The economics of donating to charity


One of the speakers at TEDxCanberra this year, global poverty advocate Stephen Walker raised the issue low donations to charity in Australia. He says from every household, there is only 34 cents from every $100 is given to charity. In concluding his speech he asked Australian’s to challenge themselves and donate 10% of their wage to charity. It’s a very confronting suggestion indeed, so why aren’t we more charitable?

With so many charities around the world, how do you choose who has the most deserving cause? Is it the one who has the PR department and can produce the best video to pull on your heartstrings and get you to pull out the cash? Or do you actually spend the time and effort to scour through the thousands of potential charities to appropriately rate the need for money vs the potential good that can come of donating to that charity, then assign your dollars accordingly?

I believe one of the largest issues is the lack of transparency in where your dollars go. A donation to a person who knocks at your door or to a website gives you the warm and fuzzy for those few seconds. Sometimes you receive a picture of the African child you helped clothe. But how do you really know where your money got spent? What percentage of it got used to actually help people versus administration costs? The problem is you don’t know.

Some charities are getting better at reporting this information like Charity Water’s dollars to projects initiative, but they are few and far between. I believe it’s only when we can see our dollars are making an impact on the ground that we will provide ongoing donations. I think we’re past the days of saving an individual, we need to tackle the core issue.

Let’s say you donate enough money to save a starving girls life. Amazing right., but what happens when that girl grows up and has 6 children of her own that she can’t feed? The problem just got 6 times worse. The reasons why someone would bring children into the world that they can’t sustain are incredibly broad. Sometimes its as basic as lack of contraception, religious or cultural pressures or sometimes they may just want more babies because they know a % will not survive.

If you’ve ever seen some of the work that Bill and Melinda Gates are doing at the Gates Foundation, that’s real change. Education and behavioural change, two of the hardest problems to solve. Surely a charity that doesn’t only help the people who are dying today, but those that have the power to stop people being born into poverty or dying tomorrow are the best places to put your money. It’s your best opportunity to make the biggest long-term impact with every trackable dollar you donate.

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This post is authored by techAU staffers. Used rarely and sparingly when the source decided to keep their identity secret, or a guest author who isn't seeking credit.

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