (We're at around 5-6 these days.) If you want to set, say, $500 as a target donation, maybe you set $250 as a minimum. If you have $1000 to give, that's two at $500. If you have $1100, go 600/500. When you get to $1250, go back to 500/500 and add a 3rd group at $250.
Which to choose? No way to say, but maybe some guidelines: If you read that Bill Gates or Warren Buffet gives to them, pick someone else. They don't need your $500. Pick something local (or a national group with a local affiliate) so you can give your time as well as your money, and see the results of your donation first-hand. Pick issues you care about, and then find a group that addresses your goals. Find something that ties into your professional interests, as you may find that charitable groups offer good networkign opportunites with other donors (and the more successful you are, the more you can donate, so it is not entirely selfish...)
That's funny about the Sports Night comment. We have given to the Alzeimer's Association because, frankly, we know we'll probably be there sooner or later!
I don't know, I tend to like diversifying. There's medical causes that we care about, local organizations we're involved with, national organizations that are important, and you can't forget about international problems. I know you can have too many charities, but it would be hard for me to pick just three.
Freescale is starting a new program next year which is interesting. Instead of doing United Way like they used to, they started a website where employees can do all (or most) of their giving. You can have automatic withdrawals from your paycheck (one time or at a given frequency) that is designated for a stated charity (if the charity is not on their list you can request to have it added). Then, Freescale adds up all of the employee's gifts and gives one bulk gift to each charity each quarter. This helps to reduce the costs to the charity since they are only receiving 1 large gift instead of 100 smaller ones. An interesting concept.
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