Giving 2.0: The MOOC and Opportunity Costs of Charitable Giving

Do you remember the concept of opportunity cost from your Econ 101 class?

If not, here’s a quick refresher from philanthropy educator Laura Arrillaga-Andreessen, during a recent Twitter conversation about wise charitable giving:

So, when resources are limited, how do you choose which nonprofit to fund?  As #Giving Tuesday fast approaches (and Minnesota’s Give to the Max day just concluded), what are the opportunity costs of your giving decisions — when a donation to one organization or cause is a donation denied to another?

Giving 2.0 for Everyone
This is just one lesson I learned this fall while completing Giving 2.0: The MOOC, which sought “to educate givers of all ages, backgrounds, incomes and experiences about effective philanthropy.”

Educational components of the course included short video modules of Arrillaga-Andreessen and guest speakers describing key concepts, brief workbook exercises and talkabouts (Google Hangouts with fellow students from around the world).  Plus, we completed two assignments — an assessment of a nonprofit tackling a social issue that I care about, and my personal IGAP, or Individual Giving Action Plan, to determine the best way to distribute my philanthropic gifts — such as money, volunteer time and skills, and contacts — to maximize social impact.

A few course takeaways in addition to the opportunity cost lesson included:

• Only one-third of us do any research before making a charitable gift, and only 3 percent of us compare nonprofit organizations before making donations.  Emotions drive our decisions.
• We can shift from being simply charitable to being truly philanthropic by blending short-term and long-term giving: contributing to provide immediate relief of need or suffering, plus funding of systems change to solve root causes of social problems.
• Creating a personal theory of change — identifying the causal relationships between my resources, my actions and my desired outcomes — will give me the satisfaction of tracking progress while also enabling me to improve my giving strategies.
• We should remember that nonprofits (and especially their beneficiaries) know best about what they need, so listen, learn and limit restrictions on our giving.  General operating support is golden.
• Everyone has something to give, be it time, money and other assets, experience, skills, networks or access to others’ resources.

Pause before making your end-of-year donations: How can your gifts make the biggest impact?

What’s Your IGAP?
By giving more strategically, we can not only feel good, but we can create more good by supporting initiatives that will deliver maximum measurable impact.

For access to tools that will help you develop your own Individual Giving Action Plan, check out Arrillaga-Andreessen’s website, follow her on Twitter (@LAAF), subscribe to her foundation newsletter, or buy or borrow her Giving 2.0 book.

The value of your time spent learning about strategic personal philanthropy will far exceed the opportunity cost of other uses of your time.  Especially when your year-end charitable donations deliver more social good than ever before.