The Importance of Giving

In the spirit of Thanksgiving, I’d like to take a week off from the technical tax stuff I’ve been discussing, and instead talk about something potentially more meaningful: how to give effectively.

A lot of the material on this site talks about furthering your own finances—how to invest it wisely; how to save it for the future—but I don’t mean to suggest that hoarding is the only way, or the best way, to live life. I don’t think that there’s anything inherently wrong with having a lot of money; I think that a lot has to do with how you use your wealth. And to that extent, I think that giving away a portion of your money is a good social action.


Many philosophers have dedicated books (or even their whole careers) to convincing people about the moral virtue of giving. I’m not as well-read in the literature as they are, nor am I as educated in philosophy, so I won’t attempt to make that case better than they already have.

Instead, I want to focus on some of the hang-ups that young people face when considering giving, and hopefully help you resolve those issues. By making it easier—and more rewarding to yourself—to give your time or resources, we can hopefully create a world in which giving more is the norm.

Why should you give your time or money to help people? Beyond the moralistic accounts referenced above, an increasing amount of scientific studies show that giving is actually good for you.

For example, the social psychologist Liz Dunn found that spending relatively more money on other people predicted higher levels of happiness, whereas spending more money on one’s self did not. This finding held true for people of all income levels.

 In other words, even if you do not have very much money, you are likely to obtain more happiness from spending $5 on someone else than on yourself. If you believe that money is valuable as a means to an end—as a way to achieve happiness—rather than as an end in itself, then you have very good reason to give to others.

 Now, I know that the above sounds like selfish reasoning that might be contrary to the idea of giving. But as a real person considering whether to give, you might be concerned about how that giving will impact your life. And the above shows that there is good news: It will benefit you in great ways.

 This giving does not have to be material to help another person (and yourself) feel better. For instance, instead of spending an hour watching television, you might consider giving an hour to work at a nearby food pantry or to serve meals to neglected populations. Even if you don’t have any money to give, these are equally meaningful ways to get involved and to put your know-how and strengths to good use.

Another hang-up facing prospective givers is the issue of where to donate. Thankfully, a series of meta-charities have emerged in recent years that attempt to evaluate the net good of donations to different institutions. In other words, they evaluate the efficacy of certain organizations and determine where your giving will do the most good.

 The charity evaluator that I recommend is GiveWell. On their site they highlight two particularly effective charities targeting disease in the developing world: the Against Malaria Foundation and the Schistosomiasis Control Initiative, which helps de-worm children so that they are better nourished and can participate in things such as school.

Each is a terrific charity, through which you can save a life for a $5 donation. (This is not hyperbole—GiveWell explains exactly how the process works.) Having trouble deciding to which to donate? Flip a coin, or donate to both!

 Of course, sometimes you might want to donate to a particular interest of yours. There’s nothing inherently wrong with that desire, but it still makes sense to consider how you can impact that interest in the most direct way. For this task, I recommend Charity Navigator and Charity Watch, which allow you to search by theme and a variety of other factors.

I know that taking on massive social issues can be daunting, even disempowering. You might think that your donations mean nothing, or that the world is doomed even if you do all you can to help rid it of disease and poverty. But economists such as Jeffrey Sachs have argued otherwise that eliminating these global problems is well within our grasps, as long as individuals contribute and do their share.

So, instead of thinking about the scale of global issues, focus on that individual whose life you are helping to save with a mere $5. Or think about a child in your community whose life you could help to improve via tutoring. By taking a series of small actions together, we can achieve a great impact—using your ambition and smarts to tackle big social problems. I wish you all a terrific Thanksgiving.