If you want to give to charity, do it wisely. Following the worldwide charity giving splurge to assist the victims of South East Asian Tsunami there have been many false charities springing up, hoping to coin the gullible out well intended monies. Be cautious if you haven’t heard the name of the charity before and if its source of proof of identity looks suspicious. Do you have any proof that the money will go where it is intended to?

But the truth is that even when giving to legitimate charities one should also consider how effective or useful they would be over and beyond legitimacy. Indeed, a substantial part of a donation to charity goes to paying for the cost of certain expenses and giving to a small start-up charity in particular means that a more substantial portion goes to costs like administration, transportation and transactions costs as against actually doing what it is intended to do – assist victims or those less fortunate.

It’s why, therefore, giving to an organisation like the Red Cross or other well established ones is more effective in international causes than giving to a smaller one. The latter has to cope with the costs mentioned above, and in the example of the Tsunami victims substantial fixed travel costs just to get to South East Asia whereas the Red Cross is more capable to do so from the start. The small charity also collects less than a large international charity group like the Red Cross does, and as such cannot spread fixed costs out over whatever the items it is hoping to deliver (humanitarian aid, water, etc) – which again the Red Cross can due to it’s ability to handle bulk transactions.

As such one gets more bang for their buck. Older, larger and more reputable organisations can also be more circumspect in the use of aid money, as well as using it more intelligently. Yes, it’s true that a good deal of charity resources do come from volunteer work or donations of what they require but away from the corner soup kitchen and in larger international charity schemes it inevitably demands more thought.