Maximizing Return on Donation Through Cost-Benefit Analysis

At The Charity Experiment, we’re taking the guesswork out of charitable giving.

Our unique concept of “empowered giving” ensures that you are educated about each nominated organization’s costs, impacts, and outcomes—allowing you to make informed decisions about your charitable donations. Earlier this month, The Economist published an article about this concept, titled Can “effective altruism” maximise the bang for each charitable buck?

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The Economist states “The vast majority of charitable contributions come not from big foundations, but from individuals. Data from the Giving USA Foundation, a non-profit, show that of the $390bn Americans gave to charity in 2016, $280bn came from individual donors.”

Since individual donors comprise the vast majority of the charitable donations (i.e. those who donate money to charity), it is vital that individuals are provided with the greatest amount of verified information and data prior to making a donation to ensure that their money is directed to the most effective organizations in the world. Providing this information to donors is the primary function of our “empowered giving” model.

The Charity Experiment’s empowered giving model is the result of financial, economic, and causal impact cost-benefit analyses allowing you to make informed decisions in the charitable giving marketplace. The Economist states that “Donors to charities rarely make the sort of cost-benefit calculations investors, for example, would think obligatory. So charities attract donations with pictures of smiling gap-toothed children, rather than spreadsheets showing how they actually spend their money. Tugging at the heartstrings, however, does little to allay the doubts of economists sceptical about the efficacy of charity. Who is to say whether donating to a homeless shelter is a better use of money than donating to a school?” The Charity Experiment is here to answer that question, and for good reason.

Oxford University professor, William MacAskill, “argues that promoting inefficient charities might actually do more harm than good” because “competition for donations is acute.” In effect, “for every dollar raised by one charity means 50 cents less for others.” The Charity Experiment addresses this economic puzzle by identifying:

  1. total number of charities
  2. total number of current individual donors, and
  3. total number of potential individual contributor.

These metrics help us determine how best to “maximise the bang for every charitable buck” through our system of empowered giving-- with a goal of informing, educating, and connecting individual donors to the most effective charities in the world.

Daniel DurningComment