The Rise of Smart Giving

Key Point

• The Haitian Earthquake marks a turning point in American philanthropy where donors are now expected to “give smart,” not just give.

Something fascinating is happening in philanthropy in the wake of the Haitian Earthquake. After most disasters, the public responds to a steady drumbeat from the mainstream media and prominent leaders to support those in need. But this time, the message is different in an important way. The new message to the American public is to give smart.

The first indication of the new trend came from former president George W. Bush, when during the press conference announcing the his partnership with former president Bill Clinton to raise money for Haiti, one of the first things he did was to urge people to not make in-kind donations.

From the New York Times:

This small remark might have been an interesting footnote if it were not for the sustained message from the mainstream media that donors need to do more than just “support Haiti.” They need to be smart donors.

Examples:

• The New York Times article Teaching Americans What Haiti Needs: Money, begins: “Don’t send shoes, send money. Don’t send baby formula, send money. Don’t send old coats, send money. Nonprofit groups rarely look a gift horse in the mouth, and the relief effort in Haiti is desperate for resources. But the experience of wasteful giving in the past, coupled with the ease of speaking out via blogs,Facebook and Twitter, have led to an unprecedented effort to teach Americans what not to give.” The article goes on to quote international aid bloggers Saundra Schimmelpfennig and Alanna Shaikh on the problems with in-kind gifts.
• The New York Times article Three Steps to Making Smart Haiti Donations, took a more positive approach and offered donors tips on smart giving. The article pointed to top-rated organizations operating in Haiti (including Partners in Health, which we had recommend in our Haiti post), and pointed readers to GiveWell, GreatNonprofit, Tactical Philanthropy Advisors, the Center for High Impact Philanthropy, GuideStar and other sources of information on smart giving. The article also pointed to Charity Navigator, but warned readers that relying on a charity’s overhead expense ratio was a “rookie mistake.”
• The Miami Herald ran a feature on vetting charities, which quoted me and the director of the Center for High Impact Philanthropy. The article accompanied a database of charities to consider, which included overhead expense ratio data, but warned donors that the information needed to be considered in context. The database also indicates whether each organization has previous experience in Haiti.
• The Financial Times article Efforts to channel Haiti donations pay off, examined the changes in corporate philanthropy since the Indian Ocean Tsunami. The article highlighted the better coordination of resources going to Haiti and efforts to educate corporate and individual donors about the problems with in-kind donations.
• The New York Daily News featured the advice of their financial columnist in an article titled How to make donations to Haiti wisely, which reminded donors that disaster relief was not the only need. Haiti will need extensive assistance to rebuild.
• Investment News looked at the role of advisors to donors in structuring effective support for Haiti and reminded donors that ongoing long term support was needed. The article examined the role of donor advised funds and highlighted the advice of Arabella Philanthropic Investment Advisors.

The importance to all these stories is captured in Stephanie Strom’s article in the New York Times where she pointed out the rarity of nonprofits “looking a gift horse in the mouth.” Historically, American culture has been loath to do anything other than pat people on the back for trying to do good. But in the wake of the Haitian Earthquake, we’re seeing an unprecedented move towards asking that donors do more than just give. Donors are now expected to give smart.