Five ways to make the most of your charitable giving

Charity

With the holidays and the end of the calendar year just around the corner, many people are preparing to donate money, goods or their personal time to a variety of charities and good causes.

How can donors make sure their gifts—whether they total $50 or $1 million—will have the greatest impact? Katherina Rosqueta, executive director of Penn’s Center for High Impact Philanthropy, housed in the School of Social Policy & Practice, says she provides donors with five tips for maximizing charitable donations.

1.) Give cash, not cans. “During the holidays there are lots of food drives,” Rosqueta says. “But if you are really trying to make a difference, you can feed 20 times as many families by giving money than by donating cans.” There are two reasons why, she explains. First, effective food pantries have relationships with suppliers that allow them to purchase food at a fraction of the cost of grocery store cans. Second, food pantries match the food to what families want and need, so there is far less waste.

2.) Focus on impact, not overhead. Checking out the fiscal standing of a non-profit is wise, but tax returns don’t always tell the complete story. “Overhead ratios are pulled from two-year-old tax returns,” Rosqueta says. “They aren’t calculated consistently across the board and, what’s worse, they don’t focus on social impact.” Don’t, she says, get too hung up on “a random financial ratio” if the organization is high performing. Instead, she says, focus on the charity’s results.

3.) Follow your investment. Sign up for the organization’s newsletter or arrange for a Google alert to see how your money is being put to work.

4.) Think prevention. Penn founder Ben Franklin once said, “An ounce of prevention is worth a pound of cure,” and Rosqueta agrees. Consider helping to lower the dropout rate by giving to organizations that focus on teaching children to read, she advises. Fight recidivism by funding organizations that help soon-to-be-released prisoners obtain work and reconnect with their families and communities. “It’s always more cost-effective to prevent a bad outcome before it happens, than to fix it afterward,” Rosqueta says.

5.) Give unrestricted gifts. Donations made with restrictions limit the ability for non-profits to achieve the impact donors want, Rosqueta says. “It’s like giving me money only for my heating bill when my child outgrew his shoes two days ago,” she says. “If you don’t trust the organization to do a good job with your money without a restriction, you shouldn’t be giving money to begin with.”

For more information on the Center for High Impact Philanthropy, visit www.impact.upenn.edu.

 

Originally published on November 18, 2010