on January 7, 2020
This is the time of year for resolutions and fresh starts. Maybe you’ve already decided to improve your eating habits, exercise more, or learn a new language…but have you considered making a financial resolution? One route you could take is saving more or improving your financial habits, but another route you could take is pledging to use your money as a force for good.
In the U.S., charitable giving dropped by an alarming $15 billion in 2018, despite a strong economy (likely due to recent changes in the tax code). That’s unfortunate, because there is just as much need as ever. About 40 million Americans are currently hungry or “food insecure,” air pollution is on the rise (and has been linked to 10,000 deaths in the past two years), and vital arts and science programs are in dire need of support.
No matter which cause you care about, your contributions have the potential to make a huge difference, as long as you approach your giving with a plan.
Try these four steps for smart charitable giving:
1. Choose Effective Charities
Not all nonprofits are created equal. Some spend a large portion of their dollars on marketing campaigns or paying their high-level staff big bonuses. How can you track how charities spend their money? Website such as Charity Watch give nonprofit organizations a score (A, B, C, D, or F), and provide an overview of how their money is spent. By law, these records are public, so it shouldn’t be difficult to find out how much money is actually going to the cause you care about.
2. Plan Your Monthly Gifts
At the beginning of the year, choose which charities you would like to contribute to, and how much you’d like to give annually. Then, divide that amount by twelve and set up automatic payments to each cause. Many organizations will let you become a monthly sustainer, giving as little as $1 per month (and as much as you’d like). By spreading out your gifts, you’re less likely to feel the impact on your bank account.
3. Opt Out of Thank You Gifts
Your charity may want to give you a stuffed animal or a t-shirt to thank you for your donation, but you can usually decline. Declining the thank you gift puts more money toward your charity, instead of toward trinkets (you were already planning on giving anyway, right?). Unless the thank you gift is truly something you’ll use and it has your charity’s branding on it (which is good for their exposure), it’s usually better to turn down the gift.
4. Review Your Giving and Plan for Next Year
At the end of the year, don’t forget to review your annual giving. Which organizations did you contribute to? How were your dollars put to use? At this point, you may want to shuffle around your money, and increase your gifts to organizations that seem to be doing good work, while ceasing or decreasing gifts to other charitable groups.
You should also consider whether or not you missed the money you donated over the year. Did you feel stretched financially (if so, you may want to cut back on contributions), or did you hardly miss the money? If you hardly missed it, you may want to be even more generous next year. Remember, your contributions to worthy organizations DO matter and CAN make a major impact.