A young boy makes a donation into a Salvation Army kettle outside a Giant grocery store in Clifton, Va., Nov. 24, 2012.
'Tis the season for giving: Soup kitchen volunteers, Toys for Tots, and bell-ringing Santas abound. Goodwill toward humanity is widespread during the holidays, but before emptying their change jars and drawers of used clothing, donors might want to do some cost-benefit analysis. Below, experts explain six ways to make holiday donations more cost effective.
1. Donate like an investor: "Can you imagine if you were an investor in Apple, and you said, 'Well, look, I'm going to invest in your company, but only if you use my funds for the next iPad release'?" says Katherina Rosqueta, executive director of the Center for High Impact Philanthropy at the University of Pennsylvania. That would mean that if Tim Cook woke up tomorrow with the next big idea, the investor's money would be walled off for use in a potentially less profitable project.
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Likewise, donors' restrictions on how their money can be used create inefficiency for charitable organizations. Rosqueta explains that a donor might, for example, tell an organization that his or her donation can only be used for fighting illiteracy in North Philadelphia.
"What happens if another program is serving those kids better in North Philadelphia, and the real need happens to be in Southwest Philadelphia?" The lesson is that donating to a charitable organization may best be done like a small stock transaction (albeit without the personal gain aspect): The donor buys into a trusted company hoping for a good return on investment, but the organization does as it chooses with the money.
2. Consider cash instead of used goods (or at least call ahead): Often, money can go farther than donations of goods, particularly when a donor doesn't know exactly what a charity organization needs.
"You certainly want to check with the charity first," says Sandra Miniutti, vice president of Charity Navigator, an organization that evaluates charities. While organizations sometimes do ask for donated goods, she says, people often want to give used items, such as furniture and clothing, for which the charity has little use. That can mean extra time and money spent finding a place for those items (or getting rid of them).
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"We get clothing donations that we can't use at that time," says Kristin Valentine, chief development officer at Bread for the City, a nonprofit that serves the poor in the Washington, D.C. "It's December and folks are donating their shorts and T-shirts, and it would be really great to get winter coats and sweaters. We have a small room and nowhere to put this, and it actually costs us money to figure out what we then can do with this."
Many organizations have lists on their websites of the types of items they are seeking. And for people who simply prefer giving goods over cash, some charities have wish lists on sites like Amazon, allowing donors to purchase entire cases of needed supplies. And, Valentine points out, her organization has received many useful donations, such as subway farecards with value still on them, but those gifts have been especially welcome when donors asked first if Bread for the City could use them.
3. Don't purge your pantry: The money-versus-goods conundrum is perhaps nowhere more apparent than in the area of food donations.
"We can just purchase so much more food, and healthy food, at the time when we need that food, if someone gives us a dollar versus if they go to Giant [or another grocery store] and spend a dollar," Valentine says.
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Food pantries often can buy surplus goods from the food industry for pennies on the dollar, meaning that a $10 donation can buy 20 times that amount of food.
In addition, food pantries are often looking for donations that cater to their clients' health needs; high-sodium or high-sugar offerings may not fit that bill. Valentine stresses that her organization is pleased at people's generosity, but donations are often the kind that the pantry cannot accept.
"It's very common [that] a minimum of 50 percent of the food that someone will collect in a food drive are food donations that we cannot give out in our pantry," she says.
4. Consider what your skills are worth: A lawyer or a web designer might feel fulfilled ladling bowls of soup, but in labor market terms, she also has much more valuable skills. Many organizations require high-cost skills that they may not be able to afford, Miniutti says, like attorneys to look over and negotiate contracts with vendors. Likewise, doctors working pro bono can be very helpful for organizations helping people who cannot afford healthcare.
5. Think about value, not dollars: That doesn't mean everyone should give as much money as possible to every charity, no matter what. It does mean, however, that cheaper isn't necessarily better.
"Low-cost is not the same as cost-effectiveness. For example, the cost part is meaningless unless you have any sense that what you're paying for is actually making any difference," says Rosqueta of the Center for High Impact Philanthropy. For example, one charity might have a $20 suggested donation, while another place might suggest $50.
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"If the $50 organization is actually making a bigger difference in the lives of the people you want to help, and the $20 one, there's no indication that they're making any difference, the $50 is more cost effective, even though it's a higher cost," she says. "Cost effectiveness matters once you understand that the nonprofit is actually making a difference."
6. Do the math (but don't get hung up on it): More often than not, Miniutti says, phone solicitors asking for donations work for for-profit firms, not the charity organizations themselves. That means that a cut of a donor's money will go to that firm.
But there is a flip side to that kind of thinking: Rosqueta points out that it's a mistake to get hung up on what percentage of a donation goes toward what kind of work, especially without considering how much good is actually done.
"It's focusing entirely on input without understanding what's the result of it," she says. "It would be like choosing a chicken soup based on the amount of chicken stock that went in."
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Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter @titonka or via E-mail at dkurtzleben@usnews.com.
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