Charitable Giving Tips from Warren Buffett

If you are a big Buffett fan like I am, it’s important to stand up and take notice when he wants to teach you something for free.

Warren and Doris Buffett are quite the pair when it comes to giving to charities. Just last year alone Warren Buffett gave away $3.084 billion. Now, if that weren’t enough, the 85 and 83-year-old brother and sister are sharing a free online course called Giving with Purpose. It’s about ways to maximize on your charitable donations, and do so at your own pace.

One of the biggest excuses for avoiding charitable donations is, “I don’t have enough money to make a difference.”

But regular people were the biggest source of charitable donations during 2012. According to Giving USA, we donated $228.9 billion.

After checking out the six class course, you have to wonder if it will make you want to give even more.

But the best take away from the Giving with Purpose course was the “Rise Framework for Social Change.” This is a fancy acronym that clearly represents four things to be out on the lookout for when deciding if a charity deserves your contribution. Sometimes, wondering where to begin and who to give your money to is reason enough to stop from giving charitably.

We will look at the first two steps of the four step process today, and go into the second two steps in tomorrow’s update.

Let’s dive into steps one and two right now…

1.     Relevance

Everyone in the world is hit up for donations from time to time, by roommates, friends, aunts and uncles, coworkers and previous acquaintances. At times we will give to a charitable donation because we want to help somebody that we love. Other times we will trust our gut. That’s all well and good, but it’s important to avoid your blowing “give to charity” budget without knowing full well that the money you donate is going to make an actual difference.

Buffett tells us to start by clarifying the things that motivate you. The Giving with Purpose course recommends asking a number of questions in order to decide. Here’s a couple of examples:

  • ·        Do you prefer to address persistent needs like homelessness or those that arise unexpectedly, like humanitarian crises and natural disasters?
  • ·        Do you see giving as a way to support family and friends by contributive into the issues that are important to them or have touched them personally?
  • ·        Are there specific problems or issues you feel compelled to help address, such as education, health, hunger or the environment?
  • ·        What issues do you care about, and why do you want to support them?
  • ·        Are there organizations or institutions you feel an obligation to support the cause of your personal affiliation or use of their services, such as your alma mater?
  • ·        Where do you want to make a difference? Locally, nationally or internationally?
  • ·        How does your sense of community factor into your giving?


2.   Impact

In order to maximize your impact, it’s important to begin using two ways that will analyze the giving you plan to do.

First, look at your portfolio: Your portfolio is going to be the collection of places to which you donate. It’s possible that you dedicate a portion of your stock portfolio to more risky, fun investments. You’ll be doing the same thing with your charity portfolio, where you give to fundraisers and charitable organizations based on “gut feelings.”

Second is your toolkit: There’s more ways to help than just donating money. As an example, you can dedicate your professional skills, time or reach out to your social networks on behalf of charitable organizations. “When you’re considering a gift… You can ask yourself first, ‘Is a cash gift to the organization an effective way to make a difference,” and second, what else in my toolkit can I use to increase my impact?’” we learned from Rebecca Riccio, course instructor.

Let’s not forget about measuring the impact of the organization…

“One thing to pay attention to is what the numbers an organization provides about its impact really mean,” says Riccio.

As an example, a local food bank could provide information about how many people it serves and how many pounds of food it gives out, but “they won’t necessarily tell you whether the food bank reaches out to the households at greatest risk, or if they’re referring people to other services to help them address the reasons that hunger is a part of their life,” explains Riccio.

If you’re trying to choose between two organizations that help the same issue, it’s best to keep in mind that one may serve more people, but the other may have and more powerful impact on the fewer people that they serve.