One of the charitable giving techniques mentioned in this piece—the utilitarian “effective altruism”—became associated with fraudster Sam Bankman-Fried a few months after this piece was originally published because, as it turns out, his trillionaire aspirations were a house of cards (built with cards that belonged to customers). Go figure. Regardless, to my knowledge, the movement itself (that says one should try to maximize good in the world through their charitable giving; not exactly scandalous stuff) is still a viable perspective through which to view giving. Here’s more from a writer who breaks down EA’s relationship to Scam Bankrun-Fraud.

As doom and gloom as things can feel sometimes when we have access to the entirety of the world’s atrocities at our fingertips, the reality is that circumstances have gotten objectively better over time. After all, the number of people living below the World Bank poverty line has more than halved since 1990. That’s a statistic worth celebrating, right?! 

Simultaneously, being constantly aware of the number of problems that still need addressing can be overwhelming. The “analysis paralysis” of realizing there are endless worthy causes that could benefit from your money (animal cruelty! Starving children! The homeless!) can make it difficult to know where (and how much) to give to have an impact. But part of the fun of being a #RichGirl is being able to positively impact the world around you with the one thing that—frankly—solves a lot of problems: Money. 

My original thesis for this post was that you should choose the one thing that makes you feel really moved; for me, it’s animal cruelty. We’ve adopted a dozen cats from shelters or the streets over the years who were abused, which makes it a particularly salient issue for me, as I stand with the #kitties. 

Or maybe you watched the show Maid on Netflix and felt moved to find your local women’s shelter after seeing how grueling the system can be for someone who’s been emotionally, physically, and financially abused (just me?).

But there’s an obvious shortcoming with this approach: You won’t necessarily choose a cause where your dollars will have the most efficient impact, and majority of the time, the causes that are poignant to you are likely poignant to others, and therefore receive more attention (and may need your help less).

The reality of effective giving may be more rational and efficient: 

It sounds silly, but sometimes I think about it this way: There’s undoubtedly enough money (and resources) in the world for everyone to have a roof over their head and food to eat. Some people have way more than they know what to do with, and others don’t have enough—it’s more of an allocation problem than an “insufficiency” problem. 

While reading about the most effective ways to give, one site called Effective Altruism noted that it’s easy to give to causes you feel passionately about (usually because you’ve had personal experience with it), but that means you may be overlooking some of the most important issues of our time that are also worth considering where your hard-earned #dollhairs may go a lot further. 

Step 1. Determining the cause.

So the first key decision is this: Do I want to give based on my #feels about an issue (giving feels good and can encourage us to continue doing so!) and donate to causes that are meaningful to me, or do I want to take a more data-driven approach that’s more about “impact?” 

Neither one is more “right” than the other, and if you land on the former, you can identify the cause that means a lot to you. Done! But if you don’t have a cause that you feel super passionately about (or you’re just obsessed with efficiency), giving based on a rational determination of impact can be an excellent choice. 

Effective Altruism highlights a few things to look for in “high-impact” charities: 

• Issues that are under-recognized because they don’t lend themselves to the same level of emotional appeal (i.e., causes that don’t get a lot of attention)

• Issues that impact a lot of people or affect a lot of lives (i.e., they’re occurring at scale)

• Issues that are pretty easily solved with more money or have a clear path forward (i.e., throwing money at the problem will actually help)

At first, I was like, “There’s no way so many of these problems are so readily solvable just by giving more money to them!” But…spoiler alert…that’s actually how a lot of causes are. Go figure.

For example, in the book Utopia for Realists, the author points out a few studies that indicate the thing poor people need most is money (shocking, huh?), and that giving them money (directly, without contingencies or complicated administrative strings attached) has an amazing economic impact on the poor communities in which they live. A charity called GiveDirectly makes cash payments to people living in poverty and found that—in the 18 months studied—for every dollar that was given, the local economy studied was boosted by $2.60. (You can read more about the study here.) While those conducting the study feared price inflation as a result of the cash payments, any inflation observed was minimal and mostly dwarfed by the positive impact of the donations. 

To double down on the stats that made my eyebrows raise, the author of Utopia for Realists noted it’s estimated it would cost about $175 billion to end poverty in the United States.

That sounds like an outrageous amount—until you contextualize it. 

That’s one-quarter of our annual military spending budget, and represents less than 1% of our GDP. The immediate next question is obvious: What do you do with the $175 billion to end poverty? Is that putting the 14% of Americans who live below the poverty line in a house? Giving them food? That’s not all you can do; the math works out to roughly $15,000 per person to provide both of those basic needs. This contextualizes just how relatively little would be needed to improve a lot of lives. 

The other fascinating “watch-out” I came across? Some charities treat “symptoms,” not “causes.” We need both to help those currently in need and prevent future generations from finding themselves in the same boat. The primary case for really doing your due diligence about a charity beforehand is ensuring that the money is effective at addressing the goal, whether it be the symptom or the root cause.

The results of studies like the one above that examines the effects of programs like GiveDirectly highlight a simple truth:

If you have more than what you need, it just makes sense to give some to someone who needs it more. 

While working toward your own financial independence, it can be daunting to voluntarily give anything away, but the reality is that most of us with the time, energy, and money to invest can also afford to help other people. Learning more about this has shifted my Scrooge McDuck natural tendencies to explore the really powerful ways one can #deploy capital meaningfully to actively support your vision for the world instead of hinder it.

So let’s go back to my personal example of caring a lot about animals—apparently, only 3% of all donations go to animals, and the other 97% go to humans. Booyah! My feels-y cause of choice actually meets one of the major tenets of a “high-impact” cause to look for, and that’s one that doesn’t have as much attention.

One question I had, though, did come down to the #feels problem. I care a lot about animals (and have now validated that they’re under-supported), but man, is it shitty of me to give money to animals instead of people? Should I do both and split my contributions?

Sentiment around this is mixed—some make the case that #diversifying where you’re donating can help ensure if one of the charities ends up not being as reputable, you haven’t put all your positive impact eggs in one basket, while others say that you’ll increase your impact and lower administrative costs by donating the entirety of your charitable funds to one place.

Generally speaking, though, the “Effective Altruism” approach would advise the best way forward if you’re hung up about this would be to determine which charity is more effective and give everything you’re able to that cause.

Of all the resources I studied, the common throughline was this: Doing your research is key, and it’s usually the biggest barrier to entry for those who are #CharitablyInclined but not sure how to proceed. (There are even charity advisors out there who will help ultra-high net worth clients build these plans with research!)

That brings me to the next hairy thing: Making sure the charity is effective. At first, I thought “effective” just meant “their CEO doesn’t make zillions of dollars,” but it turns out just spending less than 25% on overhead doesn’t necessarily mean the other 75% is being spent effectively. After all, even if most of the money is going to the “cause,” if it’s not actually solving any problems, it’s not truly effective. The idea that charities should spend as little as possible on overhead is a myth, and a dangerous one at that.

So how does one find a good charity to give to?

Step 2. Determining the actual charity.

Like I said, while administrative costs matter, they’re really not the most important thing, so in order to learn more, I asked Henah Velez, my Senior Editor with a decade of nonprofit experience to chime in. She shares more about finding reputable, worthwhile charities below:

There are organizations (sometimes called “metacharities”) that focus on identifying and analyzing the efficacy of charities; Effective Altruism mentioned earlier is one such group. Others include Charity Navigator and Candid. These platforms will standardize and aggregate data from all different organizations—like organizations’ revenues, 990 tax forms, and leadership—and then rate their work. The obvious upside: They’re doing the hard work of “vetting” for you. The downside: It’s harder to vet small organizations that have limited resources or are just starting out. 

TL;DR? While these platforms are a great place to start, they’re not the only place to consider looking.

You can also read up on reviews via Glassdoor to see more about its work culture or any red flags, Yelp or Google for client experiences, or through word-of-mouth. You can also deep dive into an organization’s tax forms to see how much revenue they received, how much they spent (and where it was allocated), and how much is compensation for leadership and C-suite level employees. As Katie mentioned, supporting overhead costs is necessary—otherwise, how would the organization get any work done? But at the same time, it’s imperative that we give to charities that aren’t paying their CEO 20x more than the lowest wage employee.

Recently after the tragedy in Uvalde, the Money with Katie team decided to support gun control initiatives via a fundraiser. Though there was a popular organization out there to support that—on paper-–was doing decent work. Unfortunately, diving into the nonprofit’s Glassdoor and 990 forms shed light on what was ultimately a toxic, less effective place to give. Ultimately, we pivoted to support another organization, raising over $5,000.

Keep in mind: There are organizations you’ve surely heard of like the Red Cross or Habitat for Humanity; these NGOs have dozens of national (and international!) branches. And while it’s tempting to give to a cause you care about halfway around the world or nation, there’s also an argument to be made that your dollar will go further within your own community at a grassroots organization. There’s always an opportunity to make a deeper impact with a smaller, more local organization than to donate towards largely bureaucratic and complicated causes.

It can feel overwhelming and extremely complex to find the right organization to support given these many parameters to think about, but this will be the hardest—and simultaneously most effective—part of the process. Now comes the fun part.

Step 3. Determining the amount and cadence.

Hi world, it’s me (Katie) again. So, after you’ve identified the charity that you’d like to give to, determine how much money you’re comfortable donating.

Practically all of the information I came across indicated that charities would prefer to receive monthly donations as opposed to one lump sum at the end of the year (which makes sense, if you think about it; it’s easier to plan around recurring monthly donations than a lump sum that may or may not come).

That doesn’t mean if you DO come into a large sum of money and want to donate a chunk of it that they’re going to turn you away, just that—when planning your own personal philanthropic plan—building it into your monthly financial schedule is both easier on you, cash-flow-wise, and more effective for them, in most cases. 

So how much is appropriate to give?

It’s important to give what you can afford to. Call it selfish, but jeopardizing your own future for the sake of someone else seems like it just shifts the problem around rather than solving anything—so if you’re already unable to make ends meet, don’t put too much pressure on yourself to forego your only savings for the sake of giving. 

Maybe it’s 1% or 2% or even 5% of your annual income that you settle on—for example, if you make $50,000 per year and currently save 20% of your income, you could probably comfortably donate 3% of your income on a monthly basis (roughly $115 per month after taxes) without feeling squeezed. Ultimately, this is completely up to you—but determining a percentage based on the amount you’re able to save is probably a good place to start. The key is to give something to establish the habit and get the ball rolling—but not so much that you’re actively putting yourself or your future in jeopardy. 

After you decide, build it in as a line item in your budget—charitable giving accounts for X% of monthly spending—and it auto-donates on X day each month. This will help streamline your giving and make it net-more effective. 

How we’ve structured our personal philanthropic plan

We sat down and had a little heart-to-heart about (a) the causes we cared most about and (b) the charities that seemed to be the best suited to address those problems, and then figured out the amount we felt comfortable donating on an ongoing, monthly basis.

We haven’t finalized things yet because we’re still debating some of the finer details, but here are the whittled down options we’re considering:

• Causes: Call me an ancient Egyptian, but I really freaking love cats. I also think it’s horrendous that anyone in the richest country on planet Earth doesn’t have shelter and food, so causes that help the houseless are really important to me (like I said, it’s an allocation problem, not a scarcity issue). 

• Charities: Alley Cat Allies and Fort Collins Rescue Mission. Alley Cat Allies is an organization that helps trap, “fix,” and return cats to their local communities, works directly with local shelters to improve the lives of cats, and works on anti-cruelty initiatives. I love their hyper-niche focus and they got a 90 on CharityNavigator. I also loved the local angle of Fort Collins Rescue Mission, because it helps people in the community where I live, and especially because they provide year-long training programs for job readiness, counseling, and financial management. 

• Amount: The fun part! We went back and forth about this quite a bit, but eventually settled on $500/mo. recurring donations.

In conclusion

Once you get to a certain point of financial stability, it makes sense to think about the type of world you want to live in and how you can use some of your capital to help create that type of world.