Updated on 11.10.07

The Charity Dilemma: Small Donations to Many or Large Donations to a Few?

Trent Hamm

Recently, my wife and I took account of all of our charitable spending. Over the last year, we’ve donated small amounts ($10-$50) to many different charities, a list that was almost shocking in length when we finally examined all of them together. Our total charitable spending was an amount we were comfortable with, but we wondered to ourselves whether or not one large donation to one charity we both cared about and were sure was a legitimate and healthy charity.

One big reason why we feel that the small donations are fine is that most charities are based on a model of receiving a lot of small donations. Their organizations assume – and operate – on the basis that there will be many out there like me and my wife,

Another benefit of the small donations is that we can support a lot of organizations that we believe in. There are many, many charities and organizations out there that we believe in and agree with the concept behind, and thus there are many that we have interest in supporting financially.

Even given those ideas, however, we’re leaning towards reducing the number of our charitable donations significantly in the coming year (down to just a very tiny handful), and donating much larger amounts to these charities. Here’s why.

The charities that we are most strongly tied to are either highly local or tied closely to our family. These charities are extremely involved on the local level, facilitating positive social work in the community itself instead of on a broader scale. They provide the opportunity for us to directly witness our dollars at work, as well as donate our own time if we so wish.

These charities tend to be much smaller than other charities. In one case, it is an organization that provides fulfilling living conditions for physically and mentally handicapped people in a specific community. In another case, a small, independent food pantry that provides food to people below certain incomes that actually work for a living – they target minimum wage earners with families, mostly, and provide them quite a bit of free, fresh food. In both cases, the organizational structure behind each of these is small.

These charities also enable us (and very close relatives of ours) to directly donate time and talent, as well. In every case, the charities are local enough that my wife and I – or members of our immediate families – can directly volunteer or work for these groups. This means that we have the clear opportunity to do even more than before – and spend our volunteer time and money working for the same goals.

In my eyes, the benefit of supporting local charities is the greatest of all because you can directly witness their good work – and even participate with your own effort quite easily. Because of this, our charitable donations next year will be much larger and focused on small organizations within communities where my family and I can potentially not just make a financial contribution, but a personal one as well.

I guess, in the end, Your Money or Your Life had a broader impact on me than I would have ever guessed.

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  1. Jim Lippard says:

    While I agree that there are benefits to giving to small local charities, you should also keep in mind that even small donations can have an enormous effect on lives in developing countries that is far more significant to those individuals than the same amount of money is likely to have locally in the United States. You should consider a small donation to a highly efficient charity like AmeriCares or PATH that makes such a huge difference in the lives of people whose state of impoverishment is unknown in this country.

  2. Looby says:

    I tend to agree with Jim, I mostly donate to a local hospice (where a family member works and where several family friends have been patients). A national level cancer research organisation and guide dog (seeing eye dog?) charity. And international medical charities like MSF or the Red Cross which does a lot of good public health work like providing clean water. I know my money goes further there. Also while it is great to see first hand how your donation is helping your community, I don’t think that is the most important aspect of charity and people should look outside their immediate area and help those in other countries as well if they can.

  3. Trent Hamm Trent says:

    The problem I have with donating to charities that provide benefits in other parts of the world is that I have no idea whether my donation is having an impact – I essentially have to trust the word of the organization that I’m donating my money to. I cannot actually ~see~ the benefit.

  4. Smart. Healthy. Rich. says:

    It sounds to me like you’re making the right move Trent. Making larger donations to local charities that you have much more involvement in makes sense, and like you said in the comment above, this way you get to directly see the impact that your donations have.

    – Brandon

  5. Looby says:

    I understand that giving to a large international charity requires a certain amount of trust that they will use your donation well. But a quick google search provided several charity watchdogs and ratings guides that will tell you what percentage of each dollar raised is actually spent doing good, amongst other things. These sites include charitynavigator.org and charitywatch.org. I would also recommend checking your local charities through a site like this. My only concern is that more people will give only to local charities and international charities and those they help will suffer. Maybe if you need “proof” you could find out if there is someone in your area who is going abroad with a charity, you could provide sponsorship to them, they often have websites to show people what they are doing, or give talks when they return to their community. I have a friend who went to Malawi to help set up a village school and vaccination programme and regularly posted updates on a website that anyone who helped sponsor her could access.

  6. Susy says:

    I agree. We donate 10% of our income to a religious mission that working in S. America. Our money helps educate poor children and gives scholarship for college to poor youth. We’ve also visited several times to meet people and to make free publicity videos for them.

    We want to only donate to 1 or 2 charities and also be involved in the organization. We don’t want to resort to just sending money.

    Often times donations of time are more valuable than donations of money!

  7. Johanna says:

    Trent, are you sure you don’t mean that you can’t actually see the -problem-?

  8. sk says:

    Jim is right about the efficiency factor. What you can do to support local causes is give to the local Red Cross with a memo that they support the local fire victims or blood drive etc. This way your $ gets max benefits because the costs are low and it supports locals. ARC generally likes unrestricted funds so they can be the best judge of how your $ is spent. Your local food bank or PBS station are also good options.

  9. Ruth says:

    What a timely subject, Trent! I’m just about to sit down and figure out what I’m going to do with my charity donations this year and next year.

    For those of you considering how to evaluate a charity or other nonprofit, I urge you to read and think about this post by the President of the D.C. Central Kitchen. I work in a medium-sized (about 125 employees) local nonprofit, and I can tell you that it’s often disheartening for our frontline staff to realize that their financial situation isn’t necessarily any better than that of the needy clients coming through the door. Administrative overhead does have value, especially when it goes into things like staff salaries, health insurance, and retirement funds. How can a nonprofit fulfill its mission to make its community a better place when it can’t provide a living wage or adequate health insurance to its staff, who are members of that very community?

  10. kevkev says:

    I give all my charity money to Uncle Sam
    Then he gives the most wealthy tax breaks,
    and sends my charity money over to the Military Industrial Complex, so the wealthy make more money and get more tax breaks.

    George W. Bush has killed over a Million Humans!

  11. shadox says:

    A few larger donations may be better from an efficiency perspective – since there is a cost for managing and process donations received. If you make fewer transactions, the administrative costs (to the charities) associated with your donations may be lower. Just a thought.

  12. Brian says:

    While I do agree that charitable donations are a good thing, I don’t understand why anyone with any amount of personal debt would make any donations until their debt is paid off. What’s the rationale?

  13. Jay says:

    We have a tight budget ourselves and thought about this quite a bit. We ended up making the decision to give $10/month to the Ten Dollar Club (http://www.thetendollarclub.org/), an international poverty alleviation group which has no overhead and operates under the principle that many people giving a little ends up having a dramatic difference. We receive monthly [lengthy] emails about each month’s project, describing the conditions in that month’s country and the need for our funds. The projects range from education support (for example, 372 people gave $3720 to fund a support group for girls’ education in Senegal in October), to capitalization for buildings to educational programs to health care/support. There are frequently follow-up emails and photos showing progress of past projects.

    I really like the idea of channeling the idea of the “latte factor” into a pool of funds to assist people. Our $120/year could not have anywhere near the impact by itself that it does via this group.

    With that said, I look forward to being able to do more charitable giving, both domestically and internationally, in the future.

  14. Imelda says:

    I think the rationale, Brian, is that most people in debt in this country still have significantly higher standards of living than those who live in true poverty.

    When you think about it, there’s no difference between debtors who give to charity, and people with no debt who give– both are choosing to use a portion of their money (of their goals, of their “future”, as Trent would say) to help others. Everyone could use more money. But the poor could use it more than most.

  15. Margaret says:

    Imelda is exactly right. I support several charities, most of them helping children in developing countries. Whenever I think about cutting that out so I can pay off my debts faster, I just can’t help but think how much better off I am than those kids. Even if I went bankrupt and lost everything, my living conditions would still be far superior to those in developing countries. If I stopped my charitable giving, I would feel like I was telling them sorry kids, no food for you because I eat out at restaurants too often.

  16. Marcus says:

    Might I recommend a book “More Sex is Safer Sex: The Unconventional Wisdom of Economics” by Steven E. Landsburg? The book contains a very good economic-based argument for what has become my point of view, namely that if a charity is most worthy of having your first dollar donated to it, then if there are no intervening changes in your philosophy of values or the charity’s initiatives, then that charity is still the most worthy of having your second dollar donated to it. Taken to fruition, it supports the idea of large donations to a few, few meaning one.

    The book also provides interesting considerations of various charitable actions. For example devoting time or receiving benefit from a donation are not economically equal to donating a dollar and receive special consideration.

    The title of the book is strange, but I think that it is very provocative.

  17. Helen says:

    I donate to Greenpeace, a direct debit every month. This is something I care passionately about, and it makes me feel less ‘useless’ in the face of the problem – I’m making a small, but solid contribution. For me it isn’t just about tree-hugging but protecting the world for future generations – the poorest people are the ones who will suffer most from climate change and forest degradation.

    It was interesting to read your comments that charities are ‘set up’ for small donations – I’ve often thought if my odd couple of dollars here and there to various street fundraisers were wasted.

  18. Angela says:

    “In another case, a small, independent food pantry that provides food to people below certain incomes that actually work for a living”

    Unlike all those moochers on welfare, you mean? Yay for myths & stereotypes. I hope one day you may learn to be more compassionate & open-minded.

    I’ll not be returning to this blog.

  19. Stephen says:

    Your post reminded me of this very interesting article that I came across a while ago.

    It makes an excellent case for choosing one charity and focusing your giving.


    Thanks for the blog – keep up the good work.

  20. I read a report from an economist (I am sorry, but his name fails me now) in which it was argued that you should focus your efforts on one charity alone, if you want to make an impact. His argument convinced me , either correctly or not, to spend my time and money on one charitable organization.
    Also, the Better Business Bureau operates a website where they evaluate the effectiveness of your charitable dollar to a non-profit. I do believe that for every dollar you give, the percentage to a receipient should be greater than the administration cost.

  21. speedy says:

    Angela is missing the point. Our local food banks have a cutoff point for income, and if you are above that cutoff point, you are not permitted to receive food. One of my co-workers was turned away a few years back because her income was “too high” even though she had lost her job and her unemployment payments had not yet started, and she was completely broke! When she asked if there was another pantry she could go to, the worker told her that all the food pantries used the same standard and she would be turned away.

    I support a few local charities, and for helping abroad I loan money at no interest to people through a microloan program (www.kiva.org)– I can choose the projects I fund, so the money will not be used to support projects that are contrary to my values (e.g. I am vegan so I do not wish to loan money to someone who raises livestock or has a butcher shop). I also am able to see photos of the people I am loaning money to and read about what they do. Sometimes a hand up is as good as a handout!

  22. kim says:

    A very interesting discussion here, Trent. Some people seem to have missed the point, which is that you sat down and discussed where your money should go and focused your giving to groups you care about. I think many of us simply give a little to every good thing that comes in front of us, never thinking about where our money should go. After all, who doesn’t want their name on a balloon or a shoe of whatever paper notice they give at the checkout stand for our dollar toward the charity of the month. You feel like a jerk telling the checker, “No, I think I’ll keep my dollar.”

    That being said, I frequently turn down donations to worthy causes (even in the checkout line), not because they aren’t good, but because I know the things I care most deeply about.

    One of the frustrating things about giving a little money to a lot is that you get on the mailing list and before a few months have passed you wonder if they haven’t spent nearly every dime of your gift entreating you for more. The printing and mailing costs alone bother me.

    Much of my giving is through my church and our benevolence and mission work to impoverished souls right here in the US, but I support One.org to help alleviate poverty and disease in parts of the world that have been ravaged by war, gross poverty, disease and evil leaders who care nothing if their people are starving and dying. I support local charities in ways that make sense to me and for causes that mean the most to me, like the Children’s Hospital that helped both my niece and a friend’s little boy following traumatic brain injury.

    I keep a jar for change that goes to one cause I feel strongly about and it is one way to give in a fairly painless way.

    As for the question, why give if you’re in debt? I cannot spend all my money digging myself out of debt. We still eat out with friends on occasion and see the occasional movie, buy the occasional book. If I am willing to treat myself, why would I withhold charity to those who most desperately need it so that I can get out of debt just the tiniest bit faster?

    At the moment, however, we are treading water, and due to a job loss and other unfortunate circumstances are simply keeping our head above water. We are not currently paying down debt, we are staying afloat, and scraping out a bit for fun and a bit for charity. Giving to others reminds me that our situation isn’t as dire as it feels. I am reminded that I have a roof over my head that would be the envy and delight of much of the world’s population. I am reminded that the food budget that is so tight would still feed many children in developing nations. I am reminded that while I struggle to fill my tank, others walk everywhere they go and may not have shoes. It puts things in perspective, so it is good for those to whom the charity goes and it is good for me as well. Win-win.

  23. Kaye says:

    I also favor a targeted approach to giving. If you have a few organizations that you can give a larger amount to, you are more of a stakeholder. You have time to read all the literature, get to know the principals, and be more involved. If you focus on a very few, you can volunteer personally, even if the work is far away.

  24. Betsy says:

    Great question. The argument against lots of small gifts is that each gift generates overhead costs for the charity – processing, acknowledging, record keeping, etc. In some cases it lands you on a mailing list and they spend way more than one’s small donation on you, so it’s a net loss.
    The flip side argument, especially for non-profits which are funded by foundation money, is that the larger the donor base they can demonstrate to funders, the more credibility they have. So they like having lots of donors, even if they are contribute small amounts.
    My husband and I have been tithing – I have written about our strategies and thinking:
    My son has adopted this habit and you can see how he distributes his gifts and how he makes the decisions (you don’t always get to look into someone else’s check book!):

  25. Jim Lippard says:

    Trent: “The problem I have with donating to charities that provide benefits in other parts of the world is that I have no idea whether my donation is having an impact – I essentially have to trust the word of the organization that I’m donating my money to. I cannot actually ~see~ the benefit”

    PATH actually arranges trips for donors to travel to remote parts of the world to see the effects their donations have.

  26. Dawn says:

    Sometimes making smaller donations is for personal political reasons. A co-worker you are close to asks, a business organization is doing a fundraiser, your niece or nephew’s school. In a lot of these cases, their goal is to get a certain number of people to participate (at least 80% or at least 20 donations per person). In some cases, they can’t participate in the event unless they do.

    Because of that, I tend to give $20 to each of these. The people trying to fund raise really appreciate it because it takes the pressure off of them, and I build good will from the act of making the donation as well as donating to a worthy cause, even if it’s not one I would ordinarily think to donate to.

    That said, my husband and I also make a couple of larger donations to organizations that are close to us each year.

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