Here’s why mystery tips are on the rise

Here’s why mystery tips are on the rise

“Come to Hooters in Aurora, Colorado,” one commenter posted.

Another posted her home address in Marietta, Ga., and said, “I need a blessing!”

It would be easy to write off the mystery tipper as a one-off novelty in the charity world. After all, we assume that real philanthropists write checks to hospitals, colleges and nonprofits trying to solve large social problems. Giving money to a waiter may help them with their rent for a month or two, but it doesn’t make the world a better place.

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But philanthropy experts say the mega-tipper may, in fact, be the tip of a broader trend among the wealthy. It’s called direct giving. And as more of the wealthy around the world get frustrated with the inefficiencies and ineffectiveness of large nonprofits, they are making more and more direct gifts to people who need money or somehow attract the attention of the donor.

Chen Guangbiao, a Chinese recycling magnate, for instance, is known for handing out money on the street in red envelopes.

“We’re seeing a real increase in interest in direct giving,” said Melissa A. Berman, president and CEO of Rockefeller Philanthropy Advisors, a nonprofit philanthropy service.

Berman said that the usual criticism of direct giving—that the money will be wasted or ill-spent—may be misguided.

“There’s a sense that if you put money into the hands of the poor, they will know exactly how best to use it to help themselves and their families.”

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She said the big challenge for direct givers like the tipper is figuring out who is the most worthy. Some large donors who are looking at direct giving globally, study satellite images and look for areas or homes with thatched roofs—”since that means that anyone living there is not well off.”

“There are so many poor people in the world, the question is how to make an ethical decision about where to direct,” the giving, Berman said.

—By CNBC’s Robert Frank. Follow him on Twitter: @robtfrank.

High Net Worth


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