Maximising Your Impact Through Donations
Published on 13th October 2023 by Jessica Wen
As we approach the end of the year, I've been reflecting on how our donations can create meaningful, tangible impact.
Why should I give?
Donations are some of the most effective ways that we, as individuals, can make a positive impact. Donating regularly to effective charities reminds me that even a little goes a long way. Here are some reasons why effective giving means a lot to me:
Helping those who need it most: Charitable donations provide crucial assistance to people and animals I cannot otherwise directly help. By donating, I can directly contribute to improving the lives of those less fortunate than me.
Supporting effective solutions: Many effective charitable organisations have a deep understanding of the issues they tackle and employ evidence-based approaches to address them. By donating, I am supporting these organisations’ efforts to implement effective solutions to make a meaningful impact.
Enable others to do the work I cannot: Charitable organisations have the expertise, resources, and infrastructure to address complex social, environmental, and many other challenges. By donating money, I enable these organisations to carry out their important work on a larger scale than if I personally worked “on the ground”, and reach more people in need.
Cultivating a sense of gratitude and fulfilment: Giving to charity helps me feel a sense of gratitude and purpose. It reminds me of the advantages and privileges I have, and encourages me to share them with others. Knowing that my donations are making a positive difference brings me a profound sense of joy and satisfaction, and this brings out the best qualities in me: empathy, compassion, and generosity.
Everyone has their own personal reasons for donating, and I think these should be celebrated. Giving What We Can features lots of stories of others who have pledged 10% of their income to effective charities. You can join your local or online Giving What We Can community to celebrate and support effective giving!
Why should I give?
Ever considered the top 1% of income earners on a global scale? It might be tempting to picture famous billionaires or Hollywood stars. However, let's pause and reflect: did you think of yourself?
You don’t necessarily need to own a mansion and a fancy car to be in the top 1%.
That’s right. If you're reading this, especially if you live in the US and work a full-time job, you're likely in the top 1% globally. An annual income of just $58,000 after tax would put you in this bracket. Even if you earned around $29,000 per year (about $14 per hour), you’d still be within the top 5%.
While this might come as a surprise (when I was earning that much, I certainly didn’t feel rich!), it just goes to illustrate the stark income gap between rich and poor nations, and how little others around the world have.
This has intriguing implications. It means that you — yes you, the individual reading this right now — can make a tremendous impact on the lives of the less fortunate, even if you don’t have Jeff Bezos’s wealth. The beauty lies in the opportunity.
It's inspiring to think that by allocating 10% of the average US mechanical engineer's annual salary of $91,000, more than 7,200 treatments for schistosomiasis can be funded, and more than 1,300 insecticide-treated bednets can be distributed, equivalent to saving around 2 healthy lives. Even just donating 1% would protect 31 children from malaria for a year.
It’s likely that even if you don’t earn this much, you can still have an extraordinary impact by donating a percentage of your income. You can calculate your own potential impact using Giving What We Can's "How Rich am I?" calculator or One for the World's Impact Calculator. The opportunity to have an outsized positive impact is not exclusive to the Bill Gates of the world, and we certainly can’t wait for billionaires to solve the world’s most pressing problems.
Have more concerns about donating to charity? Giving What We Can tackles some common concerns here.
Where should I give?
Some interventions are much, much better than others
Careful thinking about how and where you donate can make a surprisingly large difference in the lives of others. Picture this: you have $1000 to donate to try and help people who suffer from or are at risk from HIV/AIDS. There are five interventions that experts in global health use to help people in this situation:
Antiretroviral therapy (drugs)
Surgical treatment for Kaposi's Sarcoma (cancer caused by HIV)
Prevention of transmission during pregnancy
Education for high-risk groups
Condom distribution
How would you allocate your $1000 budget? How would you even decide how to allocate your budget? Does this decision even matter?
It turns out that experts have compiled a 1440-page resource of global health interventions in the Disease Control Priorities in Developing Countries 2nd edition (hereafter DCP2), and analysed all of these interventions’ cost-effectiveness. If you spent $1000 of your imaginary budget on surgery, you’d be able to save around 0.02 years of healthy life. That’s not bad, but it pales in comparison to giving out drugs, which is 75 times more cost-effective (providing 1.5 years of healthy life for every $1000). However, these are both far less cost-effective than the most cost-effective intervention: education for high-risk groups, which blows them out of the water at around 27 years of healthy life for every $1000 spent. The full graph looks like this:
The distribution of HIV/AIDS interventions.
The least effective HIV/AIDS intervention does less than 0.1% as much good per dollar as the most effective – it doesn’t even register on the full graph. Put another way, the best of these interventions is about 1,400 times as cost-effective as the least good.
It’s important to note that not every initiative has positive effects. Consider if you spent that same $1000 on something like the "Scared Straight" program aimed at preventing juvenile offending. This endeavour is estimated to have a negative effect, effectively costing society $293,000 for every $1000 invested.
Let’s think concretely about what this means. Our resources are finite, which means that selecting less effective methods to assist those in need can translate into hundreds, thousands, or millions of additional preventable deaths, depending on the scale of funding involved. This startling reality underscores the critical role of rigorous evaluation and prioritisation in altruistic efforts.
In summary, your impact can vary wildly depending on where you donate. A 2013 paper by Dr Toby Ord compared 100 health interventions in developing countries and found that the best interventions were around 10,000 times more cost-effective than the worst, and around 50 times more cost-effective than the median. The distribution of these 100 health interventions is below. You can read more about this distribution phenomenon in 80,000 Hours’ analysis of how much solutions to social problems differ in their effectiveness.
Intervention cost-effectiveness in global health in order of DALY per $1,000 on the y-axis, from the DCP2. Compiled from The Moral Imperative Towards Cost Effectiveness by Toby Ord.
These numbers unveil a world of difference in the potential impact of various interventions. It's about choosing not just the good, but the exceptionally great, when it comes to making a significant difference in the world.
How do I know which charities are the best?
When considering which charities to support, charity evaluators do the hard work in estimating which charities are the most effective. it's worth noting that different organisations excel in various cause areas:
GiveWell, for example, specialises in global health.
The Happier Lives Institute focuses on global well-being and mental health.
For high-profile disaster relief, Charity Navigator could help. (Be cautious because high-profile disasters often reach diminishing returns for donations very quickly as lots of people are aware of them. Every day, 15,000 children die from preventable causes. This is an ongoing disaster and a severe failure of media attention.)
For those concerned about climate change, Giving Green provides valuable insights.
If longtermist causes pique your interest, the Long-Term Future Fund (LTFF) is a strong choice.
For enhancing the effectiveness of the EA community, the EA Infrastructure Fund (EAIF) plays a crucial role.
We're proud to disclose that High Impact Engineers is funded by the EA Infrastructure Fund (EAIF). Donating to the LTFF and EAIF from now until February may allow you to multiply your impact as Open Philanthropy is matching donations 2:1.
How could I boost my earnings?
If you're looking to increase your income and, subsequently, your capacity to make a meaningful impact through donations or other means, there are several strategies you can explore.
1. Skill Enhancement: Consider honing your existing skills or acquiring new ones that are in demand. Investing in further education, professional certifications, or gaining expertise in an emerging field can significantly elevate your earning potential. In this way, you can pick up skills and knowledge to work towards a more impactful job and have impact at the same time.
2. Job Market Research: Research the job market to identify industries, positions, or even geographies where earnings are generally higher. In today's digital age, job market research tools such as LinkedIn or Indeed are readily available, making it easier to identify opportunities that align with your skills and interests. It’s always generally good to keep an eye on competitive alternative jobs because it’s proven that job changers moving between firms have higher pay growth than those moving within firms or people who stay in the same job.
3. Tax-Efficient Strategies: Optimizing your finances can be as impactful as increasing your income. Ensure you're aware of tax-efficient strategies, such as investing in retirement accounts, understanding tax deductions, taking advantage of tax credits, and donating pre-income-tax (e.g. through an employer’s payroll giving scheme) that can reduce your overall tax burden.
4. Freelancing and Side Gigs: Many professionals today engage in freelancing or side gigs to supplement their primary income. Exploring such opportunities can provide an additional revenue stream that can be directed toward high-impact causes, or provide an opportunity to directly contribute to high-impact organisations.
5. Negotiation Skills: Don't underestimate the value of good negotiation skills. Whether during salary negotiations or contract discussions, the ability to negotiate effectively can result in more favourable financial terms.
6. Networking: Building a strong professional network can open doors to opportunities you might not find otherwise. Networking can lead to job offers, collaborations, and partnerships that could boost your income. Networking could also land you your next high-impact job role!
To assist you in navigating these strategies, Yield & Spread provides a range of free resources and tools. These resources can help you assess job opportunities, identify tax-efficient donation strategies, and gain insights into areas that can enhance your income.
Feel free to reach out if you have any questions or would like more information on how your donations can have a profound impact, and how this can work in conjunction with an impactful career.
Together, we can make a real difference.
