Think Twice before Donating Your Money to Charity

Homeless Man

Donating money isn’t all that it’s chalked up to be.

Many charities are inefficient and tackling the wrong problems.

It feels good to help at a soup kitchen… but can you put your time to better use?

Sure, you’ll get some pats on the back. It can even be great teambuilding with others. I’ve done my fair share of it… but handing out food is similar to covering up an infected wound. It hides the growing problem.

Instead – and at the very least – you could work hard to add value in the world elsewhere, get paid for it, and then hire someone that’s unemployed to feed the hungry. You’d do more good this way but you’d have to forgo the direct social praise from helping.

Forward Thinking to Improve your Donations

With charity work or any organization, the best efforts are more forward looking. Delayed gratification is a powerful concept in many areas of life.

You could feed a person and feel good. Or instead, put that money towards programs that teach them to feed themselves. That way you can feed them for life.

It’s not the quick feel-good option but it can produce a better outcome down the road. All I’m getting at here is that you can give your time and money more effectively.

With the delayed gratification mindset, you’ll have likely amassed a fortune towards the end of your life. Then with your compounded wisdom, you can put it to use with a lasting impact.

… So put some thought into when and how you give.

Don’t get pulled into the first charity porn you see. By that, I mean the emotionally attacking ads showing malnourished kids in Africa or abused puppies. Take a deep look at the charity first to see where your dollars will actually go.

Don’t Donate Your Money to Any “Good Old” Charity

There’s a good deal of pomp and circumstance in the donation industry. For example, the Disabled Veterans National Foundation, spent $27 million in 2016… but they used less than a third of that for charity. The majority of the donations were used for fundraising.

Even if every $1.00 you donate goes to its intended cause, think deeply about its impact. Does donating shoes to kids in Ethiopia really help? Shipping shoes around the world is resource intensive and it puts local shoe shops out of business.

Charities that dump goods into poverty stricken areas can make things worse. It’s not sustainable in the long term.

Don’t flood communities with cheap goods. A better approach might be helping local businesses get up and running. It’s a more sustainable solution. You can even start micro lending to folks in third world countries.

One type of philanthropy that I’m in favor of is education and research based efforts. It takes longer to see the positive effects… but a smarter population leads to faster innovation. And that innovation helps us solve the root of the world’s growing problems.

Your mind is powerful… and a malleable tool. Don’t let social pressures mislead you from giving back intelligently.

Invest mindfully,

Brian Kehm

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