Afford Anything - PSA Thursday - Your Guide to Giving: How to Donate, Volunteer and Practice Spontaneous Kindness

Episode Date: May 29, 2020

Let's start with the good news: the majority of U.S. households, 6 in 10, donate money to nonprofits and charities, and 1 in 4 adults in the U.S. volunteer their time and talent. The only way our society is going to get through the struggles and the stresses that we face is if we are good to each other. Compassion and common humanity are crucial. In this PSA episode we discuss strategies around giving, including how to donate money and volunteer time effectively, as well as how to embrace the opportunity to practice informal, random, spontaneous acts of kindness. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Welcome to PSA Thursday, a special bonus weekly segment of the Afford Anything podcast in which we talk about how to handle life, money, and work in the middle of a pandemic. My name is Paula Pan. I am the host of the Afford Anything podcast. These weekly segments, which come out Thursday-ish, otherwise sometimes known as Friday, are short, stripped-down bare-bones episodes. There's no fancy intro music or outro music or sound effects. We don't run ads. We just do a focused episode where we deep dive into one particular topic and today we're going to talk about giving because certainly the only way our society is going to get through all of the struggles and the stresses that we currently face is if we are good to each other. At the end of the day it comes down to that and so I'll kick off today's episode with a quote from Mr. Rogers, Fred Rogers, who said, quote, when I was a boy and I would see scary things in the news, my mother would say to me, look for the helpers. You will always find people who are helping, end quote. And so today, let's talk about how we can be those

helpers, how we can support our neighbors, support our community, support people across the world, and support people in our own backyard. But let's kick off by starting with a conversation around formal giving. Now, that's not the only thing we're going to talk about today. We're also going to discuss volunteer work, as well as informal giving, ways that you can informally, spontaneously support your neighbors in your community. We're going to discuss all of that, but we'll begin with charitable donations, formal and structured giving of money. And here we find good news, which is that the majority of American households regularly donate to charity. Around six out of 10 U.S. households routinely give to charity, according to the Center of Philanthropy at Indiana University.

And contributions from households make up the bulk of nonprofit budgets. It's very easy to think of philanthropy is something that's done only by the very wealthy or by big foundations or by very prosperous companies. But using stats from 2014, which admittedly is a long time ago, six years ago, in 2014, there was $358 billion that Americans gave to charity. Of that money, only 14% came from foundation grants and 5% came from corporations. The rest of it, 81% of those donations came from individuals came from households. And that is according to the Philanthropy Roundtable. So when you talk about the 80, the 80 aside of the 80 20 is the support that each and every one of us, people like you and me, give to the groups that are doing the type of work that we want to see in the world.

So how do you find and evaluate these groups? We're going to discuss two different approaches. First, there is what some people refer to as the traditional model of finding and evaluating nonprofits. That is the model of going to websites like Charity Navigator, which evaluate the performance of nonprofits based on their financial health and their accountability and transparency. So groups like Charity Navigator will take a look at how much of a donation goes to overhead versus how much of a donation goes to fulfilling the mission of the group. They'll look at whether or not the group can execute their mission in a fiscally responsible way. They'll look at systems that the group has put in place in order to minimize. the chance of unethical activity happening internally. And based on all of that, they then assign a score to that nonprofit organization. In fact, they assign two scores. They assign one score for financial health.

They assign a different score for accountability and transparency. And those two scores combined can, in theory, be as high as 100. So it's a 100 point scale. Less than 1% of the many thousands of charities that they evaluate earn perfect 100 scores. But on websites like Charity Navigator, you can then look at the scores and the financial data of different organizations to decide where you want to lend your support. Now, this model has some drawbacks. There's only so much that a financial scorecard can tell you. So, for example, if you go to Charity Navigator, let's say that you're interested in giving to a group that works with animals and that is run in a fiscally efficient way. You go to Charity Navigator, go to the category of animals, and run a search for.

for charities with the highest scores, charities with a perfect 100 score, under the category of animal welfare, the very first listing that you'll see is a group called Big Cat Rescue, run by Carol Baskin. So this model has some drawbacks in that it can tell you part of the story, it can tell you the fiscal part of the story, it can tell you the accountability and transparency part of the story. It is certainly a great step towards doing due diligence, but it is not the only only. step. There is still more information that needs to be gathered. And of course, once you gather that information, make your own decision. If you still want to support them, support them. But that example is illustrative of how there are stories, there is depth, there's dimension,

there's complexity to the way that nonprofits are run and to who their leaders are and to the work that they do. And not all of that can be reduced to a scorecard. So how else can we gather data around nonprofits. Well, here is a different approach. In 2006, two hedge fund managers named Holden Karnovsky and Ellie Hassanfeld decided that they wanted to give a portion of their earnings to charity, but they wanted to make sure that it was going to be used effectively. Now, since they were hedge fund managers, they applied their financial analyst framework to their evaluation of charities, and they started trying to perform due diligence, contacting various organizations to ask about cost effectiveness and about outcomes.

In their experience, what they found was disappointing because many organizations responded by sending them glossy brochures and glib reassurances. They realized that many groups simply didn't know the data about outcomes. Many groups weren't tracking such data. Certainly, they had financial data about their spending, which is reflected on their tax returns, but to be able to account for the portion of your budget that goes towards administration versus the portion that goes towards, towards executing your mission, that'll give you a snapshot of the budget breakdown, but it won't necessarily give you data about outcomes. Ironically, what Karnovsky and Hassanfeld discovered is that methodically tracking outcomes

requires increased administration, it requires increased overhead. And at the time, given that most charity rating groups were evaluating charities based on the amount that they spend on overhead, charities were highly incentivized, to spend as little money on overhead as possible. And as a result, among other things, that means less data gathering, less outcome analysis. So the focus, the model by which charities were getting evaluated, was a focus on how do we spend rather than a focus on what outcomes do we achieve. And those are two distinct questions. So Karnovsky and Hassenfeld wanted to take a different approach. They wanted to evaluate nonprofits based on data and performance metrics similar to those that they used at

their hedge fund, and they were surprised to find that this didn't exist. So they created a nonprofit called Give Well to provide essentially financial analyst services to donors. Give Well changes the model of nonprofit evaluation by focusing primarily on the cost effectiveness of the organizations rather than those traditional metrics, such as the percentage of the organization's budget that's spent on overhead. Now, admittedly, this approach, of course, has huge problems. So for one thing, their evaluation is biased only towards quantifiable and measurable outcomes, such as, for example, the number of lives that are saved by distributing mosquito nets in high malaria regions. That type of change is more quantifiable, more measurable, as compared

with a nonprofit that has a mission that's based around more nebulous outcomes, such as raising awareness, outcomes which are incredibly important yet disregarded under this model. And so Karnovsky and Hassanfeld decided to lean in and embrace those limitations, and they decided that Givewell would be dedicated to evaluating one very specific niche, which is charities that save or improve lives the most per dollar. In other words, they're specifically looking at the cost effectiveness of evidence-backed programs. That means that many great groups are going to be excluded from that list, and that is something that they will readily admit, because their niche, again is how cost effectively are you achieving the result of saving or improving lives the most per dollar.

Now notice that phrasing, save or improve lives the most, not save or improve the most lives. That phrasing is important because in their model, the magnitude of impact is as important as the volume. So, in other words, making a huge life-saving or life-changing impact in the lives of 1,000 people is arguably more important than making some minor marginal improvement in the lives of 2,000 or 3,000. And again, of course, there are limitations to this approach. Certainly, when there are people who are dying of preventable diseases, like people who are dying from cholera, from unsafe drinking water, or malaria as a result of not having adequate mosquito nets, or people who are suffering from preventable blindness and malnutrition,

which could be solved with some vitamin A and iron, groups that address these types of issues, groups that prevent people from dying of preventable diseases, or groups that protect people from easily preventable disabilities, those groups under Give Welles model would be ranked more highly than groups that focus on long-term systemic improvements in things like clean air, clean water, animal welfare, education for underserved communities, mental health, those types of groups often get overlooked by the specific model.

And so stepping back a bit, we've talked about two different models on how groups evaluate charities. On one hand, you've got the more traditional model represented by groups like Charity Navigator, in which they look at budget allocation. And on the other hand, you've got the effective altruism model represented by groups like Givewell, that look at the cost-effectiveness of evidence-back strategies with an emphasis on life-saving. And so zooming out, the question that you want to ask yourself is, how do I want to evaluate charities? Like, what is important to me? It's essentially a question of what are your priorities? Is there a certain cause or a set of causes that you want to support?

Or are you open to various causes and you want to give your money where it has the highest likelihood of doing the most good? do you want to support groups here in the United States or are you interested and open to global giving? There are no right or wrong answers, but this is the starting point for each individual and each household. This is the starting point in terms of thinking about the evaluation model that you will use. That's another way of saying step one is to evaluate how you will evaluate, evaluate what criteria you will use. And bear in mind that different charity evaluation groups use different models, different criteria, different really philosophies and approaches and frameworks to how they evaluate charities. And I highlight the difference between a group like Charity Navigator and a group like Givewell, both of which are excellent and both of which I spend quite a bit of time on each of their websites. But they represent incredibly different models and approaches to nonprofit evaluation.

So that is, in terms of formal giving, that is how you can begin to do research on what groups you want to give to. Now, with all of that being said, if something motivates you or calls you to redirect your resources, your financial resources, your attention resources, your energy, your time, if something is calling you to redirect your resources, your financial resources, your energy, your time, if something is calling you. for you to spend your time, money, energy there, do it. I mean, we've talked for the last 10 minutes, more than 10 minutes about how to evaluate charities. And that's, you know, in a long-term framework when you're thinking about sitting down and making a giving strategy for the year, sure, that research, that evaluation is great. But when you're feeling the fire, when you're feeling that motivation, when things are so bad that you can't imagine not doing something. And you can't imagine not doing something immediately.

Harness that energy. Don't let perfect be the enemy of good. If you're feeling incredible motivation right now to give your time, your energy, your money to the things that matter most, then don't get lost in the weeds. You can get lost in the weeds later. You can get lost in the weeds when it comes to, again, a long-term annual strategy that you're planning. But there are two different forms of giving. There's that soberly thought out strategic giving that is wrapped up inside of a financial plan. And then there's a spontaneous giving that you do just because it feels right.

And if you feel that, don't let analysis paralysis get in the way. Up to this point, we've talked about giving of money. But you can also give your time. And here again, we have good news. one in four adults in the U.S. do volunteer work. That's based on 2016 statistics according to non-profit source.com. So again, that's great news. We've got 25% of the adult population giving their time, their talent, their energy to the causes that they support.

If this is something that you want to do, here are a few tips. Number one, decide what type of schedule you could adhere to. Can you do volunteer work once? a week, let's say every Saturday from 9 a.m. to noon. Is there a particular type of schedule that you can stick to so that you can do something routinely? Make that decision, make those time-related decisions in advance so that you know how much you can dedicate to this, how much you're capable of. That's number one. Number two. Ideally, if possible, do it with a friend because quite frankly, you're likely to stick with it longer if you have essentially an accountability buddy. Because

there are going to be times when you feel like you're too busy, you've got a ton of chores to do, you've got errands to run, you haven't filed your taxes yet for the year, there's so much going on, it's easy to say, you know what, I just can't. But if you have a buddy, it's kind of like having a buddy for the gym. If you have a buddy who you volunteer with, then it helps you stick to that commitment. And if you can't find a friend to do it with you, once you start volunteering, become good friends with one of the other volunteers there. Have that accountability buddy inside of the people that you meet as a result of volunteering. So that's tip number two.

Tip three, check with volunteer clearinghouse organizations in your city or town. So many people often ask what types of volunteer opportunities are available. Most localities have opportunity aggregators. So these are organizations, their volunteer clearing houses that are dedicated to being a centralized source of matchmaking between nonprofits who are looking for volunteer work and individuals

who are happy to contribute. In New York, for example, there's a group called New Yorkcares. New Yorkcares.org. They aggregate volunteer opportunities all across New York. They recruit both rank and file volunteers as well as team leaders, and

their central source of volunteering on COVID-19 relief projects. And those types of COVID-19 projects, those span a huge array of needs ranging from providing tutoring and additional support to students who are learning at home, helping students who are in transitional housing get access to technology so that they can take advantage of distance learning, a virtual learning, making calls to homebound seniors, distributing meals. So there's a wide array of needs. And if you want to volunteer, you can search for opportunities based on location, based on when you're free, or

based on issues that you care about. You can use any of those as filtering criteria. And that's specific to New York CARES, the filtering criteria that they use on their website. But many cities and towns across the nation have their own comparable groups that serve as those aggregators, that serve as those clearinghouses and help match need with people who are willing to fill those needs. So those are three tips for anybody who is interested in volunteering. Number one, commit to a volunteer schedule up front. Number two, do it with a buddy. And number three, search for opportunities through aggregator websites or clearing houses. And before we move on from the topic of volunteering, there's one other comment that I'll make,

and that is that if you are a professional, there are many professionals who volunteer in the form of dedicating a portion of their working hours to pro bono professional services. in terms of hourly value of that volunteer work, those are some of the most highest value hours. So if you are a professional who possesses some of those high dollar value skills, you could do a tremendous amount of good by giving pro bono services. That being said, I also understand that for each individual, there's a limit to how much that you can work in your normal nine to five job. In terms of the demands on your energy, the demands on your hours, the demands on your attention, at some point you tap out. And at some point, there's just a limit to how much you can do within your primary field of work. So if you are feeling that burnout, it's okay to volunteer in some different capacity.

It's okay to do something that is different than your primary occupation if that is necessary for you to not. get burned out. If you're an accountant, providing pro bono accounting services are awesome, but if you're just burned out and you want to drive around delivering meals to the elderly for a Saturday, that's great too. So simultaneously, I want to share the message that pro bono services are highly valuable. And also, if you feel as though you're going to burn out and you just need to do something different, that's also okay. Don't worry about the hour. inefficiency of it, because doing something is better than doing nothing. Finally, let's talk about informal acts of kindness.

A few years ago, there was a big shooting in Las Vegas. The next morning, a huge line of locals lined up in front of blood donation centers in order to give blood as a result of hearing about the shooting and in the news. That giving blood is an example of formal giving, formal volunteering, because of it it's through an organization. But informally, there were a number of people who also spent the entire day just driving back and forth between Costco and that line of people who were lined up outdoors waiting to give blood. So they would go to Costco. They would fill their car with bottled water and snacks and sunscreen.

And then they would drive to the parking lot where everybody was in line to give blood and they'd pass out those. those water and snacks and sunscreen, and then they would drive back to Costco. And they just did that loop all day long. And it wasn't organized. There was no official group that was doing it. This was just a collection of people who all had that idea of, hey, let's help the helpers. I think that's a beautiful example of informal giving. And we see this type of example everywhere.

We see it when someone in our building spontaneously decides to organize a canned food collection just among the neighbors. We see it when someone volunteers to give their neighbor a ride to a group counseling session. We see it when someone offers to go to the pharmacy to pick up a prescription for a friend or a neighbor who's sick. Or when somebody drops off meals in front of their neighbor's doorstep because their neighbor is sick. When I had COVID-19, people did this for me. People left food, literally left food outside of my front door. I live in a condo and some of the people in my building.

left food in front of my door so that I wouldn't have to worry about it. And I had friends who lived out of state who sent me food in the mail. Somebody went and picked up a prescription for me because I couldn't go to Walgreens. I was too sick. So they picked it up for me.

They dropped it off at the front desk of my building. These are informal, friendly, neighborly, community-based actions. They're not organized by any particular group. They're often spontaneous. But they are equally as important as any type of more formal volunteering. In fact, according to the book The Elephant in the Brain, spontaneous acts of giving and generosity, meaning those unplanned acts that arise from seeing a need in front of us,

are more common than planned acts that result from having a giving strategy or a volunteer strategy. Both are important, but the spontaneous acts are more common. They, in many ways, play to our nature. I like to believe our nature is to help. Our nature is to do good. And when there's an opportunity in front of us to do that, to positively make a difference, then embrace that spontaneous opportunity. And so again, zooming out, I suppose the broader message is that the notion of giving or the notion of generosity is far too big to be reduced to only formal change. charitable donations or only formal volunteer opportunities. Both of those are critical. They're crucial. But let's also celebrate all of the people who informally, spontaneously are performing these random acts. It's all of this working together that moves us forward and creates a positive impact. So that is today's PSA Thursday on giving. Thank you so much for tuning in. If you enjoy today's episode, please share it with a friend or a family member. You can access all of the PSA Thursday episodes plus links for sharing at afford anything.com slash PSA Thursday. My name is Paula Pantt. Thank you so much for tuning in. If you want to connect with other people in this community, you can do so at afford anything.com slash community,

where you can discuss today's PSA Thursday episode, which I realize aired on Friday. So sorry, it's the day late. I hope you have an excellent weekend and an excellent week ahead, and I will catch you in the next episode. Thank you.