Rethinking how we give to charity

I often run into two groups of altruistic people at World Economic Forum events. The first are specialists such as doctors and engineers who deliver their expertise directly to people in difficult situations. The second are those who have switched careers to help a cause they believe in.

Both groups are inspiring, not least because they approach their calling full-time and at the expense of alternative careers in the mainstream and possibly more lucrative arenas. There are also people who are not quite ready to give it all up, yet are keen to give back in any way that they can. Paying a small percentage of one’s income by direct debit into some charity ticks the basic box, but it is impersonal and often doesn’t provide a sense of contribution.

For a donor to feel good about giving, they need to sacrifice time and effort. This is the reason that people brave a challenge, conquer a fear or run a marathon to raise funds. This is also the reason that people volunteer time, on weekends for example, for charity work, whether it’s visiting the elderly or picking litter up off a beach.

There is yet another alternative, one that I call the “comparative advantage approach” to doing good. About 200 years ago, British Economist David Ricardo argued that it makes more sense for countries to specialize in their areas of relative productivity advantage and trade with each other as opposed to allocating resources to every area of absolute advantage.

This approach – when applied to social enterprise – begins with the acknowledgement that similar to other professions, the delivery of social outcomes is a specialized job that requires specialist skills. It is perhaps challenging for someone to step into a certain role for a few hours on a weekend and expect to make meaningful impact.

Instead, the following two-step approach might achieve more impact:

1. Do something that productively employs your core skills (outside of your day job and outside normal working hours) at a fully professional level of competence. For this, you should expect to get paid full commercial wages.
2. Donate the money to those who specialize in charitable services.

Whether it’s teaching at a night school on weekends, writing a book, giving a concert or providing accounting services, you should volunteer in your core area of competence. Choose an area that gives you the highest earning power for a finite number of hours.

The result of your money and your personal time will now stretch that much farther.

Author: Lutfey Siddiqi is Adjunct Professor at the Risk Management Institute, National University of Singapore and a Managing Director at UBS Investment bank. He is also a World Economic Forum Young Global Leader.

Image: Children donate money for eartquake vitims in Jinan, China REUTERS/Stringer