Warren Buffett’s Charitable Donation Tip…”Impact”

To maximize your impact, there are two ways to analyze the giving you’ll be doing.

First, your portfolio: This, simply put, is the collection of all your donations. Just as you might dedicate some percentage of your investing portfolio to “just for fun” investments, you might donate a small percentage of your total charity to “gut” giving, like supporting your friend’s fund-raiser triathlon.

Next, your toolkit. In addition to money, there are many different ways you can help. For example, you can dedicate time, professional skills or outreach to your social networks. When you’re considering a gift . . . you can ask yourself first, ‘Is a cash gift to the organization an effective way for me to make a difference, and second, what else in my toolkit can I use to increase my impact?’.

What about measuring the organization’s impact? One thing to pay attention to is what the numbers an organization provides about its impact really mean. For example, a food bank might provide information about how many people it serves or how many pounds of food it provides, 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.

If you’re deciding between two organizations that address the same issue, keep in mind that one may serve more clients, but the other might have a longer-lasting impact on fewer people.