How to Give to Charity and Have a Big Impact

One of the best things about building wealth and making money is the opportunity to give your money away. On this blog, I’ve talked about giving to charity as one of the six expenses I’ll never cut back on and donating regularly is one of the things that successful 30-year olds should be doing with their money!

I believe that anyone that is privileged enough to be investing, budgeting, and saving extra money has an opportunity to have a big impact through charitable donations. Here’s how to give to charity and have a significant impact across the course of your life.

Select a few causes that mean the most to you. I recommend identifying a small number of charities or organizations that align with your values and passions. Selecting 3 - 6 that you can truly research, understand, follow and volunteer with allows you to stay close to the impact your donations are having. By now, you’ll realize I’m a fan of focus and simplicity. With a smaller number of organizations, you can truly remain engaged and aware, and your limited resources will, by definition, go further among a smaller set of causes. What if you have more than six that you care deeply about? That’s fabulous - I don’t want you to feel limited - but think carefully about how you’ll prioritize your limited time and money to support a wider group.

Research them carefully. There are amazing resources today that help you understand the impact your selected nonprofit is having. I prefer Charity Navigator, which is itself a charitable organization. Charity Navigator evaluates nonprofit organizations against a variety of objective criteria, including financial health, accountability, and transparency. Using their site, you can easily explore how the organization uses its budget, understanding how much goes to paying its staff, versus to the causes it is designed to support.

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Set up recurring monthly donations. Like anything in your financial life, automation will make your donations easier to maintain. Further, recurring donations provide your charities with a more reliable stream of income. Fundraising is costly and very time-intensive, so your automatic donation helps alleviate some of that strain.

How much should you donate on a monthly basis? Like everything in personal finance, the answer is “it depends.” Many cite 10% of your income, linking back to the practice of tithing. I recommend starting with that as a benchmark - and lowering or raising it to fit your budget. When your income increases, or your expenses drop, you can adjust your donations as needed.

Evaluate your budget for additional donations. If your budget allows, you may want to create space for additional donations to the causes you care about. Many organizations have an annual fundraiser and run periodic giving campaigns. Contributing to those efforts provides additional support to the programs you value.

Mr. Financier and I set aside budget to participate in - and invite guests to - the annual events that are thrown by our favorite charities. It’s a great way to connect our friends to the causes we care about, connect with the leaders of the organization, and understand the progress and strategies of the coming years.

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Determine your practice for unexpected donations. The causes you care about deeply represent your personal priorities. However, if you’re like me, you have friends and family that have other philanthropic passions that they work to support throughout the year. These efforts often come in the form of a personal campaign or athletic competition.

I suggest you take one of two approaches when you’re approached by a loved one about donating to a new non-profit organization:

  • Set a budget and stick to it. Create an “on demand donation” budget that you can use when you’re asked for ad-hoc donations. This small slush fund allows you to contribute, but not go overboard or contribute at the expense of your other charitable goals. When you’ve exceeded the budget, allow yourself the permission to say, “I’m honored you asked, but I’ve already spent my budget for charitable donations - is there another way I could support you?”

  • Politely decline. There’s nothing wrong with saying no. Women, particularly, were often socialized to be “people pleasers,” and can struggle with this small phrase. You can be kind and still say no. If you choose, you may offer an explanation, “I appreciate your passion for this cause - however, I’ve decided to funnel all of my charitable giving to a small number of causes so I can have the greatest impact.”

Explore your company’s employee matching policy. Once you’ve settled on your charitable goals, your company may be able to provide additional support. Many businesses offer Corporate Matching Gift Programs, where the company will match employee donations, usually up to a certain dollar amount annually. Contact your human resources team to understand if your company has one in place, and if they do, take advantage of this “free money” for your favorite causes!

Don’t forget about donating clothing and household goods. You could spend time selling your gently used items online, or via consignment...but if you can afford to go without that “found income,” donating your physical goods to shelters, return-to-work programs, and other organizations can have a tremendous impact. When donating physical goods, take the time to research the requirements of the specific charity - you’ll save them time and effort if you provide only what they are looking for.

Finally, no amount is too small. Occasionally, I hear women muse about whether “smaller donations” have an impact. While large donations catch headlines, every nonprofit is grateful for even the most modest amount. Start with what you can afford, and don’t demean your donation. Every contribution counts and will support the organizations you care about.

Are you interested in learning more about smart giving strategies? I loved the Charitable Giving Boot Camp episode of the Better Off podcast. Host Jill Schlesinger speaks with the CEO of Charity Navigator about how to maximize your charitable giving. Their discussion explores the impact of philanthropy and several common questions about charitable giving.

One of my other favorite podcasters, Jean Chatzky, also addressed charitable giving on an episode entitled Doing Well While Doing Good with Katherina Rosqueta, the founding executive director for the Center for High Impact Philanthropy at the University of Pennsylvania. Katherina noted that 80% of Americans give to charity, and shares several practical tactics to bring to your own philanthropic efforts. She also reminded listeners that philanthropy isn’t just for the wealthy - anyone that engages in charitable efforts is contributing to the greater good.

I haven’t addressed the potential tax benefits of charitable donations, but there are opportunities to deduct donations from your tax bill. This is a nice incentive, but not the driving purpose behind my giving, personally.

I’d love to hear about the strategies you use to support your favorite charitable organizations! How did you identify the causes and organization you support today? What techniques do you use to balance their support with your other financial priorities? Looking forward to your feedback!

xoxo, Ms. Financier