‘Worth’: Advice to Donors on Making Effective Gifts

Andrew tobias, a columnist for Worth magazine, urges people who are frustrated by high overhead costs at charities to consider setting up their own “mini-charities” so they can control the costs.

In the magazine’s March issue, Mr. Tobias, author of the book My Vast Fortune, says he empathizes with the problems charities have in controlling their fund-raising expenses. “If you were running a charity,” he writes, “and found that for $1-million you could do a mailing that would bring in $1.2-million, would you do it? If not, you’d be losing the chance to net $200,000 for your good work. But if you did go for that $200,000, it would mean that 83 per cent of the money people mailed in simply went to cover the cost of the solicitation.”

To avoid such debates over fund-raising expenses, he advises donors to get involved with small charities or other grassroots efforts. For instance, he suggests that donors consider setting up a local basketball league and paying for flyers, T-shirts, trophies, and other needs for it.

Making such a gift would not be tax-deductible, unless the donor worked with a local Y.M.C.A. or other charitable organization, notes Mr. Tobias. But, he says, a donor needs to find more ways to make sure a gift is used in ways that have “little or no sales and transaction costs to dilute its impact.”