By Paul West
“I’ve heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.
I hate peanut butter. We all should… .”
No matter your feelings about the sandwich staple, the so-called “Peanut Butter Manifesto” written by a Yahoo! Executive in 2006 gave us a term that hasn’t worn thin yet. The “Peanut Butter Approach” is a derisive term used in business to describe spreading anything – money, energy, time – too far and too thin to be effective or useful.
In business, the peanut butter critique is usually leveled against a move like translating a small profit bump into a $100 bonus for everybody. A punch-in-the-arm bonus like $100 can easily be spent in one night and forgotten. A concentrated approach – like giving a $50,000 bonus to your top performers – helps provide incentives and keeps good people who will continue to drive up those margins.
In business, the peanut butter approach can result in under-motivated employees and suggests a lack of concentrated vision. In philanthropy, this approach can leave you frustrated and unsatisfied in your giving life.
Let’s look at a few of the issues in financial planning for philanthropy and strategies to keep yourself from spreading too thin.
The Problem with Peanut Butter Philanthropy
Donating Without Impact
The obvious issue with peanut butter philanthropy? It’s not as effective.
You don’t feed the hungry with $20 or $2,000, and you don’t save the proverbial whales with a one-time gift to the zoo. Sure, every little bit helps, but the most effective philanthropy is given in a relationship over time. Real change takes more time than money, but plenty of both.
The needs and wants of a charitable organization, just like any business, will grow and mature year over year. Directing your giving – or at least being in contact with those who know how to do it well – can help you put the money where the need is the most acute. Stay in touch with newsletters and outside media sources on your charities of choice.
Third-party organizations like Charity Navigator can be especially helpful. This group evaluates charities on their financial practices and transparency. Charity Navigator also breaks down charities’ missions and performance indicators. They also keep steady contact with fundraising issues and questionable practices and how the organization has (or has not) addressed them.
In short, charitable giving in its most serious and impactful form should be just as strategic as the rest of your financial plan.
Impulsive Giving
Dropping change in bell-ringers’ buckets, rounding up your purchase to benefit a local shelter – charitable giving can become diffuse quickly. You forget how much you gave or who you gave it to, and you almost never see the results.
The pervasive temptation is to give in the “peanut butter” fashion. It’s an impulse – and a good one at that – but impulses are by definition not strategic or particularly careful.
The placement of that bell-ringer, at the door of a supermarket, is strategic on their part, not yours. The emotional marketing behind most charity advertisements appeals to your heart, not the spreadsheet part of your brain.
Approach giving with more intention. Let’s say last year you started planning for retirement in earnest, lost a good friend to cancer and adopted a rescue puppy. These are all emotional, even existential, events in your life that touch on several levels of who you are.
You then spontaneously donate $1,000 from your tax return to the AARP, you donate a percentage of your bonus to the American Cancer Society and you tearfully put a hundred dollar bill in the jar at the Society for the Prevention of Cruelty to Animals on your way through.
That’s giving, and giving is good. Every little bit helps and this kind of philanthropy – whether the bell ringer or the change jar – is important and nets money for these causes. But, you never see the results of it in a direct way. Will you give next month or next year? These returns will more than likely diminish.
Steps Toward Satisfying Giving
I’ve written about the “emotional ROI” (return on investment) that comes with developing an ongoing relationship with a charity as you see your donations in action. The peanut butter approach spreads this experience out so thinly that it can feel meaningless.
Reflect on What Matters Most
The first step toward focusing your giving is to determine what matters most to you. Maybe you give intermittently to the family alma mater, because that’s what mom and dad always did. But when you look back, you see the institution’s mailings as a nuisance, and you don’t keep up on the newsletter anyway.
On the other hand, you may find yourself deeply moved by another cause or institution. You find yourself reading about them in the news and remembering their advertisements. Maybe it’s time to develop a deeper relationship there.
One group that has embraced emotional ROI is Compassion International through their adopt-a-child program. Instead of a generalized ask for funds, they’ve offered people a relationship with a child in a developing country – down to exchanging letters with the child, even visiting. Donors develop an ongoing heartfelt connection to the organization, rather than giving haphazardly out of guilt or obligation.
Do Your Research
Around two-thirds of charitable givers don’t research the causes and organizations they support. They give because they always have or take recommendations on word of mouth. Flat, unenthusiastic giving doesn’t offer much satisfaction for your charitable efforts.
Worse yet, giving without reflecting might mean you’re supporting organizations that are deeply flawed. The Kids Wish Network, a copycat of the Make-a-Wish Foundation, has been repeatedly criticized for behavior such as raising $110 million in the first half of the 2000s and only giving $3.2 million toward the cause. Peanut butter philanthropy can fall prey to those schemes easily.
I’ve already mentioned Charity Navigator; GiveWell and Charity Watch do similar work. Watchdogs like this can give you insight into an organization’s vision and their business practices. Knowing who you are and who you’re working with is key to a joyful giving life.
Give More than Coins if You Want to See Change
“…I hate peanut butter. We all should” are strong words, but they drive the point home: being a mile wide and an inch deep helps no one in the end. The charities are left at maintenance level, and givers lose interest – there’s not enough investment, of time or money, to effect real change in the world.
Your charitable giving should have the same eye to strategy – tax efficiency, effective impact, lasting investment – as the rest of your financial plan. Our advisors have access to a nationwide support team of investment managers, researchers and wealth planners who have helped thousands of families on their financial journey. How can we help you?
