Why Donors Get Fooled: 5 Principles Every Donor Should Understand

Most donors want to help others, but struggle to have an impact.

If you want your donations to actually make a difference, here are 5 key principles every donor should understand.

Principle 1: Charity Scams Are Easy to Run

If you paid for a sandwich at a restaurant, but they never delivered it to you, would you notice?

Of course. It would be blatantly obvious since you wouldn't have a sandwich in your hands.

But if you gave a charity money to deliver 100 sandwiches to homeless people, how could you tell whether those sandwiches ever got delivered?

You couldn't. As a donor, you never get to see the sandwiches, or the homeless people being fed. This means that if the charity lied, you won't know that you've been deceived, and you'll likely keep trusting them, unaware that the claimed impact never happened.

And that's why charity scams are one of the easiest types of scams to run.

Principle 2: Good People Can Still Lie

Many people working at charities aren't scammers, and instead genuinely want to do good. That's great! But unfortunately, this desire to do good actually makes it even easier to rationalize dishonesty.

Think of it like this: if exaggerating a few marketing claims brings in more donations — and those donations allow the charity to save more lives — exaggeration can start to feel like the ethical choice. The alternative, after all, is fewer lives being saved by the charity.

The result? Many charities lie thinking it's the right thing to do.

Principle 3: Impact Metrics Are Easy to Inflate

In 2021, the co-founder of Effective Altruism calculated that $1 in efficient work is more valuable than saving 5 billion lives (on average).

How did he calculate this massive metric? By making favorable assumptions.

Favorable assumptions allow any level of impact to be calculated—even when the true impact is zero. And despite how favorable the assumptions are, people are still free to call them "highly conservative."

Principle 4: Give Zero Credit for Unsubstantiated Claims

If we told you that we met with Twitter and caused them to change their name to X, would you believe us?

Of course not. There are no names of people we met with, no corroboration, and no reason to believe we have that kind of influence over a multi-billion dollar company.

You'd give us zero credit for this claim unless we provided evidence to substantiate it.

This same principle should apply to charities that make massive claims with no evidence.

Principle 5: A Good Cause Isn't Enough

When people donate to charity, they often only consider who the charity aims to help.

For instance, an animal lover might see pictures of cows on a charity's website, and donate because they want to help animals.

Charity Showing Picture of Cows With Donate Button

However, identifying who a charity aims to help is only the first step in choosing a good charity. Donors should also consider the charity's strategy, and how well the charity executes that strategy.

If a charity has a bad strategy for helping animals, then animals might not be helped at all. And if a charity has a good strategy, but executes the strategy poorly, the same can be true.

In summary, there are three factors that should be considered before donating:

Beneficiary: Who does the charity aim to help?
Strategy: Does the charity have a good strategy for helping the beneficiary?
Execution: Does the charity execute its strategy well?

Closing Thoughts

Some donors worry that demanding evidence from charities is cynical or unkind, but it's actually the opposite. If you genuinely care about the people or animals a charity claims to help, then figuring out whether that help really happens should be important to you.

Diligence isn't a betrayal of kindness. It's what makes kindness work.

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