Usually your charitable decisions and mine don't get the press that those of big philanthropists and tech billionaires do. Take, for instance, Dustin Moskovitz, a co-founder of Facebook, and his fiancee, Cari Tuna. Recently there have been a number of prominent articles about the couple and their strategies to give away half of their considerable wealth. Moskovitz and Tuna's focus can be summarized in one word – impact.
Impact has become such an important term in charitable giving that the expression "buzz word" doesn't come close to describing its ubiquity. Philanthropists have been oriented toward the impact of their gifts since the last golden age of American philanthropy, the era of Carnegie and Rockefeller. Different today is the pervasive idea that charitable dollars are only well spent if they result in substantial, measurable, and efficient change. But there are a number of problems with impact being the sine qua non of charitable giving:
- Big philanthropy vs. regular givers: The Gates and Moskovitz families not only have a lot of money to give, but they can also fund systems to understand the impacts of the efforts they are funding. This applies even with challenges that are very distant or in settings that are completely different from those in America. Most people, who cannot give at that scale, have to rely on the non-profits where they donate to give them an idea of the ultimate outcomes of their giving. This is particularly challenging if you're donating to causes beyond where you can understand them directly, in your own community.
- Burden on nonprofits: Non-profits, even large ones, were created to gather resources and address some social, health, or environmental problem. Impact assessment is a wholly different set of tasks, and the research needed to express exact impacts is out of the reach of many nonprofits. In essence, knowing the ultimate impact of social sector work is a very high bar. It is also an expensive one, so we need to make sure we aren't waylaying resources to satisfy our own need for assurances.
- Measuring transformation: In many instances, the nonprofit sector is trying to affect deeper problems that aren't readily quantifiable, or are improved through a number of different and interrelated factors. For instance, with domestic violence, violent behavior in the home is related to education, economic level, cultural norms, external stressors, mental health, substance abuse, and other factors. First of all, how does one quantify the impact when someone's life is transformed by moving to a safe, non-abusive environment? Secondly, how can we point to just one nonprofit's work as being solely responsible for that transformation?
As a donor, should you be asking about the impacts of your giving? Certainly. Should nonprofits at all scales find ways to understand and express their most effective work? Yup. Just know that measurable impacts aren't the only way to understand whether your donations are being used well, and the nonprofits you fund are making the kinds of differences you might expect. You can also find out about the participation and reach of their programs, their cooperation with other organizations to help fight the problem, and how much the beneficiaries are included as partners in their efforts.
Solving social and environmental problems is complex. To be a skillful giver, you will need to do a bit of research using tools such as Charity Navigator, Guidestar, and GiveWell.org. Beyond that, you can build your knowledge about the issues you care about, how they're being addressed, and by which nonprofits. That will help you be a skillful giver and create a giving plan that makes the most difference with your donations.
Fool contributor Mark Ewert is as serious about charitable giving as you are about investing, so he wants to help Fool readers to be skillful givers. You can purchase his new book, The Generosity Path: Finding the Richness in Giving through his website or at your local bookstore. The Motley Fool recommends and owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.