General Donations Tips from Stiftung Warentest in conjuntion with the DZI – Spendensiegel (The German Central Institute for Social Issues – Donation Seal of Approval):
- General versus earmarked donations. Donor stipulated donations limit the ability of aid agencies to allocate funds to the most promising projects. This is particularly problematic with donations for victims of natural disasters as the possibilities of intervention only become apparent after some time has elapsed. Transfers for general use allow aid organizations more flexibility and they can put the donation to the best possible purpose at that time.
- Cash donations versus donations in kind: Cash donations can be distributed more easily and efficiently to recipients. Donations in kind may incur high logistics costs for the aid organization.
- Donate concentrating on just a few organizations. Concentrating on a few aid organizations facilitates the seriousness check and reduces administrative costs as many aid agencies send donation requests to former donors.
- Bank transfers versus the collection box. With bank transfers, there are fewer possibilities of abuse than with a donation into the collection box. Fundraisers at information stands in pedestrian zones often earn a commission from your donation.
- Informed decisions versus spontaneous donations. Dubious relief organizations are often characterized by emotional rather than informative advertising. Donate only after informing yourself, on the Internet or elsewhere, about the organization.
- Transparency. Does the organization provide transparent information on the use of funds, the results of their projects, the project evaluation and the structure of the governing bodies? Does the aid organization publish an annual report with meaningful information on the use of funds? Is there confirmation of the annual report by an independent auditing firm? (The DZI expects the latter of larger aid organizations with an annual revenue of 2.5 million euros and up)
Additional donation tips for donors who want to see their donations achieve the highest possible effectiveness:
- What improvements can be brought about through my donation? How many people can benefit from my donation and in what way exactly? What is the improvement compared to alternative uses of my donation?
- Donations can generally do more in developing countries. In the areas of poverty relief and health care, a similar donation for people living in extreme poverty in developing countries can generally do more than the same amount to fight poverty in developed countries. People living in extreme poverty in developing countries have substantially lower income and living conditions. Aid intervention in developing countries has substantially lower costs per person and per saved life.
- Proof of the effectiveness of the measures: Has it been proven with reliable methodology that the measures taken really have produced the promised positive effects? Does the proof which been provided come from the organization itself or from independent, trusted and knowledgeable third parties?
- Need for additional donations: Can the organization use future additional donations effectively and efficiently? Are there short- and medium-term projects that can only be realized with additional donations. Could successful projects be upscaled with additional revenue?
In the past, the research necessary to follow these additional donation tips was near to impossible for the individual donor because of the enormous time expenditure it entailed. Fortunately, today you can rely on the research and recommendations from specialized reviewers such as GiveWell to make this work easier.