There’s something wrong with charitable giving. It’s not the #ALSIceBucketChallenge.

If, like myself, you’ve been fascinated by the viral marketing sensation that is the ALS Ice Bucket Challenge…you might also have some wonderings about whether it’s good, bad or neutral for the charitable sector. Having spent a fair bit of time thinking about these kinds of issues, I’m going to offer some thoughts.

First, if you haven’t read this article from Maclean’s, I recommend it. The Cole’s notes are that the author makes some great points about why we should rationally allocate our limited charitable dollars to the causes that have the greatest needs, where our dollars can do the most good, and for what is most urgent. Hard points to argue with. Of course we want to act rationally, which is why you can buy a 700 horsepower Dodge Challenger. The free market caters to the rational.

Why shouldn’t someone donate based on emotion? Or having a bit of fun? Or because a friend or family member challenged them? The simple reality is that the entire charitable sector, when you think about the enormity of the challenges they’re facing, is pitifully underfunded. The issue at hand isn’t whether heart disease is gathering 90$/patient vs. ALS pulling in 3000$. The issue is that neither of those numbers are big enough to solve the respective problem. Instead of lamenting that the small pie isn’t being sliced in the most rational way…why the hell aren’t we trying to make the pie bigger?

Fundamentally, the author (and other “small pie” thinkers) are correct. In a world with fixed levels of charitable giving, the best approach would be a rational one. I don’t believe that we live in that world (both rational and one of fixed giving potential). A good place to start might be a 20% luxury tax on things like 700 horsepower muscle cars, a tax that went directly to charitable organizations. That might even help some people make more rational decisions in general.

Incidentally, the author of the Maclean’s article works hard to help build free markets in developing countries through his nonprofit organization Building Markets. One of the fundamental tenets of a free market? Driving purchasing decisions through emotion-based advertising. Which is why, in 2010, internet and tv advertising was a 76 billion (that’s billion with a b) dollar industry. How, then, is the charitable sector going to compete with that?

How about a couple of viral slacktavist challenges and celebrity videos…obviously not the ultimate solution to a small-pie problem, but not the end of the fundraising world as some would make it out to be.

Is there something wrong with how much money society allocates to solving poverty? Cancer? Environmental decline? Yes. Does the #ALSIceBucketChallenge make that problem worse? I’d say doubtful.





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