GiveWell’s research aims to help donors by recommending charities we believe can put donations to use efficiently to save or improve lives. Our research focuses on maximizing the good donors can accomplish with their gifts by identifying where to donate effectively.
This is the first of two posts discussing another important aspect of giving effectively: how you donate. The second post will discuss how to maximize your gift (via tax deductions, employer matches, and other strategies) and to ensure the greatest percentage of your donation reaches the charity, rather than being taken up by fees. This post will discuss how to reduce the administrative burdens on charities by choosing your donation method wisely.
How you choose to donate—whether you write a check, fill out a PayPal form, or enter your credit card online—can make a huge difference for the charities that receive your gift. You can save charities time and administrative headaches by being strategic about your method of donation. Our advice follows.
- Give predictably. We’re often asked whether it’s better to give a recurring monthly donation or to give once every year. We don’t think one is inherently better than the other. We do think it’s important that you communicate with charities about your plans; this enables them to budget for your donation.
- Consider the fees and processing costs of your donation method. Some donation methods require more administrative work for charities to process than others. For example, check donations require multiple manual steps (such as mail retrieval, scanning, data entry, and composing a receipt), whereas online donations can be recorded and thanked automatically. The table below summarizes administrative burden and fees for donations made to GiveWell via the following methods:
Processing burden Fees GiveWell recommends for what size gift? Online credit card form Low 2.15% (3.20% for AMEX) + $0.28 on each transaction. GiveWell pays the fee. Under $1,000 Check High None for domestic checks. Currency conversion and vetting fees may apply for international checks. GiveWell pays these fees. Over $1,000 Wire transfer Medium Variable. Donor pays the fee. Over $1,000 Appreciated securities High Variable. For E*Trade and Vanguard, GiveWell pays the fee. Over $1,000 The fees associated with each method also matter. Online credit card donations generally have the highest fees, but the lowest processing time for GiveWell. Checks, on the other hand, have no fees but the highest processing time.
As a result, we recommend that donors giving under $1,000 make a donation via our online credit card form. For donors giving over $1,000, the calculus changes – we recommend giving via a check. Note that due to the high processing time required for each check we receive, we would advise donors giving via check to make an annual gift, rather than dividing their gift into monthly check payments.
- Tell charities where you heard about them and why you chose to support their work. Knowing how donors who use our research or support our operations found GiveWell and why they chose to make a donation is extremely helpful for improving our outreach and research product. We recommend giving charities this basic information. Supporters of GiveWell and our recommended charities can do this by filling out this survey.
- Keep in touch! Charities love hearing from their supporters. Ask them questions about their work, let them know if your giving plans change, and offer them feedback on how to improve.
A separate post will discuss how you can save money on fees and give tax-efficiently so that more of your charitable budget can go directly to the organizations you want to support.
Comments
On the monthly vs. annual question, I’d say it depends on the amount. If you’re giving $50 a month, sure it doesn’t make much difference. But if you’re giving $10 a month, giving monthly more than doubles the credit card fees to 4.95% (=0.28/10+2.15%).
Some credit cards (i.e. Citi Double Cash MasterCard) provide 2% in cash back. So if my arithmetic is correct, a $1020 donation to GiveWell would cost the donor only ~$1000, and GiveWell would receive ~$998, for a loss of $2. Given that this is a very small amount and that credit cards reduce GiveWell’s processing burden, perhaps it would be preferable to donate 2% more via credit card instead of donating by check, at least for amounts under $10,000 or so?
How does someone best report their plans to donate to a charity in advance? And do you have a sense of what size of donor it is helpful to notify in advance about a donation? I imagine plans to donate $100,000 three months from now would be great for a charity to know about, but what about $10,000 or $1,000?
Also what would be helpful for Givewell to know about, in particular if making donations to your discretionary fund? One advantage I see to the discretionary fund is that I imagine Givewell can estimate the amount they will receive and signal the charities roughly how much they can budget for. But would Givewell benefit from individuals reporting their plans to donate to this fund?
Hi Colin,
That’s right. For donors giving in the range of $10/month or less, we agree that giving annually might be a better bet due to the flat fees that are applied each time a credit card charge is made.
Hi Avi,
That is right – we were aiming to provide a general recommendation in the post, but in the case of credit cards that provide cash back, there may be reason to shift the threshold for making a credit card donation.
Hi Chris,
We’re happy to receive information about plans for donating via email at GiveWell; other charities may have different preferences. We don’t have a threshold for donation amounts for which this information should be shared; generally, the larger the donation, the more helpful it is for a charity to be able to factor it into their plans. At GiveWell, we also appreciate the chance to check in with donors considering making very large gifts ($100k+) about the funding needs of our top charities, prior to the donation being finalized, in case there are considerations the donor hasn’t factored in about where to donate.
It is also helpful to us to learn of your plans for supporting our discretionary fund. This enables us to plan in advance for the amount of money we might grant out to our top charities; we may need to gather more information to grant $100 M in discretionary funds than we would to grant $1 M.
Finally, reporting your donation plans – even if you are unsure – enables us to better plan our outreach; for example, we can be in touch with you prior to making your gift to ensure you’re up to date on our latest research. It also helps us understand whether you have decided to stop supporting GiveWell or our recommended charities or whether you’re planning to give again in the future; sometimes, when we do not hear from a donor for a long time, we become unsure whether they are still interested in receiving communications and updates from us, so knowing that you’re still following our work can be helpful to us in that regard, as well.
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