Have you ever wondered how valuable your charity contributions are? What proportion of your donation is actually doing good? And how much money does it take to save a life?
These are all difficult questions that we ought to answer but often conveniently forget. Most of us are altruistic people who don’t think twice about donating money but few of us stop to think how it’s being used. If the funds are being used inefficiently then turning a blind eye* to this is equivalent or arguably worse than not donating at all!
In the above TED talk, we hear about the relatively new movement called effective altruism that aims to educate us on getting the most for our donations. Peter Singer explains that it costs $40,000 to train a guide dog and the blind recipient to use the guide dog in America but the same amount of money could cure anywhere between 400 to 2,000 people from blindness caused by Trachoma in a 3rd world country.
It’s clear which is more effective. A similar judgement is carried out by the National Institute for Health and Care Excellence (NICE) when considering if a treatment is cost effective for patients in the NHS. This is because resources are very limited. I think a similar process should be carried out to assess the cost effectiveness of charities.
Even though amazing and prominent charities such as MacMillan Cancer Support particularly appeal as many of us may have lost loved ones to cancer, GiveWell suggest that we should use our heads instead of our hearts and choose the more effective Against Malaria Foundation. This is a very difficult thing to do but perhaps I will start splitting my monthly donations between the two.
Another effective altruism concept to consider is whether to donate your time or your money. Which is more effective? A simple way to look at it is this. If you’re a low earner then you should probably donate your time as presumably you’ll have little left over after your own expenses. Fixed costs such as rent and food are similar for most people so high earners should try to increase their wealth by pursuing more work. With increased wealth, you could donate enough money to employ two, five or even ten individuals who could work for a given charity.
This is exactly one of the reasons we write this blog – achieve financial independence, pursue happiness and give back to those less fortunate.
I read somewhere that if the wealthiest 10% of people donated just 10% of their wealth, global poverty would be eradicated in less than a year.
Some food for thought!