How to Allocate Charitable Dollars
I love the hum of the mail truck. Although we live on a busy street, there's a particular sound that the mail truck makes as it rumbles down the road. It's a low hum combined with short bursts of acceleration as it moves from box to box. Even if I'm in the back of the house, I can usually hear when the mail has arrived in the early afternoon. Several days a week, our mailbox is filled with charitable solicitations. In the Christmas season, it gets even more intense. I don't mind receiving these mailings and we give each request due consideration.
Alison and I have found a model of allocating charitable dollars that works for us. Essentially our guiding principle is that we need to be intentional with every dollar. That intentionality makes the whole giving process a lot of fun.
There are two strategies when it comes to making charitable contributions: share the wealth and big splash. A share the wealth strategy is when your family makes small donations to many organizations. The dollars that you've earmarked for giving are spread among numerous organizations and causes. The big splash approach is when you make bigger donations to fewer organizations. Your family isn't involved in a wide variety of causes, but rather is helping in a more significant way one or two causes that are tightly aligned with your values. Neither approach is better than the other, but I'll bet that your family falls into one of the two approaches.
We have a moral duty to manage our charitable dollars well. When we make a donation, we have to ensure that the money will do the most good. That means that research should be done before any contribution is made to ensure that dollars end up in the form of resources distributed to beneficiaries and not entirely in marketing. Certainly nonprofits need to spend a percentage of gifts on things necessary for smooth and growing reach, such as salaries, office supplies, and mailings. However, a careful balance must be struck in order for an organization to be worthy of your money.
It's best to have some rules for allocation. Identify the types of causes that your family will support, perhaps 3-5, and only give to organizations working in those causes, with few exceptions. You can also have rules that help you to vet organizations, such as political action, operating budgets, leadership, and 3rd party ratings. There are countless charities, with new ones being started every day, and a simple set of rules will help you filter through to the organizations that you really can get behind.
Giving is one of the most fun things that you can do with money and I'm always excited when Alison and I start writing checks in our budget committee meeting. Have some ground rules in place to make sure that your charitable dollars help the most people.