Ask the grumpies: How do you decide on donations?

Another activist economist asks:

What is your donation strategy right now? Are you giving to more places, or more to places you were already supporting? I was torn at the end of last year and just did the latter. Trying to decide what to do for 2017.

#2 says:  Both!

#1 also says both.  I think I must have the warm glow version of donating because I am totally just giving to places as they come on my radar.  I have no strategy at all for this stuff (my only planned giving is to my alma mater and DC1’s former private school).  Something horrible happens, I donate to the relevant agency or agencies, it makes me feel a little better.

I know that’s not optimal for the organizations in question (based on graduate public finance*), but it’s optimal for me!  Plus it’s a strategy shared by a ton of people since whenever I give, the news says that organization has just received record amounts.

Another activist economist replies:

If lots of donors share that behavior, it might become optimal for the organizations (getting small amounts from huge numbers of people)? Also, maybe your strategy (or non-strategy) means you donate more over the course of a year than you would if you explicitly made a budget for donating and only gave to a few places. Which is better for the places getting your money.

I have been holding back so far this year since I’m torn. For instance, a friend of mine started supporting this local organization that gives financial assistance to women who can’t afford abortions. But is it better to give to them or Planned Parenthood or split between the two? I’m leaning toward only PP.

I’ve given to both! Because I cried super hard when my sister told me that she was working with an organization in [City] that provides rides and housing for women seeking abortions and had someone staying in her spare bedroom for 3 days because the woman had taken an 8 hour bus in from [a neighboring state] to get an abortion. So I gave $100 to that organization to make the crying stop. Planned parenthood is where we regularly give whenever one of these things comes up in the news, plus it’s where many of our blog proceeds end up going.

While DH remains employed and with the mortgage gone and our retirement accounts maxed out and DC1 no longer in private school and no firm plans going forward for major expenditures, we can afford to just give money whenever so we don’t really need a strategy (still, this has always been how we’ve donated, it’s just that before it was much smaller amounts in grad school and I’d have to cut back on our grocery expenditures to make up the difference). We should be giving more, but I keep thinking, what if we have to move to Paradise permanently? We don’t have enough money in non-retirement non-529 accounts to buy a house in a decent school district, and renting would still be difficult on just DH’s salary. So mainly it’s the emotions that get me to part with my pocketbook even though we should be giving much more than we do.

Another activist economist replies:

I look forward to reading the responses [from the grumpy nation]!*** I should probably stop thinking about what would be optimal and just give when I feel like it. The reality is that my total giving across the year would likely be higher if I did that. But it is hard to turn off the little voice in my head that asks “if you give that $50 here are you taking it from somewhere else where it would have a bigger marginal impact?”

Yeah, I don’t listen to that little voice. It gets shouted down by the, “Look, do you want to stop crying right now or not?” voice, because I have very little impulse control. And since I don’t have a set budget constraint on charitable giving, there’s more likely to be crowding in** than crowding out of giving.

Plus it probably helps that I wasn’t all that convinced by grad PF’s discussion of optimal charitable giving given that most non-profit’s revealed preferences are to go all out and accept lots of little donations from people like me (and then sell my contact info to related organizations that could crowd out my donations to them…).

Agree about the crowding in (probably true for me too) – I don’t have a fixed budget either, exactly. (Though because I am a procrastinator, during normal times I tend to do all my donations at the end of the year, so then I am thinking about the total amount I want to give for that year.) But there’s a budget in the sense that I have an upper bound even if I don’t know exactly what it is. And that is what that little voice reminds me of. Hmmm….

*Graduate PF, if I’m remembering the lecture correctly, suggests that rational individuals interested in making an actual difference rather than just feeling warm and fuzzy should donate large sums to a small number of charities so other places don’t waste money trying to get more money out of you and you’ll have a bigger impact on that organization and more say in what is done with your money. I am obviously just motivated by warm fuzzies. Plus I’m not sold that that’s a bad thing, as you will see in our discussion.

**”Crowding in” in this context means that giving some money makes it more likely that you’re going to give more later.

*** emphasis added

Grumpy nation, do you have a donation strategy?  Do you have a set amount you give each year, or do you give on a case-by-case basis?  Have you had to make any sacrifices for giving?  What makes  you decide to give?  How do you pick who to give to and how much?

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21 Responses to “Ask the grumpies: How do you decide on donations?”

  1. Mr. Millionaire Says:

    I am not religious, but I do celebrate secular Christmas. So, instead of an advent calendar, for the first twenty-four days of December, I choose twenty-four different charities and day by day give the same amount of money. I decide on the large amount and, obviously, divide by twenty four. I divided the days into four groups – (1) education, (2) “bettering humanity” (i.e., food banks, equal rights), (3) animals, and (4) environment, although some charities dealt with 3 and 4.

  2. Hypatia Cade Says:

    I am religious and in fact my religion to some extent helps me have a benchmark for reasonable giving. So I tithe (we aim to give ~10% or more of what shows up on our tax return) . Sometimes it all goes to a church if I feel the church is heavily enough involved in social justice activities. Sometimes it gets spread among a variety of charitable organizations. We do count things that are not tax deductible into that though (charity meal tickets, donations to the ACLU). We mostly give in a planned way – i.e., we take what we project our 10% to be and pick something local, something national and something international to give to. Ideally we would give money to organizations we also give time to but lately we have lots of money and little time. I find that I give MORE when I give this way and that I don’t walk around feeling guilty about not giving because I know I’m giving a relatively large amount either as a percentage of my income or in terms of absolute dollars. (http://nccs.urban.org/data-statistics/charitable-giving-america-some-facts-and-figures) . If we get substantial gifts (say at Christmas) we donate 10% of that…

    …. Future question…. we have a 1 year old and a 4 year old. We are looking for ways to help them learn about giving and stewardship. How do you indoctrinate them into a model of giving before they understand money in a real way? How do you make the charities you give to real for them? Or do you pick different charities?

    • Leah Says:

      You can give to things your kids care about, and have them involved in both seeing you give and picking out the places. Our little one LOVES animals, so that’s where any charitable giving with her goes — we pick an animal she’s interested in and donate to an organization that helps that animal.

      You can also get kids involved in volunteering time as they get older. My parents did that a lot with us, and I found it useful in growing up to be empathetic.

    • nicoleandmaggie Says:

      We’ll put that in as an ask the grumpies!

      (Short answer: #2 doesn’t have any kids and I don’t think we particularly did other than standard sharing and being nice to people and aware of their feelings stuff, but I push understanding of money at a really early age. My four year old really gets money. But zie doesn’t know about our charitable giving.)

    • Jenny F. Scientist Says:

      We are Jewish- once each kid is old enough to count at least a little they get a tzedakah box and we give them change (er, kind of irregularly, there’s a lot going on right now) and a couple times a year we go give it, in person (usually with a check from us, too) to something local that they can understand. We usually offer a few choices- library, food bank, DV shelter, local clothing closet, school fund for kids who can’t afford school supplies. The scope is smaller than the national organizations we usually give to, but it’s important to us that they should see the act of giving as a regular part of our, and their, lives. At the holidays which encourage feeding the stranger in particular, we all go to the grocery, get a couple flats of fresh veggies, and take them to the food bank. (Again, with a check: I know money is more effective, but the food is much more concrete for the children.)

    • Rosa Says:

      I don’t know about that young, but by 5 or 6 our kid was aware that we had a budget, as in “we have $35 for restaurants this week, so if we go to McDonalds today we won’t be able to get pizza Friday…” and I’m sure he overheard me saying “we budget our giving in January and don’t give over the phone” to fundraisers as soon as he was old enough to pay attention to my phone conversations. So once he showed an interest I let him see our line item charity budget.

      The year I got “money to lend through Kiva” as a Christmas present I think he was 7? And he helped me choose the Kiva loans, and still does. That’s not exactly giving though.

    • Rosa Says:

      oh, the other thing we have done that might be meaningful to little ones, though mine never seemed interested, is that we do a “someplace else” version of school and library giving – that is, we give to our local Friends of the Library and also to one in a poorer part of the country (used to be my hometown, now is Ferguson, MO) and give or ask others to give for us to the local school district’s charitable arm and also give to one in a poorer district (a friend’s district in Louisiana). They are nice because kids know about library books & school supplies as things kids need/like.

  3. anandar Says:

    As a long time non-profit employee, I think Ms. Frugalwoods’ insights about giving strategy are spot on (http://www.frugalwoods.com/2016/12/15/how-we-make-meaningful-and-tax-efficient-charitable-donations/). I don’t know what Graduate PF’s advice about giving is, maybe they are similar, but we are also methodical types. We pick the issues that we as a family are most passionate about, and try to make sure to support a small mix of local/national/international orgs that address those issues, and also that meet direct needs v. system change (some orgs do both!). We mostly (but not only) give to smaller charities, and I try to give consistently (at least once per year), because I know how much time, effort and heartache can go into a small non-profit’s attempts to woo back lapsed donors. When in doubt, I increase the size of our gifts to orgs we already support rather than giving more smaller gifts (did this across the board after the election). Where I seem to disagree with Graduate PF is that I don’t think my gifts are big enough to have a “say”–and if an org is worth supporting, their staff is competent enough not to need my influence! I don’t give to orgs like ACLU/PP, even though they do great work, but because I enjoy identifying smaller orgs that do similarly high caliber work but don’t have the same level of name recognition.

    I do give smaller, un-planned gifts to political campaigns, GoFundMe type campaigns, or friends’ solicitations, as cashflow allows, but that isn’t as satisfying for me. I get an emotional payoff in feeling like a good steward of our resources throughout the year (same as feeling good about our boring but consistent retirement contributions). I also get the warm fuzzies any time I can increase our overall % of giving– I really want to hit 10%, but we still have a ways to go (the 10% would include donations to our public school and church, which are tax-deductible but not “charitable” IMO because we benefit directly from the health of those communities).

    I do want to let our kids start to have more input or awareness of giving, but I am not sure I’ll agree with their choices!

    • nicoleandmaggie Says:

      Graduate PF, if I’m remembering the lecture correctly, suggests that rational individuals interested in making an actual difference rather than just feeling warm and fuzzy should donate large sums to a small number of charities so other places don’t waste money trying to get more money out of you and you’ll have a bigger impact on that organization and more say in what is done with your money.

      Not really the same as FW, but also not contradicting.

      • anandar Says:

        Ok, I agree with that advice to the extent that the purpose is maximizing efficiency (which isn’t to say that non-profits don’t want small donors, just that a greater % of your money isn’t going toward the real work). But I disagree with making larger donations in order to have a bigger “say” in how the money is used, unless you are very wealthy and all your gifts are in the $10k+ range. If you are trying to exercise additional influence over an org’s activities, odds are that makes you a PITA donor distracting staff from their real work…

      • nicoleandmaggie Says:

        *shrug* Personally all I care about are the warm fuzzies. Although we have gifted directed donations to DC1’s old private school. Things like $500 to the new K teacher for specific classroom things that we want the classroom to have.

        (Most top economics professors are pretty wealthy, and I bet most people taking graduate PF end up doing pretty well, especially if they don’t go into government or academia.)

  4. Miser Mom Says:

    Like you, I do “both” planned and spontaneous giving. I think that everything we want to do well takes practice, so I think of the spontaneous giving as practice for more sustained giving to an organization. That is, I do try to think about the impact that my gifts have, both on the organization but also on me. I’m willing to make mistakes, but I want to try to learn from them.

    On helping kids understand giving, this is one possible idea: Our family has a dinner every year that we call the “Donnor” (all food is shaped like Os, and we try to talk using only O, as in “plose poss the solt ond poppor”). We schedule that dinner to be one of my big annual giving events, so I pull out the envelopes for all my charities, and I have my kids choose which ones they want to write the checks for. I write the other checks and I sign all the checks, but the kids get to see the range of places we give to, and also to think of generosity as something of a celebration. Oh, and learn how to fill out a check.

  5. bogart Says:

    Hmmm. Shortly after the election I had a small fit (er, one of several of various sizes) and decided to schedule more regular giving to more organizations. At first I was kind of all over the place in terms of thinking how much to give and where but then I decided to pick an amount I could afford each month and to pick 6 organizations I care about and rotate through each, one per month(at first I was going to send a bunch of small checks every month but then I realized that’s not administratively efficient). So that’s mostly what I’m doing now, which is distinct from the “give to stop the tears” approach you mention. I have, however, also made some smaller donations to stop the tears and/or communicate (to the cause I was giving to) my outrage at something that had happened to them (e.g. the mosque that got burned down). Those tend to involve less research and more direct giving (versus some large national group like PP). And I try also to give money and/or time (etc.) to individual people who I know need it for one reason or another. I do also give “when requested,” e.g. my work asked for contributions to a local food bank before holidays and I wrote a check; many of my co-workers brought food. (So those latter 3 are more “in the moment” and the scheduled stuff is more systematic/thought-out).

    As my persistent use of the first-person singular implies, I haven’t really coordinated with DH and he hasn’t really coordinated with me, though we each know what the other is doing and in a general sense our strategies connect and overlap.

    We haven’t done tons with DS though there are ways in which we engage him. He has walked with my mom in a local for-a-cause walk for several years, and I help him raise money for that — post a notice on my FB page and such (do not, however, ask co-workers or friends directly, just alert people — don’t want to put anyone on the spot).

  6. Middle class revolution Says:

    I have a very scattershot approach, so I don’t know how much I’ll end up giving. I give small amounts, up to $25.

    I do try to focus on certain causes like healthcare and family leave. I also subscribed to the NY Times to support mainstream media.

  7. Debbie M Says:

    Issues: My issues are generally anti-poverty, pro-environment, and anti-pain/torture/abuse. They have been my best guess at the “most important” issues to me, and I console myself about all the other issues by telling myself that we can’t do everything, but we can do something, and other people will make different choices, so lots of great work will get supported. I prefer prevention over cures and cures over bandaids. I prefer actually doing stuff over informing people or begging the government to do stuff.

    This year, I’ve decided to switch from anti-pain/torture/abuse to human/civil rights and maybe anti-corruption for a while for obvious reasons. Paying people to bring cases to court seems like a much better strategy to me than usual this year.

    I also have memberships in various organizations that help me or have helped me in the past (public TV, public radio, local neighborhood association, wildflower center).

    And when I was richer (42K+/year, boyfriend/roommate was employed), I started giving a little to things I personally love that I don’t think are as important such as a local planetarium, wikipedia, and a local pro-biking/pedestrian organization. This year, I’m just covering expenses (and keeping a list of things like this that I want to donate to later).

    Amount: I give 10% of my net income to the “important” causes. This is a compromise: way less than I could and way more than average. The other issues are on top of that, a much smaller amount.

    Method: I generally donate via justgive.org, which takes a cut, but which allows me to donate anonymously. No money is spent begging me to give more (which tends to make me angry). Also, I really don’t want to read stories about horrible poverty, environmental destruction, and abuse, even if they are getting better.

    I generally make my donations once per year, all at once, to minimize the cost for everyone. Admittedly, this is not as helpful as a continuing membership would be for the organizations to which I contribute.

    Sacrifices: I started with a much smaller percentage and gradually increased it as I got raises. So it doesn’t feel like a sacrifice (except when I imagine things I could do for myself with all that money–so I try not to do that). I’m not awesome like those homeless folks who get food donations and then feed their dogs first.

    Emotions: I get very little comfort from my donations. That’s okay with me. Signing petitions helps. And this year I’ve tried writing my own emails and making phone calls as well. (I’ve even gone activist on personal issues, like telling our city that during our library renovation they should consider having a bookmobile and requesting that we locals volunteer to help if there is a good way to do that.)

    Knowing that I’m giving 10% helps me not hate myself for all the other pleas for money that I am ignoring.

    • nicoleandmaggie Says:

      I had not seen that just give site before! Thank you!

      • Debbie M Says:

        Cool! Note that the default is NOT anonymous, so be sure to look for that check box.

        I used to have a similar option at work, but they took a much bigger cut even though they did it the cheapest way possible (asked once a year, calculated the percentages to each place, pulled that money each month, sent the same percentages even though some people had left employment).

    • Rosa Says:

      10% is amazing. I’m always trying to push us up to 5% and I often don’t make it.

      It’s mostly pushback from my husband, but it’s also that I’ve never given so much it felt like a sacrifice – partly because I actually really enjoy giving away money (and stuff, and food – when I used to do Food Not Bombs sometimes I’d just ride the bus around with a box of leftover fruit and bread and give it to people, on my own, and that was so much fun. Not rational or efficient but lots of fun.) but mostly because I’ve never given so much I was actually doing without anything.

  8. Sarabeth Says:

    We do a mix – 5% of gross income in planned giving and impulse giving on top of that as things come up. Currently planned giving goes to ACLU, Planned Parenthood, and a local racial justice org. We used to international health as well, but right now fighting the current administration feels like the most effective use of our money. Impulse giving tends to be smaller orgs involved in issues in our city.

  9. bethh Says:

    I’ve decided to give 5% of my take-home to organizations or groups that mean something to me. Half of it goes to a small family with financial challenges, a quarter is split between Planned Parenthood and the ACLU, and the final 25% is slushy for various political or other fundraisers. It’s the first time I’ve given consciously on a monthly basis and it feels good.


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