Giving Back What You Should Know - picture of young woman volunteer handing folded blankets to someone

Giving Back: What You Should Know

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Giving to charity is a pretty hot button topic around the personal finance blogosphere. Everybody seems to have their own beliefs on whether or not you should give, how much, and to whom. Ironically, just talking about giving back can unleash a firestorm of vitriolic comments that we usually prefer to avoid.

We don’t talk much about our personal giving on this blog. It isn’t that we don’t give. We do. However, we kind of follow the philosophy that if you need to advertise your giving, it really isn’t charity. Plus, most of the things we give to are either local causes or a simple “hand-up” to people that we know personally, so it really isn’t exciting reading material for a worldwide audience.

Choosing and giving to a charity is a very personal decision. Giving back not only helps out your favorite causes, but it can also give you the warm and fuuzies on the inside. Everybody wins!

Yet, not all charities are equal. According to the National Center for Charitable Statistics, there are over 1.5 million nonprofit organizations in the United States. Since each organization is built and run differently, how do you choose? Before you decide to give away your hard-earned cash, here are a few things you may want to think about.

Choose a Cause That Moves You

Some people think that it is imperative to build their charitable giving into each and every budget. Others don’t feel like charitable giving is something that they should do at all. Neither is wrong. Giving is something that is very personal and should come from the heart. If you want to give, great. If you don’t, that is fine too. Perhaps you just haven’t found the right cause yet.

If you’ve decided to give but don’t know where to start, think about what issues or causes strike an emotional cord with you. Perhaps you have a family member with autism. You may look into something as simple as purchasing some autism awareness products. Or, if you are an animal lover, you might explore options for donating to your local animal shelter or humane society. Choosing to give to something that moves you makes it much more likely that you’ll find satisfaction in your gift. You’ll feel like you’ve made a difference that matters…and that feeling will encourage you to keep giving in the future.

How is the Money Spent?

When it comes how they spend your money, not all charities are created equal either. Not by a long shot. Before you give, you really should ask where your money is spent. Is most of the money being used to fund the cause that the charity claims it is for, or are 90% of the donations used to fund administrative costs? That information can make a world of difference between whether or not you decide to give to that particular charity.

Don’t get me wrong. I know that you need to pay people to work at these charities so that they can raise awareness (and money) for their particular cause. I’m a capitalist. I get it. However, some charitable organizations seem to be in the business of collecting donations just to keep the charitable organization afloat. Personally, I would rather not give my money to an organization that is simply soliciting donations to pay for a person to continue to solicit donations…which will pay for that same person to continue to solicit donations. I want the money I give to be used for the cause that I’m giving it to. If I want to create a job, I’ll hire an employee. #thankyouverymuch

You may think that giving locally would squash this problem…but beware. Your local charity could be run just as poorly as the national/international one. Do your research before you give. Websites like Charity Watch and Charity Navigator can help you vet some of the larger organizations.

Where Do You Want to Make a Difference?

Speaking of local versus national charities, you will want to decide where you would like your charitable donations spent. Whether you are looking at national/worldwide charities or local ones, remember that neither is necessarily better than the other – they may just have a different focus. Larger charities are usually going to fund either research based causes or use their donations to fund smaller charities. Locally based charities will typically focus more on specific local issues.

For example, let’s say that you decide that donating to a cancer charity is something that moves you. While the American Cancer Society may provide money for different types of cancer research, a locally based cancer charity may provide funds to individual local cancer patients to help them pay for their treatments. Neither is necessarily better than the other. They just have a different focus. One impacts cancer patients as a whole, while the other impacts individual patients. It is up to you to decide if the charity’s focus fits your charitable vision.

If you want the best of both worlds, you may consider giving to a local service club. Local chapters of Rotary International, Kiwanis International, or Lions Club International (among others) will usually split a percentage of the donations they receive between local and national/international projects. If you don’t have a specific cause that moves you, this is a great way to make your charitable giving go to work in both your home town and around the world.

Charitable giving is a great way to give back to the communities that you feel have given so much to you. Whether you want to help fund children’s diabetes research or fund a local scholarship program, there is a charity out there for you to support. If you want to make sure your giving dollars are having the impact you desire, be sure to do your research and know exactly what your gifts are supporting before you give.

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31 Comments

  1. I personnally agree with you when you say that it is an induvidual choice. We usually decide for local activities as we prefer to know exactly where the donation goes.

    1. For a long time now, my individual choice has been to give to charities I believe in, but to do it with money from my Discretionary Fund. That means that — just like a vacation or a piece of art — the expenditure is NOT hardwired into my Basic Living Expenses.

      I determine how much to give overall by taking a look at the balance in my Discretionary Fund account near the end of the year. Once I’ve come up with a cumulative amount I am comfortable with, I divide that among the 6 to 8 charities that have made my “preference cut” according to how important each charity’s mission feels to me.

  2. “We don’t talk much about our personal giving on this blog. It isn’t that we don’t give. We do. However, we kind of follow the philosophy that if you need to advertise your giving, it really isn’t charity.” – what she said.. :-). Have a good weekend.

  3. These days we try to donate our time as well as a little money (since right now we are still paying off debt). In the past we’ve volunteered at Special Olympics. This year we’ve spent time volunteering for other disability- related causes. I really enjoy the work, and it’s our way of giving back.

  4. I disagree with not advertising your giving. The end goal is for worthy causes to get money. When people talk about their giving that encourages other people to give. Who cares if the initial giver wants to get credit for being generous? Motivation is not as important as outcomes.

    1. When we used to post our budgets, I got emails from people who said we should be giving away X percentage of our income to charity. We have never given monthly; we have always given in lump sums and not as a part of our regular budget. But people went out of their way to be accusatory and judgmental nonetheless.

      I don’t think there’s anything wrong with sharing how charitable you are with others. I just get the feeling that, for some people, nothing I gave would ever be enough.

    2. I would agree that the end goal is to generate as many donations to your chosen cause as possible. I certainly don’t think that there is anything wrong with talking about your giving, and I do agree that it can encourage others to give.

      If we want to encourage others to give to our cause, we may say, “Hey guys, we’ve found this great charity that is close to our hearts. Please check it out and give if you can.” However, when you start getting into specific numbers, I’m not sure you can consider it true charity at that point. For instance, when Walmart says, “We’ve donated $4 million dollars to local causes this year,” is that charity or advertising? If I say, “We gave $10K to the local food pantry,” I feel that reciting the hard number is more of a promotion of myself than for the charity. In my opinion, charity comes from a desire to help. So, yes, you still gave…but not necessarily out of charity.

      Again, it isn’t wrong for any business or person to give out that sort of information. In fact, as a business person, I’ve encouraged my bosses to advertise their giving. It shows great community involvement. Personally, we choose not to share our numbers because it becomes more advertisement than gift. Yet, if the end result is the charity receiving more funds, that is great!

  5. I like keeping most of my giving local so that I feel like I’m more directly contributing to my community. Local food kitchens and shelters mostly with a little bit also going to international aid and youth programs. I also volunteer as a Big Sister and do the occasional blood donation. I feel like volunteering and charity is a big way that I express my values in a way that I can’t really do in my working life.

  6. I’m at a point where everyone I know is running a race and raising money for a cause, so I’ve been doing my giving as a way to support both their chosen causes and those people who I care about.

  7. One of the newer ideas that fascinates me is giving to micro-charities – small non-profits start-ups that are trying to get off the ground. Ari Nessel’s Pollination Project is a great example of helping out both a cause and an entrepreneur.

    1. I’ve read a little about these too. Cool stuff, if you ask me.

  8. I think the term “giving back” infers that you took something to begin with. For example, if I received a scholarship from a local group, I’d be giving back if I later made a donation to it. Or if the Salvation Army helped me body or soul and I gave something to them years later, that’s giving back. Otherwise it is just giving. I know this is semantics and is just my own gripe about the phraseology. In reality, we are happy that we are now in a position where we can give more than ever before.

    1. Ha! I love your breakdown. In general, I tend to agree. However, some would certainly argue that your community “provided” you the opportunities that you have had to begin with. (I’m using the word “community” in a large sense – be it your local, national, or international community.) I wouldn’t argue that, but some would. While I think that to a small degree this can be true, in general most people can – to a great extent – create for themselves the circumstances that they desire…at least in this country. So, yes, the community helps to provide an environment for success. However, you have to go out and grab that success for yourself. I think that is essentially the point you are trying to make.

  9. My wife and I give to a few charities as well. We give to those that are meaningful to us and our local community, but have done some charitable giving in other countries as well.

    1. Good for you Jon! Keep it up. How do you vet your charitable giving?

  10. “However, we kind of follow the philosophy that if you need to advertise your giving, it really isn’t charity.” I could not agree more Holly. I don’t know that it’s necessarily wrong to share it, but I think part of it goes back to the whole being personal issue. It can be difficult to understand some numbers in a pure vacuum so we choose to keep ours personal as well.

    I worked for a charitable organization right out of college for about two years and the numbers about what is actually being spent are huge numbers to be looked at. Like you said, this is why a little research can help make sure your money is really being put to use as opposed to paying someone to raise money.

    1. Thanks John! Having worked for a charity, what would you consider to be a good percentage spent toward admin costs?

      1. Not a problem! Good question…generally speaking I like to see something that’s at least in the high-mid to high 80s. If it’s below 86-87ish% then I usually won’t even look at it as I want to see ones in the 90s. That’ll vary, of course, but if it’s below that then they’re not spending their money in the wisest way possible.

  11. We do a lot of shopping via Amazon and use Amazon smile so 0.5% of price of most of the items we get anyways goes to the charity of our choice. While it isn’t a ton of money, every little bit helps. Of course we do our best to give outside of this, but sometimes it just doesn’t work out that way.

  12. Like many others have said, I generally choose to give to local people who need it or local branches of charities so I can see my money at work.

  13. We give to smaller more local causes or directly to friends. I used to work in a large corporation where we were essentially forced to give to United Way and it made me sick every time I saw how much money United Way kept and how little trickled down to the actual causes. I love to give, but I want to know that the majority of my money will actually go to helping someone rather than the nonprofit who runs it.

  14. Once we’re on slightly more stable footing financially (though I may say that forever), I do want to start doing at least a couple of donations a year.

    I know there are websites that actually show the break down on various charities, so you can see how much goes purely to administrative vs how much goes to the actual work.

  15. Most of our givings are local, like food bank and such. Someone I know just posted something on Facebook the other day where a family is facing some challenges with their new born. I felt compelled to make a small donation to help out this particular family.

  16. Holly, I totally agree that giving has to be personal. We have not always been able to donate money or items. However, we have regularly donated our time. As soon as our children were mature enough to follow directions then we brought them along as well. When we dropped off meals to a grandmother taking care of 7 children in a “less then comfortable” home my kids eyes were really opened to just how fortunate they are, Although donating money is not always possible we donate in other ways: All aluminum, metal , plastic, glass, paper, cardboard and miscellaneous recycling is turned in and the funds go to the local humane associations; box tops and labels are given to the school; my coke rewards (tops from the local parks add up) are donated to local children’s cancer support group; our grocery store cards have charities that receive monetary donations just for registering your card and scanning them at purchase (no cost to you); we donate to locale thrift stores and we have let all our friends know where they are and I post about them and the good works they do; we have packed backpacks for kids who would go hungry and deliver them during the summer; we donate volunteer time to church, civic, school, 4h, clubs, non profits, humane society and the state DNR . The kids have worked, cleaned, played, organized, and LEARNED- “THAT MANY HANDS MAKE FOR LIGHT WORK”. Now that the kids are getting older we have given them the choice for who to volunteer for. They do it because they want to not because they have to.

  17. Greg, I always give back because I am thankful that I am in good situation and more blessed. So it’s something that I have to be grateful for and that least I can do to share my blessings with others.

  18. You have brought up a really fantastic point. It\’s very useful and helpful. Thank you for sharing your article. Great!

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