It is just a matter of things that you do that have beneficial effects on you. On a simple level, suppose you climb to the top of a mountain and then see a wonderful view. You enjoyed the view, but only were able to do that because you climbed the mountain. So climbing the mountain had a positive effect for you, so in a simple and immediate way, it gave you good fortune. Perhaps also climbing mountains helps you to maintain physical health. This is all karma - karma simply is cause and effect, and some of the effects of your actions are immediate and obvious like that. Sometimes they are harmful, you may pull a muscle, or twist an ankle while climbing a mountain. And most are neutral.

So in Buddhist teaching, there is no external deity to judge you. The physical world doesn’t judge you either. So punya is not a reward from anyone else. It’s just an effect of your actions.

So then there’s the idea that our actions have much longer term effects than you realize.

For instance, if you tell the truth, wherever possible, that helps you to have a clearer view on things, to understand the truth. If you are often deceitful, and deceiving to harm others, you may be more easily deceived by others too. Or may get so you have so many different stories you tell other people that you kind of lose track of what is the truth. Each time you tell a lie, then for a moment, just a fraction of a second, you yourself believe that lie, to tell it convincingly.

If you are frequently angry, this may change your perception of the world and your reactions to it. Everything becomes sharp edged. Your default understanding of almost any situation you find yourself in is to see those who disagree with you as enemies, as antagonists. You lose the ability to understand them, to see where they are coming from and to realize they are people like you, or that their views may change, or that your views of them may change. It’s like everything is frozen into place and permanently sharp edged and harmful to you.

While if you help others, open out to them, understand them, try to build bridges, then things change in the other direction.

So - that’s again quite easy to see. But the idea is that there are other much more subtle and hard to see effects of our actions, and some are harmful and some are beneficial.

But it’s not like a “tit for tat”, nobody else is giving you these rewards of your action. And what happens depends on your actions, but also actions of others, accidents in this world and so on.

The idea of punya, or merit is something often misunderstood and distorted. Especially that idea of "transfer of merit".

As I was taught at least, it’s not like a kind of “gold star” that someone gives you, which you can pass on to someone else. It’s not like that at all.

E.g. if you happen to have a healthy body in this lifetime, that good fortune would be a result of previous actions according to the teachings. So it’s the result of past punya, the ripening of past punya. But how could you give your good health to a friend who is suffering from cancer?

If you climb a mountain and your friend doesn’t, how can you give your experience of the view from the top of the mountain to your friend? (Except as a photo of course or a description of it).

You could start the climb saying that you dedicate all the punya that comes from climbing that mountain, all positive effects that it has whatever they are, to your friend. You can do that with anything you do. But still, how could that transfer your view you got at the summit to them? Or transfer the health effects on your body to them? If you can’t do that, how could you transfer the more subtle effects to them either?

What you can do though is to have a wish that they experience any good fortune you experience.

And can do practical things to help them. It is very like Christian ideas of praying for other people's good fortune. Except without any idea that there is a God to step in and do anything about it. Many Christians also don’t think that God is literally going to answer their prayer with a miracle, but rather that by praying to God, there’s some kind of blessing comes back to help in their situation.

It's like that with Buddhists too, at least as I was taught. Dedicating the good results of what you do to all beings, and taking the negative effects on yourself.

It transforms what you did in your mind right away, you have the motive before your action to help all beings - or try to anyway - you are training to do that, if you have chosen to follow the aspiring bodhisattva path. Then you do the action, and then you dedicate it afterwards to all beings. Even if you made many mistakes, still, thinking about it this way, it transforms it somehow.

Even though it is mainly just words at that stage, the idea is that gradually this is going to transform your motivation and approach and help you to act out of loving kindness and compassion, and also not just that, but a less blinkered, and wiser, loving kindness and compassion.

You can of course help others directly. If someone is hurt, to help heal them. If they are upset, to console them. Do things that make them happy. You’ve got good fortune, and you can use it to help others.

It’s like the quote from Merchant in Venice:

“The quality of mercy is not strain'd,
It droppeth as the gentle rain from heaven
Upon the place beneath. It is twice blest:
It blesseth him that gives and him that takes.

'Tis mightiest in the mightiest. It becomes
The thronèd monarch better than his crown.

“His scepter shows the force of temporal power,
The attribute to awe and majesty
Wherein doth sit the dread and fear of kings,

“But mercy is above this sceptered sway.
It is enthronèd in the hearts of kings.
It is an attribute to God himself.”

Apart from the mention of God of course, that’s very like the Buddhist idea of punya, of blessings that stream from good actions, for yourself and others.

And those blessings are unlimited, go on and on. So when you ask how you measure it - well you can’t, it’s immeasurable. Especially if actions are done with the aim of helping all beings, towards whatever is happiness for them, and away from whatever causes them suffering and harm. If you have that motivation, in its purest form, then the simplest of actions, giving someone a glass of water perhaps, can have immeasurable benefits, rippling on and on for ever.

That’s how I was taught, and so, I find it strange when I learnt, just today, that some Buddhists talk about merit as if it was some kind of a coinage that you can give to others, limited in scope, that you can give such and such a percent of it away or whatever.

I haven’t had any teachings on such ideas so I can’t really say more except that they puzzle me. Though I have lots of questions I could ask someone who thinks like that. How is it supposed to work? What do you transfer? How does making a wish or prayer make it possible to transfer it (remember there is nobody else in Buddhism that you can pray to, to do this transfer for you)? Does it somehow bypass cause and effect, and if so how? Can you climb a mountain, and then somehow someone else sees the view at the top and experiences the physical health benefits of climbing a mountain instead of you? How is it compatible with the sutras - even though it apparently has a sutra cite, how is that compatible with other sutras? If you know more about this do say, in comments or as another answer.

Trungpa Rinoche wrote a whole book about the traps of trying to accumulate benefits along a spiritual path, in his "Cutting through spiritual materialsim" i.e. drawing attention to the many tendencies a practitioner can fall into leading a life based on cultivating spiritual accomplishments as a sort of material possession.

It’s related to this question also I think. Amazon.co.uk: Chogyam Trungpa, Sakyong Mipham: 9781570629570: Books