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Chapter 4: Giving Wisely

Maximizing the impact of your charitable donations

Why Giving Strategy Matters

Not all charities are equal. Some save lives for hundreds of dollars; others spend thousands with minimal impact. The difference between a highly effective charity and an average one can be 100x or more in cost-effectiveness.

This isn't about being stingy—it's about caring so much that you want every dollar to count.

The Effective Giving Mindset

Think Like an Investor

Warren Buffett doesn't spread his money across random stocks and hope for the best. He researches carefully and concentrates on his best opportunities. Your charitable giving deserves the same rigor.

This means: - Researching before giving rather than responding emotionally to every appeal - Concentrating donations on your best opportunities rather than giving $20 to everything - Measuring impact rather than just intentions - Updating based on evidence when you learn better approaches

Emotional vs. Effective Giving

When tragedy strikes—a disaster, a viral story—the impulse to give immediately is strong. That impulse is good! But acting on it effectively requires a moment of reflection:

  • Is this the highest-impact place for my money right now?
  • Is there overhead from rushed giving (inefficient organizations, fraud)?
  • Would my money do more good somewhere else?

One approach: Maintain a giving budget (monthly or annual). When emotional appeals hit, acknowledge the impulse, then decide whether to redirect some of your planned giving or stick with your strategy.

The "Warm Glow" Problem

Giving makes us feel good. That's fine—but don't let good feelings substitute for good impact. The $20 you gave to a homeless person on the street may have felt meaningful, but it might do 10x more good at an effective homelessness organization (or 100x more at a global health charity).

This doesn't mean never give impulsively or locally. Just be aware of the trade-offs.

Evaluating Charities

The Big Three Evaluators

GiveWell — givewell.org - Focus: Global health and poverty - Approach: Deep research, cost-effectiveness analysis - Best for: Donors who want maximum impact per dollar - Key recommendations: Malaria Consortium, Helen Keller International, GiveDirectly, Against Malaria Foundation - Standout: GiveWell estimates cost-per-life-saved for top charities (roughly $3,000-$5,000)

Animal Charity Evaluators — animalcharityevaluators.org - Focus: Reducing animal suffering - Approach: Rigorous evaluation of animal advocacy organizations - Best for: Donors prioritizing animal welfare - Key recommendations: The Humane League, Wild Animal Initiative, Faunalytics

Charity Navigator — charitynavigator.org - Focus: Broad coverage of US nonprofits - Approach: Financial health, accountability, transparency metrics - Best for: Quick check on whether an organization is legitimate - Limitation: Doesn't measure actual impact—just organizational health

GuideStar (Candid) — candid.org - Focus: Nonprofit transparency - Approach: Database of nonprofit financials, governance - Best for: Due diligence on specific organizations

Red Flags to Watch

  • Excessive overhead: While overhead isn't everything, charities spending less than 65% on programs warrant scrutiny
  • Vague impact claims: "Helping thousands!" without specifics is a warning sign
  • Pressure tactics: Legitimate charities don't need high-pressure fundraising
  • Lack of transparency: Good organizations share financials and impact data freely
  • Celebrity-driven with no track record: Star power doesn't equal effectiveness
  • Post-disaster pop-ups: Be cautious of organizations without pre-existing infrastructure

What to Look For

  • Evidence of impact: Do they measure outcomes, not just outputs?
  • Cost-effectiveness: How much good per dollar?
  • Room for more funding: Can they actually use more money productively?
  • Track record: Have they delivered results over time?
  • Transparency: Do they share successes AND failures?
  • Accountability: Independent board, audited financials?

Cause Prioritization

Where should you give? This is deeply personal, but here's a framework for thinking about it:

Scale × Neglectedness × Tractability

Effective altruism uses this formula: - Scale: How big is the problem? - Neglectedness: How little attention/funding does it receive? - Tractability: Can we actually make progress?

By this framework, causes like global health (huge scale, proven interventions, underfunded relative to impact) often score higher than causes that are already well-funded in wealthy countries.

Cause Areas Worth Considering

Global Health & Poverty - Extremely cost-effective interventions exist - GiveWell's top charities save lives for ~$3,000-$5,000 - Examples: malaria prevention, deworming, vitamin A supplementation, direct cash transfers - Room for more funding remains enormous

Animal Welfare - Factory farming affects 70+ billion land animals annually - Very neglected relative to scale - Corporate campaigns have proven track records - Standout: Advocacy may be more effective than direct animal care

Climate & Environment - Existential risk potential - Highly tractable through policy and technology - More funding available than some causes, but still critical - Consider: Clean energy advocacy, policy work, carbon offset (with caution)

Global Catastrophic Risks - Pandemics, nuclear war, AI safety - High stakes, relatively neglected - Funding: Open Philanthropy, Founders Pledge recommendations

Local Causes - Less cost-effective by strict metrics, but valuable for community building - Your donations may have more influence locally - Consider blending: significant global giving + meaningful local giving

A Suggested Giving Portfolio

You don't have to give everything to one place. Consider:

Category % of Budget Purpose
Maximum impact (GiveWell top charities) 50-70% Save/improve the most lives
Cause you care about deeply 20-30% Personal connection and meaning
Local community 10-20% Direct community investment
Responsive giving 5-10% Buffer for urgent appeals

Giving Vehicles

Direct Giving

Simplest approach: Donate directly to organizations. Works fine for most people.

Donor-Advised Funds (DAFs)

A DAF is like a charitable savings account: - Contribute money, get immediate tax deduction - Invest the balance, grow it tax-free - Grant to charities whenever you want - Offered by: Fidelity Charitable, Schwab Charitable, Vanguard Charitable

Pros: Tax efficiency, easy record-keeping, can smooth lumpy income Cons: Money is committed to charity, can't take it back

Consider a DAF if you: - Have a year with unusually high income - Want to separate "deciding to give" from "deciding where" - Give more than ~$5,000/year

Giving Circles

Pool money with others to learn and give together. Many communities have giving circles; search locally or check Philanthropy Together.

Workplace Giving

Many employers match charitable donations—free money! Always check if matching is available. Some companies also offer payroll giving for convenience.

Practical Giving Tactics

Set a Budget

Decide in advance what percentage of income you'll give. Options: - 1%: "Giving What We Can" trial pledge - 10%: Traditional tithe, "Giving What We Can" full pledge - Custom: Whatever's sustainable for you

Having a budget prevents both guilt-driven over-giving and lazy under-giving.

Automate

Set up recurring donations to your chosen charities. Monthly giving: - Smooths out your budget - Provides reliable income for charities (they can plan better) - Reduces decision fatigue - Happens even when you're busy

Batch Your Research

Don't research every appeal. Do giving research once or twice a year: 1. Review your giving budget 2. Research any new organizations you're considering 3. Decide allocations for the year 4. Set up automatic donations 5. Politely decline most other appeals with "I've already planned my giving for the year"

Track Everything

Keep records of: - What you gave - To whom - Why - Tax receipts

See our Donation Tracker Template.

Common Mistakes to Avoid

Giving to Overhead Instead of Impact

Don't reflexively avoid charities with higher overhead. Sometimes spending on good staff, systems, and fundraising produces MORE impact. Evaluate results, not expense ratios.

Spreading Too Thin

$10 to 50 organizations helps no one much. Better to give $500 to one excellent organization than $10 to 50 random ones.

Panic Giving After Disasters

Major disasters attract massive donations, often exceeding what organizations can absorb. Meanwhile, ongoing crises remain underfunded. Consider: - Giving to organizations with existing disaster infrastructure (like Doctors Without Borders) rather than pop-up efforts - Directing some "disaster giving" to GiveDirectly, which can redirect to affected regions

Letting Guilt Drive

Give from abundance, not guilt. Guilt-driven giving leads to resentment and burnout. Find a sustainable level and feel good about it.

Resources for Effective Giving

Taking Action

This week: - Look up one charity you currently give to on Charity Navigator or GiveWell - Check if your employer offers donation matching

This month: - Set a giving budget (even if small) - Choose 1-3 organizations based on research - Set up automatic monthly donations

This year: - Consider taking the Giving What We Can pledge (1% to start) - Track all giving and evaluate impact annually

Next: Chapter 5: Crisis Response — How to help when disaster strikes