Thoughtful Giving, Part 2

The Many Faces of Charity (Frank’s Approach and Other Popular Delusions)

The number of registered charities and non-profits is staggering. In Canada, there are some 86,000 registered charities and an additional 150,000 non-profit organizations.  The U.S. tax authorities report over 1.5 million active registrants; worldwide, the number exceeds 10 million. Relatively few deserve your support.

I should also add that the difference between charities and non-profits is significant. In the Canadian context, a charity has to be of public benefit, is subjected to government oversight and can issue tax receipts for donations. Non-profit organizations have none of these regulatory requirements. In the United States, the distinction between the two is a bit more complicated.

Let me make an important point: throughout this guide, whenever I use the terms “a cause” or “an organization”, I am referring to a registered charity. If you prefer to support not-for-profit entities, my document may be of limited use.

A few years ago, an elderly friend asked me to help him analyze what he called his ‘charitable giving.’ Let’s call him Frank.

When I showed up at his place, Frank told me how blessed his life had been and what gratitude he felt. He invited me to sit down and handed me a handwritten two-page listing of the causes he favoured. There were only two columns, one showing the names of the organizations he had chosen, the other the dollar amounts allocated to them.

The largest bequest was to a local think tank, well known for its ardent political partisanship. I set up my laptop and showed Frank how to log into the website of Charity Navigator, a U.S. analytical service. It took me seconds to locate the CEO’s annual salary: US$720,000, a figure I found highly offensive.

Right from the beginning we had two problems. The organization’s stated engagement was not charity but politics, and the top operative was overly compensated. There were other red flags as well, but I left those aside. Instead I asked, “How much are you giving them each year?”

Frank seemed surprised. He explained that his list was to become effective only upon his death. His will was overdue for an update, which was why he’d asked me for help.


“Feeling gratitude and not expressing it is like wrapping a present and not giving it.”

William Arthur Ward


Curiosity welled up in me. “Why not give some of your money away now?” I asked, admittedly a bit too early in our dialogue. “I mean, you’re worth many millions and have no descendants, and I’m sure you recognize there is much need for help out there now.” Then I hastily added, “Plus, there may be a tax advantage. You could offset some of your current income by contributing now,” thinking this might sway him. But it didn’t. He made references to the possibility that, given his advanced age, he may require expensive medical treatment—better not to take that risk.

I couldn’t stop myself. “Even if you get a two-million-dollar bill, that’s still a small fraction of your net worth,” I pointed out. And then I uttered the unimaginable: “Besides, if there is no risk involved, it’s not really charity. All it is in your case is a hedge against estate taxes.”

To his credit, my friend took my comment in stride and we returned to his list. Most of his chosen charities were household names. Only a few had an acceptable level of administration and fundraising costs and even fewer could be termed impactful.

Yet, each time I pointed to an inadequacy and suggested that the charity in question wasn’t worthy, Frank responded with something like, “Well, I can’t take them off my list. I knew the founder socially when I lived in New York. And we did business together.” I felt tempted to add that corporate tit-for-tat wasn’t really charity either, but this time I kept quiet.

When I left my friend’s house, I realized that we’d changed almost nothing, something that rarely happens. I admired Frank in many ways, but what had just happened left me profoundly disappointed. Fortunately, when I help others analyze their charitable activities, the outcome is usually far more positive.

One thing I’ve learned is that the majority of large and small donors start out with serious misconceptions. The most common are these:



“I always stick to the top names. Large charities are large because they’re doing things right.”

My reaction:

Big brand marketing creates an impression of trustworthiness. Yet size rarely improves quality or efficiency—in any human endeavour. That is not to say that large charities can’t be worthy. But a quick look at the data confirms that many of the best-known organizations spend an inordinate amount of their revenue on fundraising and administration, while convincingly broadcasting how urgent their appeal for help is. That, of course, is also the case with some smaller charities. Still, importantly, size does not make things better.



“My peers in the corporate world did me a favour and now I’m reciprocating it. What can be wrong with that?”

My reaction:

There is no doubt that helping others brings rewards. But helping with the expectation of a reward strips your gesture of its moral weight. Let’s say someone helped you and you now want to do something for them—that is a worthy gesture, but it shouldn’t be a consideration when it comes to charitable giving. What you have to ask yourself is whether this is about an old relationship or whether it’s about helping someone in indisputable need.



“I like to honour the memory of the dead. When someone I respected dies from cancer, I send money to the Cancer Society. Besides, it’s usually the charity the family favours—it says so in the obituary.”

My reaction:

This emotion brings tens of millions into the coffers of national cancer societies, heart and stroke foundations and other health-oriented charities. The question is really this: are you favouring the recommended cause because it is a convenient and visible gesture towards the grieving family, or are you doing it because you believe in the cause’s merits?

Sometimes my attempts to be of help evoke negative emotions. A frequent one is this: “Wait a minute—no one has the right to tell me who I should give my money to.”

I’m never sure whether the energy in that comment is directed at me or people like Charity Intelligence, whose data I rely on. Nor does it matter. After all, it’s natural to get strong reactions when you help someone take responsibility for their personal affairs.

My response is always the same: “True enough, only you can decide which cause you want to support. But doesn’t it help when others offer their insights, so that you can make a good decision?”


The Family Foundation (What I Learned From My Grandchildren)

When I turned sixty, I decided to start a foundation. Having seen numerous wealthy clients pass away and leave money to charitable causes, I wondered whether I should do the same. For a couple of decades, I’d steadily given away ten percent of what I earned, but there was room for a lot more. Should I crank up the percentage now or copy what my clients did and leave a large bequest in my will? I decided on the former alternative: giving while living.

Taking the foundation approach was not my only option. I could easily have increased my giving without the added complication of an administrative structure. The reason I chose to start the Cavelti Family Foundation was simple: I was eager to create a legacy, ideally one that would stretch over generations, and even more importantly, I wanted to share my journey with my family.

I had two choices. One, I could establish a trust or a not-for-profit corporation and then apply to be registered as a charity. There were significant legal costs to that, and the process could take some time. Moreover, the ongoing operation of a registered charity would require the formation of a Board of Directors and bring with it a heavy and expensive administrative load. I was determined to avoid that.

The alternative was a way to delegate all the paperwork and regulatory burden to our city’s community foundation. This would be done through a “Donor Advised Fund”. For an annual fee, the Toronto Foundation would perform all necessary administrative tasks, invest undistributed funds and deal with tax authorities, allowing me to focus on what really mattered.

Still, I was hesitant. I understood that a community foundation’s first objective was to help charitable activities within their town or city, and I could relate to that concept. But could I be sure that I’d agree with the Toronto Foundation’s choices, and did I want to restrict our giving to causes within our city? The answer was no—I was determined that it should be our family that would decide where our grants would be directed.

Yet, after a couple of meetings I learned that the Toronto Foundation offered several granting alternatives for Donor Advised Funds. Importantly, we’d be able to decide which charitable causes we wanted to support and when. This was crucial to me.


“As I give, I get.”

Mary McLeod Bethune


Three years into the life of my foundation, I thought the time was right to involve the family. Not sure what would come out of it, I started by bringing all three grandchildren to my office, promising them a real business meeting and telling them I needed their help. They were excited.

“Do any of you know what charity is?” I started out. Alexandra, at twelve the eldest, told me that she’d participated in a fundraiser organized by her school. Cameron, in fourth grade, reported that some of the older kids in his neighbourhood had raised money by selling cookies.

“But what do you think the word ‘charity’ means?” I persisted. The youngest, Abigail, provided the answer. “That’s easy, Papa. Charity means being kind.” I was touched by the irresistible simplicity of her assessment, concluding that we were off to a good start.

At our second meeting, we discussed the complexities of giving money away. When I provided an overview of the different types of charities and asked how they felt about each, I was taken aback. I knew humanitarian relief organizations resonated with Cameron and imagined that Doctors Without Borders would be on top of his list. I was right.

It was the girls’ notion of who should benefit from our foundation that surprised me. Social initiatives or after-school programs left them unenthusiastic, and so did environmental initiatives. They wanted to help animals. I hadn’t expected that.

As time went on their priorities changed. What made a meaningful difference was my exposing them to Charity Intelligence. I had feared that introducing them to sets of data would dampen their enthusiasm, but it did the opposite. Gradually their focus widened. The girls were still passionate about animal welfare and Cameron’s heart was still close to Doctors Without Borders, which he now expertly called MSF for Médecins Sans Frontières. But sitting at one of

our oversized computer screens and studying what happened to the donations that various charities received, focused them on new possibilities.

“Look Papa,” one of the kids would exclaim, “here is a charity that pays way too much in salaries.” Or, “I think I’ve found one we should support—nearly 80% goes to the cause!” How much of the money an organization collected was spent on actual charitable activities (as opposed to administration or fundraising) was one of their favourite metrics. Before long they produced elaborate spreadsheets, detailing each charity’s merits and shortcomings.

Now was the time to talk about different ways of giving. One thing I was not prepared for was the extent of children’s idealism. They quickly agreed that directly engaging with others was a much higher form of compassion than giving money away. The girls convinced themselves that they’d adopt lots of dogs and cats; Cameron’s declared priority was to help people, especially the sick, disabled, and hungry.

But how would they do that? After I invited the children to seriously explore their goals, the conversation started to change. They could see that there were limitations to what was possible. To begin with, realities like school and parents would render their ideas hopelessly impractical. Maybe it was easier to collect money and send it to people who were already in the right places to provide help, with the time and knowledge to do what was needed. Our foundation, of course, attempted to do just that.

The next step was to give each of the kids a small allocation they could grant to the causes of their choice. Questioning their decisions was always a highlight for me. Without exception, their decisions were well-researched. In time, I invited them along to meetings with groups we supported or considered adding to our list. By now I felt our foundation would be in good hands once I was gone.

Importantly, the grandchildren aren’t the only ones who learned from their engagement. The family foundation has taught me a lot, too. I now realize that many of the skills I learned during my business career, particularly writing and public speaking, can be applied to purposes other than corporate success. Some charities call me for an informed outsider’s opinion; others ask me for advice or invite me to address staff meetings or groups of high-level donors. Occasionally Kate Bahen, the Managing Director of Charity Intelligence, looks for input. Invariably, the outcome is as gratifying to me as it is beneficial to them.


Reprinted from Peter Cavelti’s “Thoughtful Giving: A Journey Through the Charitable Universe”, copyright 2024.. Published by the Author. Content may be reprinted with proper attribution.