Why you shouldn’t give to charity this Christmas
You wouldn’t make all of your investment decisions in the last few days of the year, but that’s when most people make their charitable donations. It’s not effective philanthropy and it doesn’t help the charities themselves either, says Gilad Tanay
It’s Christmas season. In London, that generally means a few things: last-minute present shopping, filling your fridge with everything you need for the festive period and getting flooded with requests from worthy causes for a year-end donation.
It’s become an annual tradition for people to give the bulk of their charitable donations in the last 30 days of the year. Or even in the last week or two. The statistics bear this out. UK charities receive more donations in December than the rest of the year, and the Charities Aid Foundation expects the British public to give nearly £3bn during November and December this year.
I’m now urging us to call time on this yearly ritual. It’s destructive to effective philanthropy – while putting charities under tremendous pressure to raise large sums in the dying days of the years.
If the only time that we all think about charity is in the final month of the year, then we’re all much less likely to think about charitable giving strategically. Why? Because we inevitably cram all our thinking about philanthropic giving down to a couple of days – at most. In fact, I find that most people end up choosing the causes they support through an hour or so of Google searching.
Yet, identifying the problem that you want to solve through your personal giving is a complicated, demanding and emotional task. You need to take the time to study, research, and read about problems to make sure that your initial response aligns with the actual evidence about the scale and nature of the challenge. You might find that the original challenge you were thinking about is smaller than you thought – or you might find an even bigger problem. You cannot shortcut this process.
Identifying the problem that you want to solve through your personal giving is a complicated, demanding and emotional task that shouldn’t be crammed into an hour of Googling
Or, to put it another way that might connect better with my fellow CityAM readers: it would be crazy to make all your investment decisions in a couple of days of reflection at the end of December, and yet that is what many of us are doing right now when it comes to philanthropic giving. Philanthropic giving should be treated with the same amount of thinking as investment decisions.
But the complexity of giving doesn’t stop there. Even if you have a very strong view on the problem you want to solve, you then need to take the time to find the intervention with the highest potential of solving this problem. I have known many passionate philanthropists who have given millions to specific causes – but have barely moved the dial on the ultimate problem they wanted to solve at all. If they had focused their giving elsewhere, it could have had 100 times the impact. The difference between leveraging your limited resources in the right way versus the wrong way can be extraordinary.
As people who are in the fortunate position to give charitably, I think we all have an obligation to think very deeply about the problems we’re trying to solve, so that we can focus our limited resources where they will have the most impact. If we were all able to increase the effectiveness of our giving by just 10 per cent or even 5 per cent, it could be a gamechanger for the global challenges that we’re facing together.
The December donation rush
The December donation rush doesn’t help charities either. In fact, very much the opposite. It puts charity fundraising teams under intense pressure to deliver huge sums in just a few weeks. I have known fundraising teams who were working to deliver nearly half of their annual fundraising sums in November and December – just at the time when competition is so fierce. It also means that many charities are not able to effectively plan their programmes for the year ahead until they get to the end of December, when they will have a clearer sense of the funds at their disposal. It locks charities into a terminal cycle of feast or famine.
So, this year, if you’re considering giving to charity in December, please consider an alternative course of action. If you have a robust, thoughtful and strategic giving plan in place, please go ahead. My argument doesn’t apply to you.
Charities are locked in an eternal cycle of feast or famine
But if you don’t have that plan in place, then consider this instead: set aside the funds that you would have given to charity this December, and, instead, give it in January, February, or even March. This will give you the time to think more deeply about the types of causes that you want to support as well as look at the data on where to allocate your donations most effectively.
We’d all benefit from ending the December donation dash. Donors will feel better connected to causes that they better understand. Charities will have more predictable, stable income inflows through the year. And, most importantly, it’ll give us all more time to focus our donations where they can make the most impact – meaning that we can solve important global challenges quicker.
Gilad Tanay is the founder and chairperson of ERI Institute, a research and consultancy firm specializing in leveraging best-in-class data science to drive social impact