Thinking about Giving?

Written by Julie Fortin, CFP® on .

Your brain might need a little help
The Martyrdom Effect

Human beings admire hard work and in that, we admire physical effort in giving even when less physically arduous efforts may have a greater impact.

Many of us choose to give in ways that require a great deal of physical or emotional energy. We run marathons for cancer research or take part in the 21 day push up challenge for PTSD awareness.

Volunteering our time and physical capabilities to a cause we care about has value and, especially for children, can instill thoughtfulness, charity and hard work. But, donating to most charities has a greater impact on the groups served than participating in a physical challenge.

In an article from CNN.com in July of 2015 it was identified that "More than 17 million people participated in the Ice Bucket Challenge to support ALS and other causes. Nationally, 2.5 million people donated $115 million to the ALS Association. The organization says the event was probably the single largest episode of giving outside of a disaster or emergency."

While ALS Association has certainly benefited from the campaign to raise awareness for ALS, the amount of effort put in by more than 17 million people far outweighs the amount raised.

Millions of people filled buckets with ice and ice cold water, went outside and dumped them over their heads regardless of the season. If everyone who participated in the ice bucket challenge had donated $20 instead, the amount raised would have been a whopping $340 million.
Ironically, had ALS had a campaign simply asking people for twenty dollars, there would have, likely been little participation. Therein lies our inherent nature to prefer the arduous regardless of impact discrepancy.

There is nothing wrong with volunteering and, as a part of the whole in terms of avenues for good will to charitable organizations, it rounds out the need for bodies on the ground and not just money in the bank. Also, some people cannot afford to donate, so they donate their time instead. "But it's important to make sure that we aren't being misled by the Martyrdom Effect. Sometimes the most-effective way to give is also the easiest."

The Other-Nothing Effect

In a research study conducted by Dr. Christopher Olivola and shared by the Wall Street Journal, which is the inspiration for this article, it was found that how a choice is framed has a great deal to do with the outcome.
Dr. Olivola gave participants the choice to receive $15 for themselves or have Unicef receive $35. At the outset, people seemed to quickly choose the $15 for themselves, however, when they were reminded that Unicef would receive nothing, if they took the $15, they were more likely to give to the organization.

In understanding the Other Nothing effect it may help us consider giving in a different way or to be more generous with our expendable income. If we all, for example, cut one venti Starbucks latte off our weekly regiment and instead donated that money to charity it would add up to $241.80 per year. That amount of money could provide thousands of vaccines to children in third world countries. Sure you'd be out 52 coffees; but remember, if you had those coffees, they would receive nothing.

The Unexpected Joy of Giving

It is often assumed that giving money away is a choice between our own satisfaction and the well-being of someone else. When looked at that way, we are making a sacrifice in order to create a benefit for another. But the reality is we too benefit from giving.
There is research to confirm that spending money on someone else makes people happier than spending it on themselves. This so-called "generosity gene" gives us joy when we do something for someone else.

Rewire your Thinking

People's mindsets about giving often give greater deference to charitable exercises that require a great amount of personal emotional and physical sacrifice. While nothing should be taken away from the fact that those who give themselves are going a great amount of good, the sources of this article demonstrate that sometimes the path of least resistance can be the best choice for en masse philanthropy.

Perhaps, we just need to shift our own thinking a bit. If we want to improve our world, donating to charity can have a sizeable impact. And, bonus, it improves our own mood too.

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