Choosing Effective Charities

Effective Philanthropy Gift Trust news

When I tell people about my job, the most common question people ask is “What are the best charities to donate to”? There are so many good causes to support and people often find the choice overwhelming. Here’s my guide to help you navigate.

When I tell people about my job, the most common question people ask is “what are the best charities to donate to”? It’s a very good question as there are so many good causes to support and people often find the choice overwhelming. We all want to know our dollars are making a difference, so finding charities that are effective is important. So how do you choose? 

The simple answer; I don’t have a magic list of the best charities to give to. What you might think of as the best charity, or the most effective, may be very different to me. It’s a very personal choice and depends on how you choose to measure effectiveness. Here are some ideas to consider to help you choose where to put your generosity.

#1. Start with your values

The best charities to give to will be ones that resonate with your personal dreams and wishes. What change do you want to make in the world? What are your beliefs, hopes and aspirations? And how do you think that change should be made? 

#2. Research

Once you’ve defined your values and the sectors of charitable work you are interested in, do some research to find the charities working in that area. The Gift Trust can help you to do this if you donate through us. You could start with the Charities Services website which has a searchable database of all charities in NZ. If you are giving internationally then GuideStar and Give Well are excellent resources for charity research. Once you find charities you are interested in make sure you dig deeper than simply their marketing materials – read their financial accounts, annual report and ask about their impact.

#3. Put your thinking cap on

Do you want to address the root cause of a problem (eg: lack of affordable housing can lead to homelessness), or would you rather help the immediate need (eg: providing homeless hostels or soup kitchens). Both are needed and one is not better than the other.

  • Consider supporting the unpopular causes that don’t attract much funding, or filling in the funding gaps.

  • Don’t be afraid to take risks in your donating. New organisations, or an unproven but great idea, could be worth supporting. Especially because these untested organisations will struggle to find donations from the government or institutional funders.

  • Consider your own prejudices and background and that you’ll only see the issues from your own perspective. This perspective may be very different than those you’re seeking to support. So it’s always worth speaking to the charities about what their beneficiaries need, not what you think they need.

  • Boost your giving IQ – here is a great resource kit to help you set your direction:

#4. Dispel the myths

It’s important to address some of the myths about charity effectiveness. Here are some common myths that crop up when people talk about finding effective charities.

“I don’t want any of my donation to be wasted by the charity on administration or staff costs. I want 100% of it to go to the good cause”

I’ve heard this a lot. But it’s a little like walking into a cafe and saying you’re only going to pay $2 for your flat white instead of $4 because you know the other $2 is ‘wasted’ by the cafe on staff costs and administration like doing their accounting, paying their rent and WIFI. But without those things the cafe wouldn’t exist. It’s the same with good charities. Staffing and administration are not wasted costs, they are essential if a charity wants to solve the problem they’re working on and do it effectively. For example, a charity that runs soup kitchens for the homeless needs to pay rent for its premises, submit its annual accounts, have a telephone and internet connection in order to do its work. Staff costs are also important and good people are at the heart of what most charities do. Very few charities can rely solely on volunteers and paying a decent living wage to attract and retain good staff is important. These things are not wasted and we as donors should be happy that our funds are used towards this as much as for the charity’s core work. 

Instead of asking how much a charity spends on administration, a better question to ask is – “What results do they achieve?” If they achieve amazing results, does it matter how much is spent on administration? If you want to dig deeper into this topic, check out Dan Pallota’s TED talk here. 

“I don’t like to support charities that spend money on fundraising and glossy marketing campaigns.”

This is another tricky one. To do the important work they need to do, charities need funding. And to get funding they need supporters. This often means they run fundraising and promotional campaigns. Some people get annoyed by this because they think these organisations should be spending their money on their cause, not on promotion and fundraising. But if these organisations want to make an impact on their cause then fundraising is essential. Good charities should be signed up to the Fundraising Institute of NZ which has an ethical standard of fundraising, and you can ask them if they are. You may of course want to check the ratio between the amount charities spend on fundraising and the amount they spend on their cause and that is a useful question to ask or you can check their financial accounts.

If you want to dig deeper into this topic of fundraising and charities, I recommend checking out Dan Pallota’s TED talk here.

#5. Final thoughts…

If you’re generous and want to support good causes it won’t be difficult to find effective charities. Stick to your values, do some research, ask the charities questions. Perhaps start with a smaller gift and then increase it once you get to know the charity better and see what they can do. But ultimately, remember that it’s a question of trust – do you trust this organisation to do good work with your funding? If you do, then trust them to spend those funds wisely.

The Gift Trust can help you shape your thinking and give direction if you donate through a Gift Account. Contact us to talk further.

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