Maximize the effectiveness of your charitable donation

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It is a challenge to make sure that your donation is effectively being used. Americans gave $358 billion to charity in 2014, estimates the Giving Institute, a Chicago-based nonprofit that seeks to promote philanthropy. If you’re about to donate at, new ways of thinking about charity can help your gifts go farther.

As I describe in my book, The Confident Investor, you should take care of your fellow man. I strongly encourage you to donate 10% of your after-tax income to help others. This investment in mankind may be your more most important investment. While you may want to be scrooge and hoard all of your earnings for yourself, but the joy and inner peace of helping those less fortunate can be more rewarding than just a few lost dollars.

You should manage your donation much like an investment portfolio, says John List, an economist at the University of Chicago who studies charitable giving. Many donors have long given from the gut, contributing to whichever charities make them feel best. But, says Prof. List, you should instead decide whether you want to spread your bets or concentrate on one or two holdings. Don’t let emotion alone shape your decisions. And, above all, do your homework before you send any money.

On its website, GiveWell provides helpful sets of questions you can ask a charity before you make a donation. So, instead of just writing a check, first ask the staff of the charity questions like these: Exactly what are your programs trying to accomplish? Which published, peer-reviewed studies demonstrate that your approach is likely to succeed? What data do you collect on how satisfied your participants are with your programs? What specific measures do you use to track whether your work is succeeding? How do you follow up later with participants?

Source: Don’t Let Your Charitable Donation Go to Waste

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