On Giving (Episode 4) — Measuring your giving and impact, and choosing whom to give.

Being an analytical person, I thought it might be interesting to see how charitable I have been over the years. The chart above shows my contributions and impact as a percent of my disposable income over the last decade. The gray line at the bottom shows the year over year growth in my disposable income which I measured as my taxable income less taxes (real estate taxes, social security and medicare taxes, federal and state taxes), mortgage interests (please note I didn’t include the mortgage payment itself. You could include any other interest you are paying if substantial — such as credit card or car payments or tuition here) and any major expenses (tuition or any large purchases you have planned).

If you are wondering why my impact is larger than my contribution, its because my employer matched a portion of my contribution increasing my impact. Clearly, I am a miserly person only sharing a small portion of my disposable income. But it was a revelation for me to understand really where I stand. Just like everything else having a target probably is a good thing. We derive satisfaction from the act of giving but knowing how we impact is probably more satisfying.

The chart below shows where my money went over the last decade — probably a lot similar to all yours. I was pleasantly surprised to see a lot of my money went to local charities. Then it was educational, health, religious, international and environmental organizations. Each of us may have a different distribution here but it’s good to know so we can reprioritize if we want to. We need to apply the portfolio approach to our giving and actively choose whom we choose to give to. It shouldn’t be like our retirement plan where we put some money and hope it grows large enough to serve our needs in retirement. The money we give could make a difference for someone. By being careless with our approach we only create waste. If you would really like to know more read — Dead Aid by Dambiso Mayo where Dambiso shows how the western worlds aid money was wasted on Africa. Growing up in India, I was exposed to many examples of how corrupt politicians used World Bank money for personal gain.

Organizations are no different from governments and politicians and unless we are careful our hard earned money will be wasted on building someone else’s nest egg or vacation. In my earlier blog, I introduced three organizations here in the USA that track and provide ratings on different charities. Early this year, please spend a few minutes checking the ratings of the organizations you give to, so you can determine if you need to change your giving patterns in 2019. Pay particular attention to how much of your money goes directly to fund your cause and how much is used for Administration, Communications and Salaries.

Here are few samples from Charity Navigator site — charities with a perfect score, top ten most followed charities (I was pleasantly surprised to see that I was already given to five on this list), ten highly rated charities relying primarily on private funding, and many more.

Another popular form of funding that is in vogue today is crowd funding web sites like GoFundMe and Facebook. There are many more of this type that keep cropping up everyday. I have contributed myself and frequently get requests from people I know to donate to another cause. Many of these seem legitimate and are trying to help someone in dire need due to some unfortunate circumstances (acts of god or personal tragedies). I think this mode of funding will only increase and we should all set aside some of our yearly contributions to be used for this purpose. The more frequent use of this mode of funding also increases the potential that someone misuses this funding mode so we have to be careful when we give. Sometimes, I feel that helping people who are dealing with personal tragedies and acts of god, money is not the only way to help. You should use your discrimination on when you want to gift directly to individuals.

In helping individuals with personal needs for their subsistence, health care or for education, micro funding seems like a better approach. I feel that most humans have pride and just don’t want to take someone’s money. If you are paying for someone’s education having an agreement that they will study well and use their education to repay the money or fund another student later on their life seems like a much better alternative. So perhaps if you are able to invest some of your time you can work our a set up when you are giving money direct to individuals to make sure that you are ensuring that the money is being put to good use.

Hope you give more in 2019 and use some of the tools I referred to above in picking the right causes so you can be more satisfied that your money is being to good use.