It's Better to Give in Big Chunks

Let's say you have $1,000 to give next year to various charitable organizations. Which gives you the most bang for your buck:

• Twenty $50 gifts


• Ten $100 gifts


• Two $500 gifts

Turns out the latter is 39% better than option #1 and 14% better than option #2. The reason? Costs. From Money magazine's December issue:

It typically costs charities about $15 to raise small gifts. That means you're better off giving more to fewer charities:

• 20 gifts of $50 each: $300 in fundraising costs; $700 to benefit the cause


• 10 gifts of $100 each: $150 in fundraising costs; $850 to benefit the cause


• 2 gifts of $500 each: $30 in fundraising costs; $970 to benefit the cause

I have seen this play out in real life -- from the donor's side.

I used to "spread around" my contributions, trying to give a lot of charities a little bit of money. Then, as you can imagine, I received tons of extra solicitations from every one of them: mailings, calendars, address labels, small "gifts", requests with stamps, phone calls, and on and on. The avalanche of marketing materials was overwhelming -- and the costs must have been tremendous.

Over the past couple years I have purposely focused our giving on only a few charities. We now receive much less "marketing" and the costs in the system are much lower as a result. So more money is actually doing the work we want it to. It's been a lot less stressful opening the mail as well. :)

So if you're a giver, you may want to consider giving to fewer causes and in larger amounts. Doing so means that more of your money is going to the purposes you intend for it.

Comments

[Matt]

Interesting. I never gave it that much thought.

[Bruin]

I agree completely. Years ago we gave a one-time gift to an organization as a memorial to a dear friend who had supported it throughout life. We subsequently received a steady stream of materials asking for further contributions, and it eventually had to have exceeded the value of our gift. From that time forward, we focused our giving to a select few organizations. Giving more helps us feel more committed and satisfied that our contributions do make a difference.

[Ivy]

I don't fully buy the reduction in fundraising costs coming with big gifts. It seems to me most charities seem to follow the same fundraising plan regardless of what gifts they get.

We always give to the same 4 charities, plus occasional ad hoc donations to others, and for 3 of them we do it end of year because my employer matches 100%. They are in the $500 range before match, so I wouldn't count them small exactly. So, even though we've done this consistently for several years, we are still swamped with their promotional mailings all year long. I can only conclude that either they don't pay attention to patterns or don't do any targeted outreach, but just blast-mail the whole distribution list of past givers. Or, there are several offices and while we give to the central office, this doesn't register with all.

We like to give bigger amounts both in regular and ad hoc donations, not because we think it saves the charities costs, but because it makes us feel we are making more of a difference to these causes. And it's easier to track for tax reasons of course.

[FMF]

Ivy --

I think what you're getting at is that it's the number of charities you give to, not the size of the gift that matters. That's true to a certain extent (if you give to 2 charities you get two sets of follow up marketing versus getting 10 if you give to 10.) But there's also a "fixed cost" of marketing that's a "better deal" if it's spread over a larger donation.

The bottom line to me: bigger gifts to fewer charities gets more of the money working.

[Jonathan]

The vast majority of our giving is to one charity that precisely does the kind of work we want to support. We also serve on the board of the charity and are well aware of where the money goes and the help and hope it provides. I generally don't give random charities anything, even if it is a cause I find worthwhile because, a) I already have a great cause to support that can well-use all the funds I can give, b) I don't want them to waste their time and money soliciting more from me, and c) I don't know nearly as much about any other charity.

[Old Limey]

We give a little to PBS, the no-commercials network that Mitt Romney has no time for.
My wife also gives a little to our non-profit health care provider, "The Palo Alto Medical Foundation".
I also support the Sierra Club and AARP by being a member.

That's it for us.

[Ross]

It's refreshing to see a thoughtful financial analysis of a non-profit's funding. Have you ever thought about helping a non-profit with their finances? I feel like there are very few people who are financially savvy and work in non-profits... it would be interesting.

[Brooklyn Money]

This was very useful info, thanks.

[jim]

I just wish charities wouldn't spend all the money you give them by nagging you for more money.

[JR]

Maybe it is possible to donate towards a charity without providing a means to follow up for requesting additional contributions, i.e. anonymously. Same goal is achieved, assuming your intent is to promote that particular effort, and no nagging fear of spam in your mailbox. Win-win?

[Catherine]

JR -- There is a way to do that, and it doesn't need to be non-anonymous.

I volunteer at and actively fundraised for a particular charity, giving them roughly 4 hours each week of my time, plus running a golf-outing each spring. I lean on colleagues and friends during the annual fund drive for a donation, too. One colleague was eager to make a generous contribution and wrote a nice check. The check had his name, but did not have his address printed on it. I asked for it, so we could mail him a receipt. Said he, "The cancelled check will be my receipt, and I'll stay off of your mailing list." He gets his deduction, with no sacrifice of privacy, and no mailed solicitations.