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Reasons to Be Charitable in a Tough Season of Giving

Amid all those candles and evergreens, baked goods, freely pouring cocktails (and the promise of sneaking in a tax deduction) we humans are inclined to give to those less fortunate this time of year. But there isn’t much incentive when paychecks have been cut or lost, investments dried up, and health care costs are more than ever. Even the most giving among us may be inclined to wonder: Why should I give?

Salvation Army donation kettle

Amid all those candles and evergreens, baked goods, freely pouring cocktails (and the promise of sneaking in a tax deduction) we humans are inclined to give to those less fortunate this time of year. But there isn’t much incentive when paychecks have been cut or lost, investments dried up, and health care costs are more than ever. Even the most giving among us may be inclined to wonder: Why should I give?

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Here’s a compelling list of reasons why you should do good, especially in challenging economic times.

Because It’s Good for Business
When carefully planned and managed, strategic philanthropy efforts can tackle important societal issues and at the same time enhance business success, yielding a double bottom line says Harvard professor V. Kasturi “Kash” Rangan in an interview for the Harvard Business Review. But don’t just take his word for it. The 2008 Cone Cause Evolution Study has the numbers to back it up: 85% of American consumers have a more positive image of a company or brand that supports a cause they care about. And if your business wants to capture Millenials, there’s even better news: 88% of 18-24 year olds would switch to a brand with a cause. Additionally, across age groups, causes helped consumers cut through the marketing clutter and make a purchase–38% of participants in the study bought a product associated with a cause last year.

Because It Can Boost Your Self Esteem
“Giving makes us feel capable, competent, and generous,” says Dr. Ellen Langer, a professor in the Psychology Department at Harvard University. “It is important for our psychological well-being.” As for the effects of the economic downturn on charitable giving, Dr. Langer says if people are withholding it is not so much about having less, but rather that for many this is the first time they are uncertain about how much they will have tomorrow. “There has always been a level of unpredictability, and it has a greater effect on the moneyed classes because they have more to lose.” Conversely, Dr. Langer notes that those who had little to begin with tend to be more generous. “Money has different meaning to them.”

Because People With Less Give More
In a study measuring monetary giving as a percentage of an individual’s income, Arthur C. Brooks, author of Social Entrepreneurship found a surprising result: “It is low-income working families that are the most generous group in America, giving away about 4.5 percent of their income on average. This compares to about 2.5 percent among the middle class, and 3 percent among high-income families.” The reasons for this were documented in a recent study by the Center on Philanthropy at Indiana University. “Among donors with income less than $50,000, the motivational statements that resonated were ‘helping to meet basic needs,’ or, ‘helping the poor help themselves.'”


Because You Can Target Giving to Where It Does the Most Good

Wealthy philanthropists can afford to retain a private consultant to help decide where their donations will have the greatest impact. For the rest of us, there is GiveWell.net. Like a Consumer Reports of charitable organizations, GiveWell provides ratings for a variety of programs based on a cost/benefit analysis of their impact. Elie Hassenfeld, a co-founder of GiveWell, says, “The best way to accomplish good is to make an active and conscious decision about your gift.” As such, he advises researching an organization to determine if your dollars will cost-effectively change lives.


Because Giving Is An Integral Part of America’s Economic Fabric

Consider this: In 2008, amidst the worst economy since the Great Depression, charitable giving in the United States exceeded $300 billion, according to Giving USA 2009. “The fact that charitable giving was still more than 2 percent of GDP in 2008 is a bright spot in an otherwise negative climate for donations,” said Nancy L. Raybin, chair of the Giving Institute.
What’s more, on a per capita basis Americans give to causes and charities 3.5 times as much as the French, 7 times as much as Germans, and 14 times as much as Italians, according to Arthur C. Brooks.

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Because It Will Help Keep the Strain off Government Funds
Investments in human services programs from individual donors and businesses may help offset the costs to federal and state government funded programs such as Medicaid. Adam Brickner, executive director of the Phoenix Center, says their programs to treat and prevent substance abuse help keep people out of the ER, court, and jail thereby saving taxpayer dollars. “The cost to the system increases the longer a person is addicted,” says Brickner pointing out the additional drain on unemployment and welfare as well as lost wages to the overall economy.

Because It’s a Wise Investment
Rhett Mabry, a vice-president of the Duke Endowment, believes that potential donors need to think about their charitable giving as an investment. “Cost benefit must be a part of the philanthropic process,” he says. Research by James Heckman, a Nobel Laureate in Economics from the University of Chicago, and Art Rolnick, a Senior Vice President of Research for the Federal Reserve, and a member of the Fed’s Open Market Committee, predicts a $3 return to the public treasury for every $1 spent on high-quality child development services to children in poverty. That is in addition to other benefits such as a 48 percent reduction in child abuse. “It saves society money in the resource-deprived state of our economy,” says Mabry.

Because It Really Can Be an Investment
Microfinance is an option for those who’d like to give, and eventually get paid back. David Roodman, research fellow at the Center for Global Development says that a donation to a group such as Freedom from Hunger would even be tax-deductible. However, Peer-to-Peer lending organizations such as Kiva, are not, according to the IRS. Roodman maintains that it is still charity. “You take a significant risk (the microcredit lendee might default) and you earn no reward to compensate for that risk. If you do get repaid, and usually you will, you can recycle your money into a new loan,” he says.

 

Follow Lydia Dishman on Twitter @LydiaBreakfast

About the author

Lydia Dishman is a reporter writing about the intersection of tech, leadership, and innovation. She is a regular contributor to Fast Company and has written for CBS Moneywatch, Fortune, The Guardian, Popular Science, and the New York Times, among others.

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