“Most donors don’t think their way into giving to charity.”
So writes Al Cantor, a smart guy and a veteran of the nonprofit world.
“I give from my heart – and my observation is that most other donors do the same thing,” he goes on to say. “There’s absolutely nothing wrong with that.”
Sorry, Al, but no. Something is wrong. Incentives matter. So long as people give from the heart and not the head, charities will have good reason to invest in emotional appeals — photos of smiling children or adorable puppies — and they will feel less pressure to work harder to make a meaningful, measurable and demonstrable difference in people’s lives.
To be sure, the reality is that most people today give with their hearts. But we should no more accept that than we should accept the reality of global poverty, preventable diseases, crappy schools or climate change. Indeed, one way to alleviate those problems is to encourage people give more thoughtfully.
Donor-advised funds can help.
Donor-advised funds, a.k.a. DAFs, are the fastest growing part of the charitable sector. Six of the top 10 fundraising organizations in the US in 2016 were managers of donor-advised funds, led by the charitable arms of Fidelity, Goldman Sachs, Schwab and Vanguard, according to the Chronicle of Philanthropy. Sometimes described as rest stops for charitable dollars, DAFs have major drawbacks because they enable people — typically the very wealthy — to avoid taxes, without requiring them to distribute their money for charitable purposes. (See The Undermining of American Charity, by Lewis B. Cullman and Ray Madoff.) Yet donor-advised funds have one decided advantage over conventional giving: They separate the decision of whether to give to charity from the decision of where to give.
This is why behavioral scientists think DAFs can improve the quality of giving, why the Bill & Melinda Gates Foundation has supported a DAF aimed at the masses and why Charlie Bresler and Jon Behar of The Life You Can Save see DAFs as a way to steer more money to the world’s most effective charities.
You can read the full article as it originally appeared on Nonprofit Chronicles here.