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When you look at "Bang for the buck" there are two kinds of "bang."

The feel-good bang.
I will not at all try to dispute the idea that giving $20 directly to

a homeless person will make you personally feel better about yourself and the world.

Also, I will not dispute the idea that giving $20 to John Q. Homelessman is likely in many cases to provide much more direct benefit for John specifically. (Provided that John can make sound decisions about taking/using the money, which he probably can.)

In fact, what would be even better is if, instead of just giving $20, you gave $20 once in a great while but stopped to say hello every day. Helping any and all of your neighbors who need it, and making personal connections with people in your community is an important part of charity.


The actual impact bang.
Charities exist because individual people realized that they could accomplish more by working together and combining efforts. Donating $20 to a charity will far, far more to help "the homeless" than just handing a $20 bill to some random guy.

For some reason, the concept of "overhead" has (wrongly) become a really dirty word in the nonprofit sector. People think, "Oh, no, I can't donate $20 to X charity because $2 of it will go to overhead and I want ALL of MY money to go directly to helping people." The fact is, overhead (that is, paying for office space, computers, and professional staff) allows charities to help far more people.

Why do charities need to pay for staff, computers, offices, etc? Why can't they just give all the money directly to homeless people?

Here's why:

  • It takes effort to find the people who need help.
So, let's say you give $20 to a homeless guy. Great! Good for you! How did you know he needed the money? He was probably standing by the side of the road (or outside of a store, etc.). Maybe he was even asking you for money.

What about his friend who is sick and can't make it to the side of the road? What about the homeless man who is out trying to apply for jobs every day and doesn't have time to stand by the side of the road? What about the folks who are have to be at work/are too scared/are too embarrassed/are physically unable to be out every day in your line of sight.

"The Homeless" aren't just the people you see -- and if everyone's version of charity were based on giving to whoever happens to capture your attention, we would be left with a high, high number of people who need help who would never be able to get it.

  • It takes organizations to give sustainable help.
So, the guy you gave $20 to. He probably went and spent it on, say, food. Or a pair of gloves. .. ... or something else. The immediate gratification sure feels good for everyone involved -- but what does he do the next day? Get $20 from someone else? Can he count on you being able to help him next month when he's cold?

Some charities work towards long-term impacts for the homeless (e.g., helping homeless people find jobs, find permanent housing, etc... ... the whole give a man a fish/teach a man to fish cliche.) However, even the charities that fill immediate basic needs (like, soup kitchens or shelters) provide something hugely important that your $20-direct-to-a-guy does not: Sustainability.

Giving a guy $20 can help him eat that week. Giving a soup kitchen $20 helps ensure that a meal is there for folks whenever they might need it most ... right now, and again next week, and still there three months from now.

  • It takes professional knowledge to maximize dollars and provide efficient help.
Back to Mr. John Q. Homeless. Let's say he takes his $20 to the grocery store. What is he going to buy? Maybe some bread and lunchmeat and things? He may or may not have access to a stove where he can cook himself a hot meal. How much do you think he can buy for $20? If he really stretches it, and has some way to prepare/store food he could probably eat for a few days on $20. If he has to buy ready-to-eat food, he probably won't be able to stretch it quite as far.

Charities hire program staff with specific skills and experience related to the programs and services they provide. Back to our hypothetical soup kitchen: the organization can negotiate group/bulk purchasing contracts and they have staff knowledgeable in running efficient program operations -- giving them the ability to purchase, prepare and store several times the amount of food John Q. (and probably you) could on his own.

  • The effects of a charitable donation often go beyond the obvious.
There are two branches of this that I'd like to mention. First, oftentimes local community support for an organization (that is, when a charity can say "1,000 people in this city have given us $20 each) will drive corporate and government support. It can be difficult/impossible for an organization to get grants and funding from foundations, corporations, and even certain government programs without being able to demonstrate significant community involvement (monetary or otherwise). That is, your charitable donation will quite often help the organization to get additional large-scale funding (or, donations of good/services).

Second, oftentimes charities provide benefits beyond their stated purpose. Back to the soup kitchen example - many beneficiaries (e.g., homeless people) help out in operating the kitchen (e.g., cooking/cleaning) as either staff or volunteers. Not only does being helpful make people feel good, but it can also provide an experience line-item on a resume/job application. Less tangibly, coming together for dinner at a soup kitchen can provide an avenue for socialization and information exchange that might not be available elsewhere.

So, summing up my answer to the question....

  • $20 given to a person will have a greater impact for that specific person at that specific moment.
  • $20 given to a charity will have a greater impact for "the homeless."

Just as a caveat about which charity to donate to:
We all know that there are a few "bad apple" charities out there -- that either waste money or that reinforce oppressive systems that cause homelessness. These are the exception, not the rule.

If you really want to make the greatest impact with your money, do some research before you donate. Better yet, volunteer and become directly involved in the charity.

Disclaimer: I do work for a charitable nonprofit (though my charity does not provide services for homeless people).

Browse photography at Denver.Gallery.