Ask the grumpies: How best to give?

First Gen American asks:

When giving, is it better to give one large lump sum or more frequent smaller quantities. I have opinions about this if the lump sum covers a big portion of a not for profit’s annual operating expenses.

Well, this depends on what your purpose in donating is for, and whose utility you are trying to optimize.

If you ask charities– they would like you to take the lump sum and turn it into a monthly payment that they know for sure they’re going to get each month.  They say they would rather have a predictable monthly stream than unpredictable lumps of the same amount.  I’ve seen an academic presentation on the topic.  (I can’t remember the details though.  It had something to do with spending and endowments and how to know how much to spend vs. save as a non-profit.)  That said, some fundraisers don’t even bother with small donors because small donations are more expensive to process than are large lump sums.

If you’re talking about what is optimal for *you*, then if you’re donating to get a warm glow, frequent small quantities are going to give you more dopamine hits than just one will.

You also get to keep money longer and any interest that accrues on it if you do smaller frequent quantities.  That said, you have to actually *remember* to donate and that you’re donating so if you have trouble balancing a monthly checkbook one lump sum is probably safer.

If you want to have a bigger say in what the non-profit does, a larger lump sum is more likely to attract their attention and their willingness to serve your wishes than are smaller quantities.

Grumpy Nation:  Do you think it’s better to give one lump sum or prorated monthly amounts?

Related posts:

Why do people give to charity?

How much should one give to charity?

Where should I donate?


9 Responses to “Ask the grumpies: How best to give?”

  1. First Gen American Says:

    I was on a board once and one donor represented 1/2 their annual budget and one of the first things I said was: what if that source disappears? Not 6 months later, it did. God I hate to be right sometimes. I don’t like big donations because it’s easier for nonprofits to have all their eggs in a few baskets and get lazy about fundraising until it’s a crisis.

    The downside of smaller donations is you are. Ore likely to get your information sold which has its own pesky problems.

    • Revanche @ A Gai Shan Life Says:

      Yikes. That’s always a huge risk. Did they have any plans for offsetting the loss or did they not attempt to game out that eventuality when you raised the question?

      • First Gen American Says:

        What they eventually did was build a board that was rich and also good at fundraising. It was a STEM place and I joined to help with vision and curriculum but then it was a financial crisis so I did very little of what I was set out to do. I did help them with corp donors as I was on the other side of that fence for a while.

  2. middle_class Says:

    I give monthly to 4 nonprofits via the Patreon platform. I use the app but maybe it is also a website. Patreon was set up to support creators but i guess some nonprofits use it. Anyway they seem to like the monthly support no matter how small the amount. I definitely give more $ overall per year, and i also donate lump sums sometimes when i remember.

  3. Alice Says:

    I tend to do sporadic single-donation of large-ish to me, but probably not large to the organization. I’m sure the organizations would prefer I do a subscription approach, but I’m more comfortable with more flexibility on my end.

    Ultimately, I think what’s best is what you’ll act upon. This may be my psychology and not yours, but: I find that if I get too hung up on the “best way” to do a thing or the “best” thing to get for a purpose, what happens is I get all wound up in trying to figure out what “best” is, and then it delays my actually doing or getting anything.

  4. Debbie M Says:

    I have also heard that charities prefer reliable regular donations over lump donations. And I also agree that, like many things, if there is one method you are much better at, then use that method.

    I gave monthly with an automatic debit from my paycheck when I had an employer that did that. I loved it because it was automatic and because it was anonymous.

    But it was actually a weird system where once a year they got people to make their pledges for the upcoming year, then calculated the percent to each charity, then as people left, each charity got the same percentage. I figured it was a cost-saving tactic. However, I later learned the amount taken out for overhead was something huge (17%?) and I started looking around.

    I’ve found other organizations that do that but they keep disappearing or turning weird. So now I use Fidelity’s donor advised fund. I had to save up two years of donations to make the minimum, but I was doing that for tax purposes anyway. And now each month I calculate 10% of my earnings (sometimes I have short-term jobs as well as my pension) and send that in. And then once or twice a year, I have them send checks to my charities. I liked the old way better, except for the leaky bucket.

    For organizations where I benefit from my donations (local wildflower center, etc.) and thus do not want to be anonymous, I send one donation per year, often when donations are matched or they are adding and extra month for a prompt response. My local public TV or radio station (I forget which) is really trying to get us to switch to monthly donations; at the very least, they don’t have to send reminder letters/forms each year. But I really don’t want to deal with a million little withdrawals each month.

    FYI, I learned from AOC that politicians also prefer regular monthly donations, even if they are small. (I mean, except for the ones who prefer large bribes, I guess.) I’m contributing to her even though she is not my Rep (partly as a reward for educating me on this!) and am also considering contributing to my own previous and future Rep (due to redistricting) (who is awesome, even though you’ve probably never heard of him: Lloyd Doggett) (but not my current Rep, ugh) and to Beto O’Rourke (running for governor of my state) and to Stacy Abrams (who is awesome, as you know), but I’m feeling kind of poor, so I’m holding off.

  5. Revanche @ A Gai Shan Life Says:

    I want to give small regular amounts but it makes a lot more paperwork for the amounts they would be getting compared to the lump sum and for the donation matching. So I give annual lump sums. Also because I’m much more likely to remember and not balk at giving irregular (annual) lump sums. Psychologically (and I know it makes no rational sense) I am more comfortable with one off donations as I go through the year than I am committing to a small regular amount even though in the end, I’m still giving approximately the same amounts monthly. I think it’s the control over when that money goes out that helps me combat those deep down bag lady feelings.

  6. Jessica Says:

    I do monthly automatic donations for the reasons you mentioned (best for the charity + don’t have to remember to do it). I have asked about this in the past and the charity recommended that if I’m giving a more significant amount (~$5000+ at once) it can be better to donate all at once if you can do it a way that avoids fees, uses tax benefits of a DAF, etc., and particularly if you’re contributing to a matching fund, but otherwise monthly is ideal. But also that whatever way you are able to give is fine.

    • Jessica Says:

      Also I like to give to donation aggregator funds that work with the nonprofits or campaigns to determine which ones have the most current need / capacity to use the money effectively. For instance, I have a recurring donation to the No Off Years fund for democratic political organizing (Pod Save America team has a number of funds like this available), and to GiveWell’s Maximum Impact fund which is focused mostly on global health and poverty.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: