Charitable giving: The goat effect

December 18, 2016

Struggling to find the perfect gift for a fussy relative or the brother who has everything? Consider giving them a water buffalo, a micro-loan, an irrigation pump or the ubiquitous goat.

These are just some of the items that can be purchased in-store or online from charities then donated to a person or community in need on behalf of the recipient.

If you’d rather put a more tangible gift under the tree, Oxfam shops and similar enterprises are springing up in shopping centres across the country, fully stocked with ethical and fair-trade products made by disadvantaged communities.

While the Oxfam shop concept has its roots in 1940s Britain, giving gifts to people in the developing world on behalf of a loved one is relatively new.

The concept at the heart of the so-called “charitable giving” craze is to double the impact of a gift, generating warm emotions for the first-world givers and recipients while providing highly practical assistance to the developing-world beneficiaries.

According to the NGOs themselves, charitable giving is rapidly gaining popularity – and the funds being raised are considerable.

“In dollar terms, our customers have helped us purchase $20 million worth of products from our partners [in the developing world] in the past five years,” says Oxfam Australia’s general manager, Julia Sumner. “This year alone we’ve worked with more than 130 producer groups around the world – providing vital income to often disadvantaged groups such as single mothers, ethnic minorities and people affected by or living with HIV and AIDS.”

Charities also provide the ability to give a one-off financial contribution that is then used to purchase a particular item or achieve a set goal.

The result is organisations such as Kiva, founded in 2005, which connects lenders in the West with entrepreneurs in the developing world, helping facilitate micro-loans.

A gift-giver can visit Kiva’s website, select a dollar amount then gift the funds to a loved one who can choose which developing-world project to support.

The recipient in the developing world repays the loan to Kiva and the first-world recipient can then either withdraw the amount from Kiva or reinvest it in another project.

Whether you’re buying artisan-made products in-store or purchasing items on someone else’s behalf to be donated, your contribution can have a substantial effect, according to charitable-giving advocates.

Sumner says the funds Oxfam channels back to artisans in countries such as Nepal help develop the local economy and empower women. Heifer International – whose online store offers items like farm animals (including – yes – heifers) and irrigation supplies – says gifts such as farm equipment are usually shared by families and communities, creating up to nine times the impact.

Researchers are beginning to examine the phenomenon of charitable giving to determine if and when these types of gifts might best be appreciated by first-world recipients.

In a recent paper, Lisa Cavanaugh, a marketing professor from the University of Southern California, outlined research that showed charitable giving was appreciated most when the giver and first-world recipient had a close relationship.

“[Conversely], in distant relationships, givers expect recipients to appreciate socially responsible gifts more than they actually do,” Cavanaugh writes.

The lesson is to be selective when assigning charitable gifts; second cousin Susan might not be so thrilled.

Despite these words of caution, both Cavanaugh and Sumner expect charitable giving to keep gaining in popularity. Sumner thinks this mode of gift-giving reflects a growing consumer desire to spend wisely.

“The power of consumer activism continues to rise,” she says. “More and more people are voting with their wallet, and our customers really want to ensure their hard-earned dollars are creating real impact.”

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