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Donating to Charitable Organizations - Part Three: Giving Money

By Edited Sep 26, 2016 0 0

Maximizing Your Giving: Who You should give to, what you should give, and why

Giving Your Money to Change the World

In Part One of this series we discussed choosing an organization with a mission that you are passionate about. I recommended that you volunteer at that organization to see if they are truly doing the work you want to fund. In Part Two we talked about giving away your stuff to organizations that really use it well and who were qualified to allow you to take a tax deduction for your donation. This also had the added benefit of giving you insight into the company to see if they would use your cash donations wisely. If you have done either or both of these, you should have first hand knowledge of which organizations are worthy of your money.

 How do you decide where to donate money if you cannot volunteer or give items first?

 We all want our money go where it will do the most good. We all have causes we are passionate about like world hunger, our local church, or and arts program. But not all organizations that claim to work within a specific cause are equal. So, look for organizations that are qualified to receive your tax deductible donation and are effective in the area they serve. One great tool available on line is Charity Navigator. This site has done the work of analyzing most of the larger organizations for you. When giving to organizations that Charity Navigator does not analyze, I recommend giving a smaller gift one time and see what happens…test the waters. After you give pay attention to what does or does not happen. You are looking for a company that appreciates you, your gift, and wants you to know more about the work it does.

 Signs to look for are:

  • a timely Thank You note
  • a request to add you to their newsletter mailing list if you are not already on it
  • an end of the year statement/ receipt for all your donations to that company
  • transparency in their use of money (A great organization will show you at least annually where all it’s money was spent.)
  • accountability in their accounting practices (They should submit to regular audits by an outside firm and be part of some kind of accountability organization such as the ECFA.)

Both of the last two criteria should be either published in their newsletters or made available to you on line. The public is entitled to this information at any time by law from any nonprofit organization. So, feel free to call and ask to have it sent to you if it is not otherwise available.

 Do not donate over the phone through telemarketers even if they represent the company you planned to give a donation. The fundraising companies take as much as 25% of what you give as a commission. They are not supposed to use the names of people who have donated to one organization to solicit for another organization. But, it seems like you receive many more calls from many more companies as soon as you give to one.

To further safeguard your gift, you can specify how you want the money spent within the organization. Once you designate your gift the company cannot legally be spend it in any other way. Some people like to designate staff wages, or one specific program of the organization. One place I love to give is to an organizations endowment fund. Most organizations have money set aside that earns interest. This money cannot be touched except when released by a vote from the Board of Directors for very specific reasons (usually only emergencies). It is meant to ensure the stability of the organization by generating interest which the company can spend on anything. So, by giving to an endowment fund, my money gives back over and over again.

 How much should you give?

 Some people recommend giving a percentage of your income, while others recommend a percentage of your net worth. The truth is…everyone’s situation is different; one cookie cutter answer is probably not applicable to everyone. So, give what is in your heart to give and what you can reasonably afford. Decide how much you will give for the year overall based on your personal annual budget. This planned giving strategy helps you not to fall prey to emotional responses or good presentations. It also directs your giving specifically to the causes you are passionate about rather than whoever asks. I am always sad to see someone make large gifts to good causes in the heat of an emotional response only to experience a shortfall later in their own finances. Determine the total amount you can realistically afford for the year, if you experience a windfall or have money left at the end of the year you can always give more.

 After you come up with the amount you plan to give, decide how many organizations you want to give to. Then attach a percentage each organization should receive. Say for example that I wanted to give $5,000 total for the year and had 3 organizations I am passionate about. I would choose the most important to me and give them 50% ($2,500). I would give the next most important 30% ($1,500), and the next 20% ($1,000). Then I would send each organization monthly gifts – 1/12th of their total planned gift. In our example organization #1 would receive $204, #2 gets $125, and #3 receives $84 each month. This method gives me a plan to work from but allows flexibility for unforeseen financial changes. I can decrease or stop giving in times of financial crisis or I can increase gifts as the opportunity arises.

 One of the most overlooked ways to double your giving is Company Matching. The best way to check to see if your company does this is to call your Human Resources Department. They will guide you through the process of determining if your charity is eligible and what you have to do for them to receive the extra gift. A few minutes of your time and a little paperwork just might make your money go even further than you could do on your own!

 Lastly, teach your children to be wise givers. The Big Birthday Surprise: Junior Discovers Giving (Life Lessons with Junior)

is a great book to teach kids a valuable life lesson about giving.

Remember that the most important thing is to give something back to make our world a better place!

A small gift is just as important as a huge gift, sometimes more important, because a small gift is just a start. I’d love to hear your stories about changing the world around you through giving – please leave comments to inspire us all!



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