How to Give Your Fortune Away

You write a check to charity, but does it really make a difference? Enter the team of Penn researchers cracking the code on what kind of giving works best. (Surprise: It’s not always what you think)

“Some people say, ‘Well, it’s charity,’” says Reese, “‘and if some of the money doesn’t make it, if there’s leakage, it doesn’t matter.’ I totally disagree. How many of the world’s ‘intractable’ problems are intractable because of inefficiencies that are built into our charitable system?” When the eldest of her five children started kindergarten 23 years ago, Reese began a long acquaintance with canned-food drives at his school. “My kids and I,” she says, “have collected cans, bought cans, filled paper bags with cans, shipped cans.… ” At a CHIP seminar this past fall, she discovered that canned-food drives are the single most inefficient way to address hunger in America. “If you take a dollar you spend buying cans and instead give it to a regional food pantry, you can magnify that dollar up to 52 times,” she says. “Who knew?” When she asked the school, “Why are we still doing can drives?,” the response was, “It makes a good story in the local paper, and the kids like doing it.”

Wooing philanthropists is its own cat-and-mouse game. Research has proven that if you show potential donors a photo of a sad little orphan, they’ll give you x dollars. If you show potential donors the photo and also provide them with statistics on how many sad little orphans need help, they’ll give you less. In fact, just having people solve a few mathematical equations before asking them for money drives donations down. It would seem that logical thinking wars in our brains with empathy. That makes charity’s newfound focus on outcomes as problematic as baseball’s obsession with pitch counts, which has drastically lengthened games. “People are used to seeing returns on their investments,” says Eileen Heisman, president and CEO of Jenkintown’s National Philanthropic Trust, a nonprofit vehicle for charitable giving. “But the charitable world is different. Say you’re fighting teen pregnancy in high-school girls, and you start a program in second grade. You can’t measure the outcome for years.”

With its venture-capital roots, CHIP leans toward logic, but Rosqueta keeps an eye on the human aspect—the “story”—even as she crunches the numbers. No matter how much you have to give, there’s a way to give it well. The data Reese and Gould digest before they invest their fortunes can be found on CHIP’s website. Just don’t visit right after you balance your checkbook, please.