There are lots of charities out there and many of them area worthy of your money, but there is a few things that you should know that could change the effectiveness of your donation power. I am not going to talk about how much money goes to administration verses the people who get help, because that is just the way that it works. MSF spends your money like this: 4% to administration, 16% to advertising and 80% to its projects. That is the way it works, without the first two components no one would get anything. The bus ads the people walking the street soliciting funds being pain minimum wage, the people processing the money, the website where the donation is getting submitted. These are all important things that need to get done so that Doctors can get into the aftermath of Hurricanes, Earthquakes and other natural disasters and diseases. I would gladly have all my donation go to the stuff behind the scenes, because it is so important.
What I do want to talk about is stuff that one of my Podcasts that I listen to has talked about in the past. Look them up: The Reality Check. When they talk about donations and charities, listen up! I will summarize a few things they have said in the past in the next few paragraphs.
Cash is King. To be very clear, cash has certain advantages over other payment types and that advantage is it is easily used right away. Cash can be grouped together and deposited once with only one deposit fee. PayPal and debit have fees associated with each transaction based on the number of donations and credit cards have fees dependent on the overall donation size. There are benefits to all three. I donate by credit card because I don't often have the cash on hand at the moment when I donate and credit card donation is very secure. If I had the money in the bank debit transactions would be better, but they want my donation and they get a lot of donations this way so it is a price of doing business.
Cash is King II. At this time of year there are a lot of Food drives for the poor. Food banks are brimming with food for poor people and some places get about half their yearly donations in one short period of time. This creates a lot of problems: 1) storage of all the food for distribution over the rest of the year. 2) massive hauls mean massive headaches sorting the food, luckily lots of people come and volunteer their time to sort the food so this is alleviated a bit, except those volunteers need to be organized now. 3) variety of foods is low and not necessarily very nutritious. Beans might be good for lunch and dinner but are they good for breakfast? If a poor person is of a specific religion they might need different foods. If they have health concerns ditto. And all that food does not contain a lot of fresh goods because that stuff has a limited life on the shelf. Many canned foods are not good forever either, all things expire eventually. 4) it is free, but it is not effective, the above are hidden costs and the inconvenience of food donation is also for the donator as well. There is a more effective donation form for food drives: Cash. The benefits of cash are numerous: 1) no shelf life. Cash does not go bad. 2) there is little in the way of extra costs to donating cash, no extra volunteers, no extra warehouse space needed. 3) it can be used any time through the year to buy food. It can buy fresh food, perishable food and specialty foods. 4) food banks can buy food at wholesale prices that are often a tenth the price that you pay at the store. So, that means Cash donations to Food Banks mean more food for less bother than an actual food donation. $20 worth of food or $20 used to buy $200 worth of food. They will accept both, but it makes more sense to donate cash than food.
It is a little crude to talk about tax refunds for donations but it is really important to consider. You can get back about 30% on the first $200 and near 45% on anything over $200 of your donation back from the government if it is a government approved Charity. My $250 donation means that I can get $85 back and I can donate that if I wish. All donations add up. Ten twenty dollar donation equals $200, so get tax receipts and you can donate more, or you get a break on your taxes. Anything that gets you to donate more money is good. More is better.
Larger sums are better and larger sums to fewer charities are better too. The administration of any charge costs to the charity and the cost is fixed so a five dollar donation has the same fee as a five hundred dollar donation. If you hate a charity a lot you could give them ten thousand one dollar donations and make them pay fifteen thousand dollars to process your ten grand. You could instead donate your ten grand and limit the charity to one administrative fee. If you like twenty charities, donate to four every year and rotate through them in five years, better for them.
It is sad to say that Charities are second class citizens in Canada, the first class societies are Political Parties. Political donations issue very favourable tax refunds. 75% for the first $399 and 50% to $1000 and 33% to the maximum donation. However, if you like a certain party it is very worth your while to donate to to political parties. $400 means a $300 refund. If charities had those refunds it would be grand. I am thinking I should donate to a political party, one or two that meet my political goals. It just makes sense.
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