Is It Better to Donate to a Big Charity or a Small One?
In the wake of Harvey, many are unsure where their dollars will count most.
In Texas, the frantic work of rescue is shifting to the long slog of recovery. Appeals from large nonprofits such as the American Red Cross, The Salvation Army and the ASPCA will be joined by local charities and even individual families and businesses, via mediums like social media and GoFundMe campaigns.
Americans are encouraged to add Harvey victims onto your normal giving. So, on the whole, does your dollar go further at a brand name or a local charity? Data suggests there’s not a huge difference, but big charities tend to be better during acute crises while smaller charities better utilize support throughout the year.
Shena Ashley, Ph.D., director of the Center on Nonprofits and Philanthropy at the Urban Institute, a D.C.-based think-tank has crunched the numbers and found that dollars donated nets about the same impact whether they go through a big or small organization since both sizes have complementary strengths. A small organization has intimate knowledge of their locality’s needs, but a large one works on a more efficient scale. (There are exceptions, such as disease research charities, where much of the donations typically go to high-cost equipment and skilled doctors, or “overhead,” no matter the organization size.)
In acute disasters, large organizations can have an edge. Take food aid in Harvey for example. “An organization that distributes is a huge, coordinated food delivery effort, kind of like FedEx,” Ashley says. Unlike local soup kitchens that might be under water and without electricity, a group such as Feeding America has a vast, complex network of food banks and refrigerated trucks that can mobilize quickly. And big organizations look to (and often already partner with) small outfits that know Houstonian families, block-by-block.
Usually, people choose charities whose values are in line with their own, doubling down on philanthropy’s feel-good effect. Technology has added a new facet: bypassing the charity and interacting directly with those in need.
The most recognized donor-to-recipient medium, GoFundMe, allows users to hear from the person (or family), track the campaign and get updates on how their money helped. “It’s a personal experience, unlike writing a check or even filling out a donation form online,” says Una Osili, Ph.D., a professor of economics and Associate Dean for Research and International Programs at the Lilly Family School of Philanthropy at Indiana University. Three billion dollars have changed hands since the site started in 2010.
That and what Osili calls frictionless donation (like donating via text or Lyft allowing users to round up the cost their rides to the next dollar and give the change to the charity of their choice) has affected giving patterns.
However new the methods, many needs remain the same. Your local symphony orchestra, Girl Scout Troop and community garden require a steady stream of funding throughout the year.
Whether multinational, local, or individual, it’s important to vet the organization. GuideStar and the Better Business Bureau are good places to start. (For individual giving, GoFundMe encourages users to reach out to the campaign organizer for more details to ensure it’s on the up-and-up.)
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Resist the urge to use high administrative support as a metric. Nonprofits are still businesses requiring talented people, investments in technology, legal help and the like. Better to look at the impact it’s made over the past years and how it plans to use your money.