Giving Till It Helps

Alex Steffen Harry N. Abrams Books

To a responsible citizen with a desire to change the world, knowing how to give effectively matters. Those of us who are fortunate enough to have spare pennies can spur progress by donating them. We don't need massive wealth to be charitable. A number of great systems exist for stretching modest contributions, building philanthropic networks, and successfully raising funds from numerous small donations. Remember, it's not the size of the coffer that counts, it's how you use it.

Enabling Philanthropy

While there's no shortage of opportunities to support important causes, there's usually little opportunity to see our money have measurable effects on the people we wish to help-especially when we only have a small amount to give. But there is a way for us to leverage the least amount of money into the largest measurable effect over time; there is a type of giving that multiplies itself.

Think of this approach as 'enabling philanthropy': a virtuous action that enables someone else to take a virtuous action. We don't have to give annual checks to umbrella organizations and hope that our money actually does some good. We can take a relatively small amount of money and aim it at the precise point where it can do maximum good. We can give this money not as charity, but as an investment in the ambitions of poor people in villages and squatter cities, on the condition that the recipients magnify this seed by starting a small business or enlarging an existing one. In addition, we can strongly encourage them to take some small portion of their growing investment to help someone else.

This is a virtuous circle that keeps on giving, paying its benefits forward generation after generation. There is also an optimistic assumption in this scheme: The 2 billion poorest people in the world are really 2 billion entrepreneurs just waiting for seed money. If you give it, they will build upon it.

As you look for opportunities to start your own virtuous circles, keep in mind the following guidelines:

Aim your gift at those with the least means, to whom small amounts make a huge difference.
Give at least $200. That's enough to make a real impact on the poorest recipients and to allow them to address their dreams of tomorrow. If you give less than that, the money can help only with immediate needs. For ways to leverage a smaller donation, see 'Giving Circles.'
Ask yourself if the gift will be able to expand.
Make sure that the agency that facilitates your donation sends the funds directly to individuals. The more steps between your donation and the recipient, the less impact it will have.

The following organizations take three different approaches to enabling philanthropy:

Heifer International: For 50 years, the Heifer Project has been providing families in developing countries (and in areas of the United States) with breeding pairs of animals: cows, goats, pigs, rabbits, ducks, and so on. When a family receives a breeding pair they get meat, milk, or eggs, but more importantly, they get a source of income: They can sell the offspring. Each recipient must agree to give one breeding pair of offspring away to another family, thus paying the gift forward.

Opportunity International: The payback rate on tiny loans to workers in developing countries is greater than the payback rate on large loans to their home countries. In other words, from an outright profit perspective, you are better off loaning money to a Bolivian peasant than to the Bolivian government. Several nonprofits have pioneered microcredit loans on a large scale and for large investors. For a helpful citizen, though, it's easy to contribute funds to a wide variety of microloan programs through Opportunity International. This organization works through Trust Banks, groups of 20 to 30 (mostly female) borrowers who meet weekly to cross-guarantee the loans.

Trickle Up: Rather than dispensing loans, Trickle Up issues outright grants as seed capital for micro-enterprise hopefuls. The organization makes grants (typically $200) to those looking to open small businesses, like food stalls or repair shops, on the condition that grantees undergo basic business training, commit a minimum of 250 hours in the first three months to their venture, reinvest at least 20 percent back into it, and keep an account ledger. Follow-up expansion grants are offered, too.

Giving Circles

The virtues of helping a person in the global South jump-start a small business are undeniable, but what do we do if we can't afford to make a $200 gift on our own? We can turn our $20 into $200 by coordinating our donations though giving circles.

Giving circles are easy to set up and easy to manage: We donate a small amount of money and ask our friends and coworkers to match our donation. Pooling our resources and directing the combined donation to smaller, more specific causes is much more effective than writing a small check to an organization that tackles 'the environment' or 'human rights abuses.'

For example, One By One is building an online network to fight obstetric fistula, an injury to mothers caused by long, obstructed labor that can be debilitating if it is left un-treated. The condition is relatively inexpensive (about $300) to cure, but women in the developing world, particularly in Africa, rarely get the treatment they need. One By One's network organizes individual giving circles whose tax-exempt donations to the United Nations' Campaign to End Fisutla go toward buying one woman the surgery she needs.

Excerpted from WorldChanging: A User's Guide for the 21st Century, a project of WorldChanging.com, edited by Alex Steffen and available from Harry N. Abrams Books; www.hnabooks.com.