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Don’t Donate Money To Charity
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This Devil’s Advocate post will cover something that’s bound to elicit a lot of discussion – here are four reasons why you shouldn’t donate money to charity. That’s right, you read that correctly, I have four reasons why donating your hard earned money to a charity is a bad idea and chances are there is at least one reason here that you didn’t even consider. If there was ever a Devil’s Advocate post to end all Devil’s Advocate posts (don’t worry, it’s not the last one), this would probably be one of them!
Americans are one of the most charitable groups in the world, having donating $306 billion in 2007 according to the Philanthropy Journal, an increase of 3.9% over the year before. While the donation amounts in 2008, a period of economic uncertainty, are not yet known, chances are Americans will still be sending hundreds of billions to philanthropic organizations… so in the face of that, I present to you four reasons why you shouldn’t donate money to charity.
You Already Donate
Whether you know it or not, you already donate to a lot of charities. When you pay your taxes, you’re subsidizing the operations of every single non-profit organization in the United States because they don’t have to pay taxes. When organizations receive subsidies or “investments” from the government in the form of grants, you’re more directly donating to philanthropic organizations. In the case of philanthropies that support individuals based on income (homeless shelters, soup kitchens, etc.), you are already supporting the individuals because your taxes go towards the welfare and food stamp system. It may be more efficient to donate directly to a local homeless shelter or local food bank, but you already donate to them and the people they help through your taxes.
Teach A Man To Fish
The old maxim of teaching a man to fish has and always will be true. “Give a man a fish, he eats for a day. Teach a man to fish and he eats for a lifetime.” Homeless shelters and food kitchens are wonderful if they are simply helping people get back on their feet, but far too many residents end up staying much longer than they would if the assistance weren’t so easy to come by. Withholding support to an organization trying to do good and making their lives much harder isn’t necessarily the best approach to effect this type of change, but it is an approach.
Administrative Overhead
All philanthropic organizations have administrator overhead costs to pay for. Many philanthropic organizations also have fundraising costs to pay for. When you donate your funds, a part of that goes to the administrative and fundraising costs – not the underlying cause. This is most true with your taxes, a donation you are already making! While you can check Charity Navigator to see the administrative overhead of almost any charity. The American Cancer Society spends 9.6% of its revenue on administrative expenses and another 21.8% on raising more money. Thirty cents out of every dollar you donate won’t go towards anything cancer-related.
Money Is Too Easy
It’s very easy to donate money to an organization, it’s much harder to donate your time by volunteering. When you volunteer, you have a much greater impact because you’ll probably volunteer as somewhere local. Those local organizations don’t get nearly as many monetary donations as the national organizations because they don’t spend as much on publicity! Also, many local charities, such as Habitat for Humanity, get a much larger benefit out of volunteers than they do from monetary donations. Finally, donating your time is a truly philanthropic act because you don’t get a tax deduction for your time. (The only exception to this is if you can otherwise make a boatload of cash during the time you would spend volunteering, then you probably should earn the money and donate that!)
I really struggled with this Devil’s Advocate post, probably more so than any other post, as my fellow Tweeters can attest to. In my tweeting about it, most of the responses that came back had to do with arguments against donating to a particular charity, rather than arguments against donating to charities at all! Ultimately though, I think the argument against donating to charities is pretty thin and comes down to personal preference. I don’t think you’re a bad person if you don’t donate (you may not have the means, you may not support any causes that have philanthropic supporters, etc.) just as I don’t think you’re automatically a saint for donating, it’s a personal choice that each must make on their own.
(Photo: mindfulone)
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Certainly there’s a strong arguement to be made that you shouldn’t donate if you cannot afford it, say if you have a lot of debt. One could push that to it;s logical extreme and say that if you have any debt you shouldn’t be donating you should be paying down your debt (even your mortgage).
If you have a lot of debt, it’s probably more helpful for you to pay down the debt and then donate more to charity. You can donate more if you don’t have the debt burden on your shoulders.
I think you had really good points — But the message I took away was to be more careful about how you donate.
I can’t afford to donate much, but I avoid giving to charities that waste money on admin, (there are websites like the BBB where you can find that out). I try to give to charities that help people in the long run, not just giving them something to tide them over in the short run. (Except, of course, in the case of disaster relief).
I totally reject the idea that as a tax payers, we’re already contributing (More of my tax money goes to politician’s expense accounts and paying for war than it does to charity).
However, I totally agree with the last point though — volunteering your time is very important.
This entire article was a bit of a stretch because I found it extremely difficult to argue against donating to charity.
As I was writing it did become more of a discussion about “how” you donated or “who” you donated to, rather than being charitable in the first place.
Now that is a good idea for a forum post.
“Who” do you donate to. I know there are lots of small local organizations that are out there but get forgotten because of the United Ways.
saladdin
By popular demand, it’ll be on the docket.
The administraive overhead is exactly why I don’t donate to the United Way. Their cause is just, but they employ too many people. I use their website to find local charities, and donate straight to them instead.
I don’t donate much money, but I try and donate my time, and I donate tons of blood.
Going local is the best way to cut through the admin, I donate to local food banks for this very reason (and because it helps people in your neighborhood). I would argue that time and blood are almost more valuable than a few extra dollars in some cases.
Of course having a high administrative fee doesn’t necessarily mean the charity is less effective.
But I completely understand what you mean because I sometimes feel the same way.
Yes that is very true, but I find it’s a useful indicator that you can combine with other things to help make decisions.
I say take care of yourself first then when you are in position to help, do so.
Mark me down as one who donates but to select groups only (when I give to organizations). No god or republican based organizations. The majority of my donations are to individuals not organizations. Here when there is a fire and someone loses their home an account is set up at a local bank. People can send in donations.
But I do mark the $3 donation box on my tax return. That count as donating?
saladdin
Haha, that $3 isn’t a “donation” because you don’t give them anything. That presidential political whatever donation simply tells the President (or whomever is in charge, I only say the President because he proposes the budget) to allocate a certain amount into that fund.
What a bullshit article this is. Don’t we have better issues to discuss? I donate to an organization directly. The money helps impoverished underprivileged children go to school. Yes, There are some countries where elementary school is not subsidized. So, Before you take too much credence in this stupid article…Find a organization who needs help and make sure the money is going where you want it to go. Maybe Devils Advocate can get off his ass and do the same. Now more than ever, those who have less than we need help!
I donate to causes, both national and local, that I believe in so I think you’re statement that I should “get off my ass and do the same” is unfair. Second, you may think it’s bullshit but I think it’s valuable to inspect the things that we do, especially those things that we feel are above investigation, to make sure we’re doing it correctly. I was surprised to see some of the administrative overhead figures for the charities I support, something I wouldn’t have done had someone else not brought it up. Do I still donate? Yes, I just spread it around to different charities with leaner operations.
People do need help and those who can help should help.
Have you heard of multi-tasking? Many people can do it.
Like the ability to write an article AND do something else.
It’s very cool!
Your heading really ought to be changed to “Don’t JUST Donate Money to Charity.”
You Already Donate: I think this is kind of lame. I have no control over what my government does. It’s policies ENCOURAGE people to be poor. Why are there 4 and 5 generations on welfare, with 50 year old great-grandmothers?
Teach A Man To Fish: I refuse to donate solely to organizations that just hand out stuff. I do donate to organizations that help people help themselves.
Administrative Overhead: I donate directly to charities. It is unreasonable to expect most charities to run efficiently and effectively without paid staff and fundraising costs. Of course, there are extremes. If you search “pallottine fathers charity scandal,” you will learn of a group that spent more than 90% fundraising, because they ran a sweepstakes. On the other hand, there are communal charities where being the president is very prestigious and very expensive to the individual, because it is unpaid.
Money Is Too Easy: There you have me. I spend a lot less time volunteering than I have in the past. BTW, you can *deduct your mileage* for volunteering.
True, I struggled with this article because it’s difficult to argue against supporting charities and helping people when they’re down. You can already see how tenuous some of the arguments are
but the value in these types of articles is in the discussion, not the original post.
Wow, I’m not even sure what to say about the teach a man to fish. The reference to homeless shelters… where do I even begin? MANY people in shelters are children. What are you teaching them by not supporting them? Over the past 20 years, there has been an assault on treating drug use, with the government forcing many treatment centers to adopt a ‘quick’ and outpatient solution. This forces even more of the most needy into shelters. I’m just totally dumbfounded you used homeless shelters as an example… and let’s not start about the housing crisis in this country. It’s one thing to advocate hard love, it’s another to succumb to the ‘let them eat cake’ mentality.
I just help out my family. I gave away my car to a needy family member last year. I think the most important charity is your family. Can’t deduct that, obviously.
I don’t really consider paying taxes as helping charities. Churches also don’t pay taxes, though only some of their activities could be considered charitable. It’s a tiny fraction of what the government spends, practically nothing. Overhead costs are why I don’t donate to certain charities, too little of my money actually goes towards helping the cause.
I think your devils argument posts are a great way to approach a topic from another angle.
I worked for memoreal slone ketterink in the planned giving office. The director got dying people to donate their estates after their death – BEFORE getting any help.
Volunteering is the best way to donate in my opinion. Just as Jim said in the article, it makes a larger impact and you know you are truly making an impact. Too many times, people think that they donate a few bucks to a organization that they are changing the world. American’s in particular are too busy working long hours to make more money to think about volunteering to an organization or sharing their time to make their community a better place…
The greater part of my career has been volunteerism to senior citizens and (to a lesser extent) disabled people through the local volunteer center. I quit my affiliation with the agency in 2003, and “adopted” a client I’d had through them.
As far as donating money, I don’t like giving to organizations because they dictate the help received, and my concern is for the individuals. I don’t like the idea that “beggars can’t be choosy”, and feel that recipients should receive top of the line service or assistance, based on what *they* define as their wants/needs.
When I hear people with incomes of $250,000 or more complain about tax increases, I think to myself that they ought to quit their charitable donations and consider the taxes they pay to be charity. If you blind yourself to the waste of tax dollars and look at what actually helps people, this is possible.
Jim. Kudos to you for writing this post. It’s thoughtful and certainly controversial. I agree that just throwing money at a problem doesn’t fix it.
I like to look at “giving” from a more selfish point of view (huh?). There was an article written in 2007 on portfolio.com entitled, “Giving Makes you Rich.” They compared groups of people where the only discernible difference between them was that one group donated and one group didn’t. Here’s an excerpt that gives a reason why you SHOULD donate. . .
“This is precisely what is found in the S.C.C.B.S. data: More giving doesn’t just correlate with higher income; it causes higher income. And not just a little. Imagine two families that are identical in size, age, race, education, religion, and politics. The only difference is that this year the first family gives away $100 more than the second. Based on my analysis of the S.C.C.B.S. survey, the first family will, on average, earn $375 more as a result of its generosity.”
http://www.portfolio.com/views/columns/2007/10/15/Charity-Makes-Wealth
Jim, do not listen to the negative comments which attack you for opening a dialog about charitable donations. In our country, we too often blindly follow tradition and social norms, without questioning if these activities are still valid and effective. I encourage you to do more devil’s advocate posts…it may spark a necessary dialog which we have been avoiding for too long.
Thanks for the support Steve, I knew this was going to be a tough one to write, my wife and I donate time and money and believe in the causes we support, but the point of these DA posts is to investigate the other side. Sometimes you look and decide that convention wisdom IS right. Sometimes you think of something you didn’t think of before. One person has emailed me already saying they didn’t know about Charity Navigator and how it could tell you how efficient at charitable organization is, I consider that a win.
I sometimes feel that I’m a jerk, because I donate exactly ZERO dollars each year to charities. I’ve donated cars, clothes that I don’t wear, and volunteered on weekends for some local charities, but I just can’t bring myself to donate cash. I very much believe in the ideas above (Teach a man to fish is the perfect analogy for my thought process). In my mind, the money isn’t going to get used wisely, and I’d much rather secure my family’s future than just give money away to someone else (who probably wouldn’t appreciate it).
Here’s another reason not to donate money to charity. It may not do as much good for the less fortunate as investing well. Charities are often poorly run, inefficient. In some cases they may well do more harm than good. On the other hand the companies that invented and popularized cell phone service, for example, may have done more good for sub-saharan africa than all charities in the last 10 years (or not), but the point is that commercial investments and inventions certainly do more good overall than pure charities. (Whether they do more good per dollar spent is another question.) I personally believe that investing in productive companies does more good than giving to charity. I still give to charity, but only for spiritual reason for myself, not because I think it is an efficient or effective way of helping the less fortunate.
-Mike
You could also argue that since you don’t know how much money you’ll need to finance the remainder of your life once you are unable (through job loss or disability) or unwilling (through voluntary retirement) to earn money through labor, you should make zero charitable donations and just bequeath your estate to your favorite charity upon your death. Problem solved.
I think we’re all overlooking something — one charity isn’t like another. How does one compare giving to the local homeless shelter, the Red Cross and the Cancer Society? Three very different things.
I like the point about donating blood — I’d also like to add that planning to donate organs is something a lot of people overlook.
This article is really “how to vet charities worthy of donating to”. My husband and I try to give 10% of our income to charities and we are mostly quite picky about to whom we give. Many local charities, with low overhead, and what we consider to be worthwhile endeavors, whether that is “teaching to fish” or giving handouts, whatever is appropriate. I am fortunate to be a stay-at-home mom, able to volunteer a lot of my time in education/local schools. I disagree, however, that time is more valuable than money. They are both necessities and complimentary to each other. People should give what they can, sometimes money, sometimes cash.
Another thing to consider is that when you donate through 3rd party sites, like justgive or facebook causes, those sites keep a portion of your donation as a fee. If you want your donation to go further, donate to the charity directly!
Excellent point, I had no idea those 3rd party sites took a piece (which makes sense, they are offering a service in some cases).
I think if some people are getting upset at this post then they may missunderstand the point of a Devil’s Advocate post.
While I think its important to support charities I also agree with the points made here.
One item that Jim didn’t touch on is fraud by recipients of charity. Quite often charities do not vet giving and charity is fraudulently obtained. Or if not outright fraud then charity going to people who don’t really “need” it and are simply supporting irresponsible behavior. However, while this is something that does happen I don’t think it alone is reason to not give to charities. Its just something to be on the look out for.
Another problem with charities can be that they can push their own agenda. The charity may have a religious or political leaning that is a core of their mission. This may be just fine in most cases but sometimes it causes the charity to discriminate or do other things that you wouldn’t want them to with your contributions.
Having said all that, I want to be clear that I think giving to charity is good and I do so myself. But its a good idea to investigate the charity and be careful about which ones you give to.
Jim
I agree, especially with religious charities that push their own religion, and in fact consider evangelizing to be the charity. I have to mention along with that, that I consider the Salvation Army to be a very good and helpful charity. They have their religion, but real solid help is given to people regardless of their own religion or the lack thereof.
I’m also suspicious of missionaries spreading the gospel to very needy people. The people need something other than being preached to, and they need it very badly. This makes them vulnerable to exploitation.
I was amused to see an ad for fundraising materials – presumably one fundraises for a charity – directly below this post. Ironic
The only thing that I donate to is medical research. Can you imagine how much better the world would be if we had a cure for cancer or had defeated aging, the slow death that is happening to everyone on Earth? I don’t donate to soup kitchens or starving children funds because they are just temporary fixed. Science affords us much more permanent solutions to the worlds problems, but most people think with their emotions instead of their brains and give money to things like PETA. I want to punch anyone who gives money to PETA.
Well, I think eating is pretty important, but what Arabic Student’s comment really makes me wonder about is how much money has been donated for how long toward medical research. I *can* imagine how wonderful it would be if science came up with unchanging facts for the betterment of health and longevity, but for me, I’d rather put my money toward real food than a very highly financed dream. The dream come true is for the recipients of the donations. Keeping such dreams alive seems more emotional to me than brainy. But definitely very charitable.
And giving to medical research isn’t an emotional decision? How is that more logical?
I’m sorry, but donating to stop the “slow death that is happening to everyone on earth” isn’t going to solve everything because people in developing countries won’t be able to afford the expense medications and they’re going to die anyways. You’re just saving the rich people who can afford it. How logical is that?
I’m not knocking giving to medical research — I think it’s important too. I’m just saying don’t look down on other people because the decision to give to anything is emotional moreso than logical.
Interesting and thought provoking post. A few thoughts, because I think some of your points are not as complete or accurate as they should be. BTW, I am not involved with a nonprofit in any capacity other than donor and volunteer.
First, I don’t buy the I am donating with my taxes line. I am forced to put money into bloated social programs that are mismanaged by the government and have resulted in generations of welfare dependency, but do not assume that all nonprofits receive Federal Grants. They don’t.
Regarding tax exemption, an organization having 501c3 status means they are exempt from Federal Income Taxes – not all taxes. Also, each state typically sets its own laws (and has a bloated application process) for exemption from property and sales taxes. Many nonprofits will pay some form of tax somewhere.
Someone above said it, but do not assume that just because there are highly compensated executives, that a charity is wasteful. Sometimes, the best leadership is worth a little more. Top organizations often compensate their CEO’s around 1% or a little more of total revenues. Look at the results the CEO of Boys & Girls Clubs of America is getting vs. what Ken Lewis did at B of A. Give me Roxanne any day!
Then regarding the use of Charity Navigator. it is definitely a site I like and I really enjoyed the blog of their former CEO, Trent Stamp. BUT and I think it is a big one, MUCH of this data is outdated. I looked up 3 charities I personally donate both money and volunteer hours to in my town (Atlanta). Two had reasonable ratings, but one came up 2 stars – most people would turn away based on that, but the data is old. This organization is part of a larger national nonprofit who realized they had become inefficient. So two years ago they undertook a nationwide consolidation of their administrative functions – their admin is now 1/3 of what it was 2 years ago and their numbers reflect it. BUT the Charity Navigator data is almost 3 years old. If it were current, this organization would rank close to 4 stars using their evaluation criteria. But all people see is the outdated 2 and possibly move on. Charity Navigator is fine as a tool to help, but dont base your decision on it solely. Look at the age of the data. Get the 990 from the nonprofit yourself and run the numbers – then decide.
OK – this is getting long!
I do think this is a great post (and really enjoy your blog), but don’t think this time you gave people enough information to make a fully informed decision!
@Jim, I’m late to the party, but let me help you here
(and yes I do make independent charitable donations)
Biggest reasons not to donate to charity:
1. Duplication and waste
2. Those who “need” don’t need money
#1 Duplication and waste
How many organizations do we need to help feed under-privileged kids?
I think that we can generally that ensuring that all kids are adequately fed is definitely a noble goal. But who’s going to do it?
Aren’t the parents supposed to feed their kids?
If the parents can’t afford to feed their kids, don’t we have government programs to help support these parents?
If parents are irresponsible with money, don’t we have food stamps?
Don’t we have a social services program that will take kids away from negligent or incapable parents and ensure that those kids get fed?
So why am I donating money directly to an organization that does something the government already handles?
Sure, maybe “the government” is futzing it up. But we are “the government”. We are paying for, supporting & implementing that completely faulty program (or series of programs). So we’re doing a patch job.
Why don’t we just fix the problem?
The same goes for cancer research. Success in this field clearly benefits everybody, it’s hardly a special interest group. I mean, why not apply pure capitalism instead? Provide government-sponsored “bounties” for cures or improvement in treatment (a la X-prize). Make the bounty amounts relative to the occurrences within the population and the mortality rates.
Now we have a win-win. We the public get what we pay for and independent entrepeneurs can still become wealthy by solving the right problems.
#2 Those who “need” don’t need money
The people in Africa aren’t starving because they don’t have any money. There’s lots of money moving through corrupt government officials (it’s very well documented).
The people in Africa are starving b/c they can’t produce enough food to keep themselves fed. They don’t need a bunch of paper slips. They need land, farm equipment, gas and irrigation systems. They need doctors and condoms and education systems to help prevent the spread of HIV. So why is Bono running around lobbying governments to increase our donation numbers?
They don’t need money. They need a tanker loaded with farm equipment and high-yield seeds mosquito netting and medical supplies and a few beefy guys with guns to make sure that the farm equipment is being used appropriately.
Yes money could technically buy all of these things. But notice how most of the money is spent “here” rather than “there”.
go ahead and buy those stuff and deliver it to them…lolz.
I completely agree, even if it’s not politically correct.
I would go further to say that people living in poverty in overpopulated countries should either be relocated, or not permitted to reproduce. Problem will be greatly reduced in a very short time. But that would never happen.
its easy to talk and write… its not easy to do it.
Another reason not to contribute to certain charitable organizations, related to item 2 (teach a man to fish), is some charities actually propagate a negative situation thus creating increasing need for charitable contributions. Feed the children and related organizations feeding children that likely already have development issues and allowing them to come of age and reproduce thus creating another cycle of required charitable dependants. Not every geographic location is suited for human habitation and if a geographical location can sustain human habitation it has a limit as to the numbers it can sustain. Why would anyone increase a population in a place or situation that will require continued and increasing support to sustain the population? Humans are the only species to reproduce non selectively and like viruses under unfavorable or adverse conditions. Viruses mutate to create a stronger more resistant strain, humans create a weaker more dependant strain. A better solution would be to sterilize or introduce reliable birth control, or let nature take its course. As harsh as it may sound not every human was meant to live long and prosperous, only the lucky ones. As hard as you try nature will eventually win out. I know some will say that a main concern of these organizations is prenatal care thus helping eradicate development issues and deficiencies. This creates and entire new problem, a multitude of adolescents who may actually realize the poor hand that fate dealt them thus turning to radical or extremist behavior as the only escape. Besides, it all hype, if you’ve noticed from the heart string tugging beggin-mercials, there is never a parent or parents around just a leper colony of kids. Don’t drink the Kool-Aid. Don’t get me wrong, I contribute to charities but only charities that try and solve a problem or situation not propagate or worsen a situation.
Now that is the stupidist thing I have ever heard in my whole entire life. Children in Africa are starving and it’s not thier fault!
I want to thank you for your article here. I am a senior in college, working towards my marketing major. I was assigned a pretty tough real life project to design a marketing plan for and have had trouble coming up with a solid idea that I liked. My original was going to involve a monetary donation, but I was not overly jazzed on the idea. I found your article which inspired me to drop the idea and come up with an entirely new one. My new idea, which is much more solid and concrete, is something that your words helped spark in my mind. Thank you!
Hi Jim,
Great post! I saw this post from MSN money and wanted would love to hear your thoughts on microlending/microfinancing. I think this idea addresses your point about teaching someone to fish since organizations like Kiva are enabling entrepreneurs to reinvest in their businesses and also help their communities so “donations” don’t end there. Money is re-used through repeat loans which help to develop the economy in a “micro” niches which in turn help macro-economics.
Mike
Re: Not donating to charities with “high” overhead costs.
I work at a 501(c)(3). I’m good at my job and also have a lot of grad school debt.
If you can’t pay me enough to support myself/save some $/help pay off my educational loans, then I will leave. I will have no choice; I can’t default on my loans. Then the charity will be forced to hire someone ‘less skilled’ at my old job. The charity will suffer.
I help this charity be effective and efficient, and help draw in donations. Am I not worth the “high administrative costs?” Sure, you could hire someone off the street for dirt cheap, pay them next to nothing, and have “low administrative costs.” But I want to work here. I’m good at it. And it’s fair to compensate me fairly!
Re: Not donating to charities with “high” overhead costs.
I am a senior postgrad marketing and communications manager working for a not for profit (or social enterprise organisation) in Australia. I earn an extremely ordinary salary considering my skill set and experience. I know I could be working elsewhere for a more significant return but do so because I believe that I owe my community something. I don’t have a lot of personal wealth but I do have a wealth of experience and knowledge that is truly assisting this organisation and the people it serves. I won’t hold this position forever and I hope that when I leave that a new candidate can be employed at a reasonable salary to ensure ongoing high quality outcomes. Without donations and bequests I would not be in this position and the organisation and our community would be worse off.