Planning to Donate? Know What Your Dollar Buys

For most well-meaning donors, it can be difficult to calculate which charities are most effective with their funding - that is those that aim to solve the most serious problems, use interventions that work, employ cost-effective strategies, are competent and honest, and can make good use of each additional dollar. Organizations like GiveWell are part of a new and welcome trend toward rigorous evaluation of social change programs, and helps people best decide where to donate based on what causes matter to them most.

For the superrich and the biggest U.S. charitable foundations, donating to universities, hospitals and cultural institutions is the norm. Less common are donations targeted at "social change" such as alleviating poverty or tackling global warming - but that is beginning to change. An in-depth study from the Bridgespan Group is showing how big bets in philanthropy are paying off, as well as what factors - such as a close donor-recipient relationship - are key to success.

A non-traditional program called the Family Independence Initiative (F.I.I.), uses a radically different approach from the traditional American social service model to empower entire families alleviate themselves from poverty. The results in multiple states thus far have been so striking, that this model of self-sufficiency may be able to have a significant impact reducing poverty nationwide.

Alfanar is a venture philanthropy organization that helps fund social enterprise businesses in the Middle East. The group offers grants and zero-interest loans. It has helped more than 185 social enterprises and has provided over £6 million in funding.

After learning her home city of Austin, Texas ranked the 48th most charitable city in the country despite its strong economy, Patsy Woods Martin launched I Live Here I Give Here (ILHIGH) in 2007 to encourage Austinites to better meet the needs of their community. In other words, she wanted her neighbors and community members to give locally. To get Austinites to be more charitable, ILHIGH uses games, competitions, clever marketing, and a sense of community.

A grantmaking organization known as The Solutions Project seeks to diversify the traditional white male-dominated world of philanthropy by pledging to invest 95% of its resources in renewable energy projects led by people of color, and 80% to organizations led by women. Recognizing that these populations are often the most affected by dirty energy and climate change, The Solutions Project is building on past investment successes, like a project that turned an old school into solar-powered housing for seniors.

Traditional models of nonprofit funding, as well as pressure to limit overhead spending, have created an unsustainable system in which many organizations with otherwise great potential drown. Like private companies, nonprofits need to invest in their teams, offices, and research and development, "while putting aside some cash so they don’t live and die by the next grant cycle." The Ford Foundation is changing the ineffective result-driven method of funding nonprofits through its BUILD Program, which allows for better focus on organizational resilience and sustainability.

There is a substantial argument for increased involvement of private companies in venture philanthropy. Unlike large government bodies and NGOs, private companies are more nimble and experienced when it comes to strategies in marketing, R&D, creating pricing structures, and adapting to rapid social change. Three companies in India are seeing real results by serving India's poorest customers with a market-based approach.

For years, policymakers have debated different approaches to helping the poor , but new data offers resounding evidence for a strategy that works: an approach known as a “Graduation” program. This method offers participants a “productive asset” to generate income with training on how to use it, as well as the resources (such as healthcare, food, loans, and coaching) to maintain the asset while building a pathway out of poverty.

Investments into the arts serve as significant economic catalysts. In Pittsburgh, Pennsylvania, legacy foundations like the Heinz Endowments, Benedum Foundation, and Richard King Mellon Foundation pooled their resources to create the Pittsburgh Cultural Trust, which supports art and culture in the city’s downtown districts. By purchasing and refurbishing existing real estate, as well as lending support to smaller initiatives like the Pittsburgh Playwrights Theatre Company, PCT’s investments have served as an engine of growth for the city.