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Freakonomics: This Christmas, Divide Your Giving Among Fewer Charities

FreakonomicsFreakonomics:  Charitable Giving: Why Fewer Is More:

As any 10-year-old can tell you, multiplication is commutative: 2 x $70 is the same as 70 x $2.

But not in charitable giving, it turns out. Making two donations of $70 is a good deal more valuable to charity than making 70 donations of $2.

The reason lies in the fixed transaction costs. Many charities (unavoidably) get charged a fee for each deposit into their bank account. So two large donations create only two dollops of that fee, whereas 70 smaller donations attract 70 dollops. …

Research by the U.S. Center for Effective Philanthropy
shows that these transaction costs are much higher if the foundation
makes several small grants than if it makes a few large ones of the same
total value:

Median time which charities spend applying & reporting on a grant of:

Amount raised per hour spent

No. hours work in raising & managing $100,000

$10,000

12 hours

$833 /hour

120 (three weeks)

$100,000

27 hours

$3,704 /hour

27   (less than four days)

So when you’re choosing charities to support this Christmas, divide
your total giving between fewer charities, whatever the scale of your
giving.


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