LARGE OF HEART, SMALL OF POCKET

ALLISON SCHRAGER | THE MICROPHILANTHROPIST | December 24th 2007

Hamed Saber/Flickr

Conventional wisdom holds that you should focus your charitable giving on one or two causes. Allison Schrager's wisdom holds that you should give as widely as you like, subject to the usual due diligence ...

Special to MORE INTELLIGENT LIFE

A couple of weeks ago when I was writing about giving to schools, I explained why I thought it better to give $100 to each of three schools that I attended, rather than $300 to only one. My thanks to "Josh" for a well-reasoned comment citing arguments that it was "better to give to
one cause vs. multiple ones". Yes indeed, you are usually advised to concentrate your charitable giving, just as you are usually advised to diversify your investment portfolio. But accepted wisdom is there to be overturned, in altruism as in anything else.

A few years ago Steven Landsburg wrote a mathematical
proof showing that to maximise your giving utility (to get the most for your money, we might say), the optimal strategy was to give to one or very few charities.

However, he incorporated assumptions that might not hold true for everyone, including a hard constraint on the amount available for giving. True, everyone has a limited disposable income. But how you allocate that income between personal consumption and charitable giving need not be fixed in advance. If I am moved by a particular cause or man on the street, I may give more than I previously intendedâ€”and too bad for the post-Christmas cashmere sale.

Professor Landsburg's logic also assumed that the marginal benefit from giving to any one charity was independent of giving to others.

But, as I argued in the case of schools, when it comes to small donations, sometimes participation matters more than donation size. Wealthier donors may be inclined to match your gift, and higher participation levels enhance the credibility of the charity, spurring others to give. You may not have the means to make a life-changing gift, but your $50 may have positive externalities. If the fact of your participation is at least as valuable as your gift, donating to more charities may be the utility-maximising strategy.

Another argument against smaller donations is that they may be put toward administrative fees rather than fieldwork. You are more likely to be able to choose your terms for a larger donation. However, if everyone insisted that their donations not go to administrative expenses, those expenses would not get paid. Office space and salaries are less emotive than food for starving children, but they are necessary if the organisation providing the food is to continue.

Imagine, too, that everyone chose to support a single charity. Given a random distribution of preferences in the giving population, then all causes would get support. However, in practice, some preferences will dominate, and perhaps not always the most deserving ones. I worry that too common a concentration of giving would leave less-glamorous and poorly-publicised causes, however deserving, with little revenue.

All of this is not to say that we should donate to every cause that comes our way. The participation-signalling effect only works when it is credible, which is to say, when others trust you to have done the work of singling out a worthy cause.

And, even with small gifts, it remains important to know the charity and how effective it is at achieving its goals. I don't mind my donation going to administrative expenses, but I do want to be sure that organisation runs efficiently, without excessive overhead. You may also want to be sure the charity does not sell the name of its small donors to others (though, if you are indifferent to junk mail and junk phone calls, you might welcome this as another way for the charity to leverage your gift).

Finally, think of yourself. As a microphilanthropist, you are, by definition, large of heart but small of pocket. If you feel strongly about several causes, and especially if you feel equally strongly about each of them, why not allow yourself the joy of giving to all of them? Why feel guilty about neglecting one in favour of
another?

The more pleasure you take from giving, the more giving you are likely to do. And that, surely, is the right state of affairs, both for you and for the causes to which you may give.