The title of this post is a little misleading. I sat at my computer one morning, and with a couple of clicks, donated $5,000 to a charity based in Cambridge, England. Statistically, however, that $5,000 will save someone’s life.
Let’s Start From The Beginning…
I was peer pressured into charitable giving my friend Matt Brand. He and his wife have donated over $100,000 to charity, aiming to donate 10% of their income each year. He told me about an anonymous poll he took of his former computer science classmates (a lucrative field) and found that very few were making charitable donations, despite a majority working for big tech companies with high salaries.
I was embarrassed. I too had a good job, living in a low cost city, with no dependents, and was donating almost nothing to charity. What was my excuse? Naturally, I did nothing to ease this guilt until…
Goal #25: Donate $5,000 To Charity
These lists of goals are a great way to do things I know I should do, but don’t want to. I chose an amount that felt significant but would not induce so much financial stress that I’d be permanently turned off from donating again. Baby steps.
But Which Charity To Donate To?
I stumbled upon an episode of the Tim Ferriss podcast where he interviewed Will MacAskill, a pioneer in the field of Effective Altruism. MacAskill approaches donating to charities like investing in a business. Which one has the best return on investment?
The best known charity ranking website is Charity Navigator, which compiles its ratings based largely on what percentage of donations are spent on fundraising/salaries/operations. MacAskill argues this is a poor way to rate charities. A much better way would be to see how effective the charity is with each dollar donated, rather than how efficient the charity is. We should care about the results a charity produces rather than how much they spend on executive pay and fundraising. MacAskill points out that the most effective charities are hundreds or even thousands of times more effective than merely ‘good’ charities.
Why I Chose The Against Malaria Foundation
The Against Malaria Foundation is the highest rated charity by Give Well, an organization that rates charities based on their effectiveness. On average, the Against Malaria Foundation saves a life for $3,500 by providing long lasting insecticide treated bed nets across the world. Deaths from malaria numbered over 400,000 last year, largely children under the age of 5. The analogy used is two 747 airplanes fully loaded with children crashing everyday. Tragic, right?
The Most Tax Efficient Method To Donate
This $5,000 donation runs counter to my net worth goals. It’s well known that donating to charity is tax deductible. That will save us approximately $1,500 this year in taxes, reducing the actual cost of my donation to $3,500. But wait there’s more…
I donated $5,000 worth of appreciated stocks from my taxable investments through my investment company Betterment. When you donate stocks that have increased in value, you don’t pay capital gains tax, and the charity doesn’t pay capital gains tax either. Seems like a loophole, but it saved us an additional $200. Betterment makes this process extremely simple and has a great explanation of the whole process.
I Clicked Submit, and Felt…Nothing
Logically, I know this is a significant impact, but it didn’t seem like it. I felt a sense of accomplishment since I finished one my goals, but little else.
I asked my buddy Matt Brand about this, and he said he feels the same way, but that he believes it’s his responsibility to donate. That’s a good way of looking at it.
I live in a country with tremendous prosperity, and with a couple of clicks on my computer, can significantly impact the life of someone halfway around the world. No heroics needed. What an extraordinary opportunity, right?