When do you expect donating money through Give For Good to be better for the charities than donating money directly to the charities? I’m under the impression that non-profits are allowed to invest money, so naively I expect that I can donate directly to a charity and let the charity make its own evaluation about whether to invest or spend the donation.
We encourage people to do both: support charities now AND support their futures. When you support charities directly, they will spend your money directly. The difference with Give For Good is that with us, your one-time donation results in a stable income for the charity year in, year out.
“They will spend your money directly”—seems like a strong statement, makes it sounds like charities usually do not invest any of the money they receive. Is that true? I don’t know, just flagging this for further discussion.
thanks for having such a detailed look at our website, much appreciated!
To answer your statement, see my reply to Tom, most charities that I know of have legal limits on how much money they are allowed to invest legally, it is intended for backup/reserve reasons. I don’t know many that invest as a source of income (although they should!!).
thank you for your question and interest. There is a point in time when the profit from the investments becomes more than the original donation. When calculating this point, it is important to take inflation into account (because money becomes worth less over time). It differs at which period in history you look for when this occurs, because the profits from stock investments differ per period (but are on average 9.1% per year in the past 150 years). In the example that is shown on our website, we show what would have happened if someone had established Give For Good 100 years earlier, so in 1920. If that had happened, the “point” that I speak above when the inflation-corrected profit from the investments had overtaken the value of the initial donation occurred after 9 years.
With regards to your question/statement that non-profits are allowed to invest: this is a bit more complicated. In most countries that I know of, non-profits are only allowed to invest money as a ‘reserve’. And there are limits to how much they may keep as a reserve. It is often not allowed to invest money as a primary source of income. If charities would be allowed to do this, we would certainly try to convince them of our model, because we think it generates much more benefit long-term than spending the donations immediately.
Things are a little different for philanthropic funding foundations. They very often apply our model—investing their funds—and then give the profits each year to charities or they select projects themselves (e.g. grants for students). Their model is the same as ours and they apply it for the same reasons as we do (see my reply above to Lukas).
When do you expect donating money through Give For Good to be better for the charities than donating money directly to the charities? I’m under the impression that non-profits are allowed to invest money, so naively I expect that I can donate directly to a charity and let the charity make its own evaluation about whether to invest or spend the donation.
Related: this quote from the FAQ on their website
“They will spend your money directly”—seems like a strong statement, makes it sounds like charities usually do not invest any of the money they receive. Is that true? I don’t know, just flagging this for further discussion.
Dear Lukas,
thanks for having such a detailed look at our website, much appreciated!
To answer your statement, see my reply to Tom, most charities that I know of have legal limits on how much money they are allowed to invest legally, it is intended for backup/reserve reasons. I don’t know many that invest as a source of income (although they should!!).
best,
Rik
Dear Tom,
thank you for your question and interest. There is a point in time when the profit from the investments becomes more than the original donation. When calculating this point, it is important to take inflation into account (because money becomes worth less over time). It differs at which period in history you look for when this occurs, because the profits from stock investments differ per period (but are on average 9.1% per year in the past 150 years). In the example that is shown on our website, we show what would have happened if someone had established Give For Good 100 years earlier, so in 1920. If that had happened, the “point” that I speak above when the inflation-corrected profit from the investments had overtaken the value of the initial donation occurred after 9 years.
With regards to your question/statement that non-profits are allowed to invest: this is a bit more complicated. In most countries that I know of, non-profits are only allowed to invest money as a ‘reserve’. And there are limits to how much they may keep as a reserve. It is often not allowed to invest money as a primary source of income. If charities would be allowed to do this, we would certainly try to convince them of our model, because we think it generates much more benefit long-term than spending the donations immediately.
Things are a little different for philanthropic funding foundations. They very often apply our model—investing their funds—and then give the profits each year to charities or they select projects themselves (e.g. grants for students). Their model is the same as ours and they apply it for the same reasons as we do (see my reply above to Lukas).
Hope that clarifies things!
best regards,
Rik