As intelligent, social beings, we humans understand the importance of looking beyond our own needs and wants, and sharing with others. Most of us have given our pennies in supporting someone else - whether it be a family member or friend, or a stranger.
For those of us with a surplus of resources there will inevitably come the idea of transferring some of our wealth to someone or something else. Not including grant-making foundations, Australians give about $13 billion per year to charitable organisation, which is about $1000 per adult1. Interestingly, Australian businesses give about $18 billion per year, but the lion share of wealth transfers are centralised through Federal government: The latest budget shows the nation spending about $300 billion on pensions, welfare, health, education, housing, recreation and culture.
When it comes to where the money goes, the top areas of charity work in Australia, which is primarily funded by individual donors, include education and research, health, social services and religion. Donations to international causes and environmental programs are less than 1% of the charity pie. And apart from where to give, donors need to also consider how much to give, how long to give and the risks of giving.
The overall motivation to give is different for everyone and is likely to be due to some or all of the following factors:
- Altruism - This is the innate sense within each of us that feels the need to help our fellow man, woman or child
- Reputation - This is pretty much the opposite of altruism, but is a strong motivator for many donors
- Psychological benefits - Whether it be relieving guilt or simply making our hearts fill more full, there is likely to be a non-financial benefit from making a financial donation
- Values - Most of us were taught to share from a young age and for many it is simply part of their DNA
- Efficacy - This is the feeling that it just makes sense to spread the wealth
- Duty - Community, religion, media or other influential avenues often paint giving as something that is a mandatory act for anyone wanting to be apart of a well-functioning society (or wanting to avoid eternal hell-fire...)
- Other self-interest - Some will give for other selfish reasons. In countries where deductible gift recipient status is loose, it can be quite easy to divert income to a 'worthy' charity and reduce tax. There are also many who would simply rather their money go to a charity of their choice, rather than the taxman.
Many of the above motives seem more self-serving than selfless, but that depends on whether you count wanting to experience the happiness that comes from giving as a selfish act. And even if you have purely altruistic motivations, there is still a chance that you won't produce as much good as the self-interested donor. Motivation (or vision) is one thing, but your objectives (or mission) is what will determine your effectiveness. And there are three key degrees of altruism that can affect how much good you will do:
- Input-focused altruism - this is the altruist who is mainly concerned with how much they give and less about where the money goes
- Output-focused altruism - this is the altruist who is mainly focused on producing as much social goods as possible, without understanding their value to society
- Outcome-focused altruism - this the altruist who wants to maximise the overall value of the giving to society.
This latter category of altruism is likely to be the most effective in their giving as they will look to give to charities or programs that are expected to maximise overall social impact. Of course, assessing and evaluating all the many places where to best give money your hard-earned money is the difficult part.
1. Philanthropy Australia 2018
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