So I posed this to my wife: Suppose you’ve got $1000 that you want to give to back to the community. You have lined up a number of charities, non-profits, and community groups as possible recipients. You have three options:
Give $1000 to one group
Give $100 to ten groups
Give $10 to one hundred groups
Option 2 is probably the best compromise-- it spreads the wealth a bit, but keeps the amount donated in the triple digits.
But are options 1 and 3 equally beneficial to the community? Also, if you were the fundraiser for a non-profit, would you rather have a guaranteed $10, or have a 1-in-100 chance of getting $1000 with a 99% chance of getting nothing?
In that situation, I would quite honestly say that I wanted the donor to make the decision. And choosing the recipient(s) wisely is probably more important than how you break up the fund.
I work at giving away (grant) money. Well, not my money, but donors money through a grantmaking process, so I work closely with nonprofits who submit grants to be considered for grantmaking. I also volunteer on the board(s) of other organizations and have been involved extensively with allocations.
Nearly all the nonprofits I’ve ever worked with would much rather have a shot at the $1,000 than getting $10, but any good nonprofit will tell you that a donor–regardless of how many zeros are involved–is a donor. You never know when that $10 donor will want to include your organization in their will, or serve on your board, or convince 100 of her friends to volunteer for your organization. On the other hand, that $10,000 donor may simply hand over a check then never participate ever again in any way with an organization. (This is not as good as it sounds, as word of mouth is the best advertisment any organization can have, and if your donors aren’t saying wonderful things about your organization to their friends, then you got nuthin’.)
I’ve seen too many nonprofits look down their noses at the opportunity to submit a grant for anything under $10,000, without realizing that getting funding is primarily about building a relationship with your donor (even if that donor is a foundation). This, in my book, is a huge error on part of any nonprofit.
I would say no to option 3. If each of those 100 organizations sends just a minimal “Thank you” letter, it’s going to use up more of the donation that would have otherwise benefited the community.
Even worse, you’ve got 100 organizations that’re now spending money to send you regular mailings in the hopes that you’ll donate more (along the same lines as the relationship building that phall0106 mentioned). If the individual donations are small enough, the mailings costly enough, and the donation is a one-shot deal as described, then option 3 could potentially have a net negative benefit to the community. As an extreme, I’ve toyed with the idea of donating $1 to non-profits that I strongly disagree with in an effort to make them effectively lose money.
Well, for the reasons I mentioned above, the $10 option is a bad choice. However, if we were to instead look at it as an abstract bet or game show game, I’d go with the $10. The expected value’s the same either way, so it’d seem better to go with the more reliable option.
But again, that’s just looking at it as a one-shot game. In the more real world situation, you’d theoretically be playing that 1-in-100 chance across a vast pool of potential donors, and so the $1000 seems better: Same amount of money raised, your mailing list is shorter, and donors seem more dedicated (thus helping future fundraising efforts).
I would guess, especially with local organizations, that it’s better to give to an organization where you will be able to follow along with their efforts in the future, read whatever color pamphlets they send you send you in the mail, perhaps even go to the occasional event of fundraiser. So if you have time to do this for 10 organization, then (2.), if not (1.). That being said, IANAFundraiser by any stretch of the imagination.
I have been a fundraiser. I can see this from a number of perspectives.
Because of the expense of donor relations, more good will probably go to the community from a $1000 gift. That considers the charity’s and the giver’s perspective.
From the giver’s perspective, by picking one charity you can give to the one whose work best matches your own giving objective. If you have to pick 10, only one will have that best fit and the others will work toward objectives somewhat less aligned with yours or spend more on administration. On the other hand, if no single charity matches your objectives, you might achieve more of your objectives from a mix of charities.
There is also risk management/ cost of information. If you don’t have time to research charities, you might want to split the gift rather than risk giving it all to one that turned out to be a scam.
Assuming no effort on the charity’s part, I’m not seeing any reason to prefer the 1 in 100 chance at $1000 over the $10, or vice versa. Assuming the organization is slightly risk averse, the $10 in hand would be slightly better.
I would, however, prefer to be a charity with 100 $10 donors than with 1 $1000 donor. Having a broad base of support is considered a good thing.
Some organizations like to say how big their membership is for political clout. Move-on, or ACLU, enviornmental groups, perhaps. So, a small donation would probably make them relatively happy. Others need the cash. So, I try to give one or two organizations the bulk of my giving to make more of a financial difference, and sprinkle small amounts to groups who want say they have a huge donor base.
IANAFundraiser either, but it seems to me that if you are trying to decide how much to split up $x, you want to keep the amount given to any particular charity high enough that the cost of processing your donation (record-keeping, charitable donation receipts, thank yous etc) is only a small percentage of the amount you are donating. The minimum traceable donation (i.e. excluding occasionally giving a buck or two for a Remembrance Day poppy, buying Girl Guide cookies, or dropping some change in a Salvation Army bin) I ever make is $25. If I’m not interested enough to give at least $25 I figure there’s no point in giving anything at all since so much will go towards administration.