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Don’t Donate Money To Charity

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This is a Devil's Advocate post.

Donation BoxThis 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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84 Responses to “Don’t Donate Money To Charity”

  1. Beth says:

    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.

  2. Elizabeth says:

    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!

  3. Gates VP says:

    @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”.

    • steven says:

      go ahead and buy those stuff and deliver it to them…lolz.

    • Another Realist says:

      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.

    • JonnyRabbit says:

      If you send stuff there bullies keep it and get rich. Don’t send sh1t

  4. steven says:

    its easy to talk and write… its not easy to do it.

  5. Realist says:

    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.

    • JonnyRabbit says:

      I liked your post. Remember Sam Kinison? “Don’t send food. Rent them a U-haul. You can’t grow food in sand.”

      You feed these people, they start to feel good, they lay down and sleep. When they wake up what do they do? Start making more poor people.

      I have worked since I was 15. I chose to not have children because I didn’t want the responsibility. I live pretty comfortably. You had children and can’t support them? FU! Not my problem.

  6. Runi says:

    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!

  7. Ben says:

    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!

  8. Mike says:

    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

  9. K says:

    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!

  10. Jonathan says:

    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.

  11. car says:

    Look, the two greatest philanthropists I’ve known (gave tens of millions each) were also the biggest bastards I have known. They make Ebeneezer Scrooge look like a saint. Sure I give a lot to charity, but the really big donors give for a variety of reasons – family & purity are rarely among them.

    If you have a big estate / nestegg to give, you’ve probably been a jerk to your family – never home, obnoxious, aggressive and controlling, but they stuck with you b/c what choice did they have? And you did support them – well, until you accumulated something – then you put them through a nasty divorce, and disinherited your wife and children. Now, suddenly, you’re all about charity and the importance of giving (I’ve seen this scenario a dozen times). But, before you leave your estate to the local zoo, consider the following:

    1. What could that money do for your grandchildren – set them up in a business? put great-grandchildren through school? Don’t you owe something to your family who sacrificed to get you where you are? Yes, your ex-wife.

    2. What could it do via the church? Encourage two-parent households, discourage divorce and other irresponsible behaviour which is the true cause of our troubles? Quit addictions?

    3. Is it really going to make you immmortal? Sure, the zookeeper will give you priority seating and they’ll put your name on a plaque – will anyone care in 5 years? Doesn’t your family matter more?

    4. Isn’t free money – welfare, disability income, etc, the root of evil – just enabling our dysfunction, our perturbed sense of values (save the wolves, increase tax on small and large business, go on strike until all manufacturing is gone to China)?

    5. If you have any debt, for your sake, for the sake of your family and country – pay that off first. Are we the wealthiest nation in the world – well, if you consider wealthy to mean more indebted to other countries than any nation in the history of the earth, then I’d agree.

    There are many reasons a person gives, purity, altruism, and prudence are seldom among them. The best thing you can do for the world is be good to your family. That being said, I do give tens of thousands to charity – mostly faith-based and traditional American in values.

  12. Bob says:

    Human don’t need reasons not to give. By nature we are selfish beings. Maslow’s Hierarchy of Needs proves shows that as our needs are met we progress to the next level of need – next level of OUR own need. People should always think in terms of the Three T’s in terms of giving: 1. Time; 2. Talents; and 3. Treasures (money). Of course we should give our time and talent. But without money, the giving of time and talent alone matters little.

  13. Tom says:

    This is my personal take on the topic:
    -Efficiency of aid aka “return on investment” in charity:
    Of course it is very hard to measure the combination of short, medium, and long term effects that charities have on people’s lives. what’s more the measurement will be subjective according to the measurer’s personal values and opinions regarding condoms, free food, fishing, and a million other things.

    My personal opinion is that, more important than what you actually get done for people through charity, it should first be made obvious to the end recipient that he is receiving help from another individual.
    The real long term change to pursue is in the mind of people. People all die sooner or later, some of them have better health and material circumstances than others, but what is important is that they can enjoy their life while they’re living it, and nothing makes your life feel more worthwhile than knowing that you have a friend you trust that’s helping you or that you yourself are helping a trusted friend.
    Having that kind of spirit spread around like a virus is what I believe will help the world best in the long run.

    However it takes at least the full attention of another human being to determine whether the end recipient of aid is genuinely appreciating the help as the willing gift from another individual or just selfishly using the help that falls from the sky in the form of handouts from an anonymous charity organization.

    It takes a long period of genuine uninterested one-on-one befriending and sharing with a person first before you can “throw money at them” without ruining the mutual trust, respect, and friendship that you have built up.

    This means that charity of this kind cannot be conducted from a distance 10,000 miles away, nor can you pool 10,000 donations and divide them into 1,000,000 anonymous aid packages, even if it is materially more efficient that way. You need to work one-on-one with your own time and money on the minds of people that are around you: your friends, relatives and other people in a position to observe and appreciate your actions.

  14. Rick says:

    The first reason “you already donate” isn’t much of a reason. When you donate to a charity, you get a tax break anyway. So really, giving to charity lets you decide where your money goes.

  15. Luke says:

    I can’t afford to donate to anyone. speaking of charity I don’t trust the churches on tv or televangelists on tv. Very many televangelists miss use thier nonprofit status for gain not for helping people

  16. New says:

    Proverbs 11:24 Some people give much but get more in return.
    2 Corinthians 9:7 Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver.

    I don’t mean to get preachy. I totally agree that we need to be mindful of charitys but do the research. Understand their mission, ask questions, volunteer your time.

  17. New says:

    one more thing….not everyone has a negative agenda. Some people truly have a heart to help. I encourage you not to label all charities negative.

    I work with alot of charities…I can assure you that the families that get free air transportation to cancer treatment centers because time is of the essence, greatly appreciate your donations. http://www.freedomflightusa.org.
    Or the families of disabled children that have a rehabilitation center available, appreciate your donations. http://www.rockytoptherapy.org

  18. Sherri says:

    I work for a local non profit (Meals on Wheels) a program for Senior Citizens that are homebound. All the people that work there and get paid have a big heart for what they are doing and get paid below the area’s standard salary for their job description. All the people are able to live on this income for various reasons such as some have spouses who are the wage earners, some are semi-retired, some are partly disabled and need to compensate their income. As for myself, my spouse has a great income and I feel I’m getting paid to do something I feel good about and basically am getting paid to volunteer. If you want to see what this organization does call and see if they need volunteers to deliver meals in your town. Most of the time you can deliver meals on your lunch once a week or once a month. You will see senior citizens that are homebound (not always poverty) unable to prepare their own food, have no one to help them prepare their food for lunch and are unable to leave their home unassisted. Many of these seniors have family that work during the day and are unable to hire someone to come in to prepare the meals. Medicare sometimes sends home health agents to their homes to help with cleaning and bathing etc., but they are not licensed to prepare food and would loose their job for making a sandwich. Horrible laws however, we have become a suite happy society. Anyway, you will see how grateful people are and what conditions some are in, for what ever reason. Elderly citizens are a segment of society that sometimes are forgotten. If you want to be thankful for your life and family and be brought down to thinking what is truly important in life deliver meals to the homebound. At our office we cut corners to save money, we try to get some meats and foods from the food bank, we get donations and sponsorships when we can. We are not clock watchers and most of the people that work there have family members that volunteer as well. I guess what sums this up is see what your dollars go for if you decide to donate. Volunteer and find something that you believe in and with doing that you will find out how the organization is ran. You have to do your research like anything else. If you want to buy a car you don’t just throw money at the first one on the lot you make an educated choice after you research the brand it’s the same with donations. I believe in local charities and onces you can volunteer your time to see how they are run. You may have to volunteer at several. If I didn’t have to sleep I think I would like to volunteer for the woman’s battered shelter. Great cause and they need a lot of help. Business of any kind – non profit or for profit will have over head unless they are set up from an endowment of a very rich family or organization. We struggle to keep the lights on but I can tell you it’s worth fighting to keep them on and rolling the wheels through paid drivers and volunteers for home bound seniors that need our help. I will come down from my soap box – just needed to put in my 2 cents after reading some of these comments.

    • JonnyRabbit says:

      If they’re “homebound” let them have an unmarried mother move into their “home” to take care of them. But how do you find an unmarried mother that’s not a bottomfeeder? That’s the problem with selfish America, everybody has their own and screw everybody else.

      If people are people of value, they will know someone that will take care of them.

  19. JonnyRabbit says:

    There are about one million charities. How can you pick one?

    Let the bottom feeders starve. It’s called thinning the herd.

  20. Michael Frame says:

    I love to help around my community.. It teaches my things.. and i feel great when i see the people smile at me and say thank you.. Makes me feel more moral.. This is a good site.. im currently researching donations about charities for my english paper haha I respect any1 who atleast tries to help!!!!! Good luck and good day guys!!

  21. tinabobeena says:

    I totally agree to not donate to charities! If a charity has paid employees, it’s a business, not a charity.

  22. Anonymous says:

    I agree!!!!!!!!!!

  23. Dan Izad says:

    I think that there are many valid points in this article but there’s 2 things I’d like to mention: (1)although teaching someone to fish is certainly more beneficial, sometimes the people in need are in emergency need for food and care and will die if they don’t have something right now…once they get on their feet, then they can start learning how to fish and reduce their dependency on charities. yes it’s not a perfect world and people abuse the convenience of consistent donations, but the truth is that there are innocent victims just like you and me out there who really just need help for a temporary amount of time to get back on their feet (2)if you have no debt, what would you be doing with your money anyway? buy yourself a nice shirt, a new cel-phone? at least giving it to charity gives the chance that you are using it for something more valuable than something for yourself. I read the other day that a plasma tv that you would buy at best buy costs $1100 which is enough to educate a whole class of ugandan students K1-12 .which one do you think is more valuable to you, the choice is yours.

  24. Olen says:

    Charities often get in way of progress. First and foremost we need to pay our taxes and we are going to have to raise our taxes. Our government if far more efficient at delivering goods and services, and no amount of charity will ever lessen the need to pay taxes. As Europeans and others have observed: Americans will refuse to pay taxes and vote against increases, and will pay an accountant more to find ways to reduce the tax load, but they will trustingly give to charities, which as hard as it may be to believe, are almost always less efficient than government.

  25. denisebacon@aol.com says:

    Things you left out…
    You get a tax deduction when you give to nonprofits–
    In a lot of cases, nonprofits do work that may otherwise end up being done by the government…at a much cheaper rate.

    SO give– it will save you money in the long run!


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