Author Topic: Guidance on Donating to Charity  (Read 3881 times)

mountains_o_mustaches

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Guidance on Donating to Charity
« on: September 16, 2016, 08:53:13 AM »
I'm about to get a substantial raise in my salary (woo hoo!!) so that mine and my spouse's combined pre-tax gross income is going to be around $110K.  My donations to charity have been somewhat haphazard and usually occurred at the end of the year in lump sums.  This was mostly due to not having a lot of "extra" money (previous combined gross income was ~$50k) after paying bills and paying off the debts I accrued before discovering MMM.  This is our first year debt-free AND we'll have quite the combined income to boot.  I want to more systematically donate money to worthy charities and I wanted to hear from folks about how they typically go about it - a monthly contribution vs. lump-sum contribution once a year? and how much to donate? 

Kapiira

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Re: Guidance on Donating to Charity
« Reply #1 on: September 16, 2016, 09:40:35 AM »
Congratulations on your raise!  And I think it's awesome that you plan on increasing your donations.

I like to choose a few non-profits and set up automatic monthly giving.  I have this add up to about 70% of my donations.  I keep the other 30% free for other causes that tug at my heart strings.

I decided that my donations should at least match the amount that I spend eating out.  For us, that ends up being about 3.5% of our spending.  I like to have a concrete number and automatic donations because I find I don't donate enough if I don't do those things.

Bracken_Joy

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Re: Guidance on Donating to Charity
« Reply #2 on: September 16, 2016, 09:46:19 AM »
I'm curious about this as well! We're finally getting on top of our higher interest debt, and are starting to look down this road. It's pretty overwhelming deciding *where* to give though. The guides you read contradict each other so often... overhead is bad, overhead is necessary, overhead shows potential for growth. Direct impact on individual lives maintains the status quo and is throwing your money away, but policy level changes are slow and more prone to being corrupt... on and on. I feel like I don't know where to start.

I do know Monster Monster who is on here (who works with non profits) says that monthly scheduled giving is way more important than big influxes, because then the organization can budget it out better... there's all sorts of rules about how you can hold onto/not hold onto money (or something like that), so the end result is: monthly recurring is way better for the org, especially if it is small.

mountains_o_mustaches

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Re: Guidance on Donating to Charity
« Reply #3 on: September 16, 2016, 09:59:22 AM »
I'm curious about this as well! We're finally getting on top of our higher interest debt, and are starting to look down this road. It's pretty overwhelming deciding *where* to give though. The guides you read contradict each other so often... overhead is bad, overhead is necessary, overhead shows potential for growth. Direct impact on individual lives maintains the status quo and is throwing your money away, but policy level changes are slow and more prone to being corrupt... on and on. I feel like I don't know where to start.

I do know Monster Monster who is on here (who works with non profits) says that monthly scheduled giving is way more important than big influxes, because then the organization can budget it out better... there's all sorts of rules about how you can hold onto/not hold onto money (or something like that), so the end result is: monthly recurring is way better for the org, especially if it is small.

I've found this website helpful in choosing charities to donate to: https://www.thelifeyoucansave.org/Where-to-Donate
You can read here about how the select the charities they endorse here: https://www.thelifeyoucansave.org/About-Us and here: https://www.thelifeyoucansave.org/About-Us/FAQ

I usually pick one charity from that site (focuses on international charities) and I choose one local charity that seems to be doing good work (I donate to a local non-profit that takes a housing first approach to homelessness).

lthenderson

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Re: Guidance on Donating to Charity
« Reply #4 on: September 16, 2016, 11:36:06 AM »
We budget how much we plan to give over the year before we give a cent. Some charities we opt to give as a weekly or monthly contribution. Others we give as one time gifts. We try to keep a little extra undefined every year for those that come knocking at your door or events that pop up like a fundraising dinner for a sick friend, etc. The key however to making it easy is to just decide before the year even starts how much you are going to give based off your budget.

LifeHappens

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Re: Guidance on Donating to Charity
« Reply #5 on: September 16, 2016, 11:47:49 AM »
I've worked in and around nonprofits my entire career. When creating a charitable giving strategy, I always recommend 2 things:
1) Give monthly if at all possible. As mentioned above, this really helps with budgeting. If you can't give monthly, try to find out what the slow season is for your preferred org. Most orgs get many donations around the end of the year. Some have annual fundraisers that provide a big influx of cash at a specific time. They all have a slow season when a lump sum could be really helpful. In my case, our local cat rescue really needs donations in the summer, so I try to give them a good sum then.
2) When choosing a charity, try to visit the org personally. Many orgs will be happy to do a donor tour. If they can't because of sensitivity (domestic violence shelters come to mind), they will have someone available to talk with you and answer any questions. If that is not possible for you, Charity Navigator is a decent financial evaluation site.

little_brown_dog

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Re: Guidance on Donating to Charity
« Reply #6 on: September 16, 2016, 11:56:38 AM »
My preferred method is automatic monthly deductions in small increments to a preferred charity. Automated donations generate consistent/reliable cashflow for them, and its easy to set and forget.

Since our donations are small, I prefer to give to charities that can do a lot with very little money – that way it feels like my donation is actually making a real difference instead of just feeding a massive organizational machine. A $25 donation to a huge cancer charity for example is not even going to pay for an hour’s worth of paper pushing in their HR department. But that same $25 bucks can buy a lot of dog food at the humane society, or pay for a bunch of toiletries or baby supplies at a women’s shelter. The impact is more immediate and direct.

abhe8

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Re: Guidance on Donating to Charity
« Reply #7 on: September 16, 2016, 11:57:48 AM »
We give a set amount monthly and also a Christmas gift, equal to the total we spends on everything Christmas related. We decide each year, as a family, how to give the Christmas gift. It's a nice way to include our children in our giving.

We do a few other smaller gifts during the year, like operation Christmas child boxes in nov.

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tweezers

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Re: Guidance on Donating to Charity
« Reply #8 on: September 16, 2016, 01:25:27 PM »
I like to choose a few non-profits and set up automatic monthly giving.  I have this add up to about 70% of my donations.  I keep the other 30% free for other causes that tug at my heart strings.

This is what we do, although ~85% of our charity budget is in automatic monthly giving, and only to two charities.  The remainder is for annual giving such as NPR and donations at the holidays.

startingsmall

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Re: Guidance on Donating to Charity
« Reply #9 on: September 16, 2016, 08:54:32 PM »
We give $800/month to charity, which amounts to about 9% of our pre-tax income from our FT jobs (excluding my side gig, which is just getting off the ground).

$100/mo is a recurring automatic deduction to a charity through which we sponsor three children (Food for the Hungry)
$300/mo to our church
$400/mo to organization(s) of our choice. We have a few 'standard' charities that we tend to rotate between, but sometimes will give to something else that comes up in the course of the month


chasesfish

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Re: Guidance on Donating to Charity
« Reply #10 on: September 17, 2016, 04:22:53 AM »
I'm going to come at this from a different perspective.  We are philanthropic, but very intentional about how we do it.

- I am against any automated investments into Charities, it should be intentional.   We used to budget an amount every month/year for charity, now we have moved past that.

- Make sure you have a regular brokerage account with some stock and mutual fund holdings before ramping up your charitable contributions.  Your financial security should be first and if done right, your long term charitable impact will be greater.

- Consider setting up an account with a local community foundation or through one of the brokerage firms (Vanguard Donor Advised Charities or Fidelity Charitable).   

We transfer stocks into our Fidelity Charitable account, then make donor advised grants out of there.  It optimizes our tax deduction because we can take the deduction in the year(s) we need it and donate appreciated stocks (which increases the tax savings), but still setup single or recurring checks to be sent to charities.   The large firms make this process really easy and I don't understand what keeps more people from using it.


marty998

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Re: Guidance on Donating to Charity
« Reply #11 on: September 17, 2016, 07:59:33 AM »
My preferred method is automatic monthly deductions in small increments to a preferred charity. Automated donations generate consistent/reliable cashflow for them, and its easy to set and forget.

Since our donations are small, I prefer to give to charities that can do a lot with very little money – that way it feels like my donation is actually making a real difference instead of just feeding a massive organizational machine. A $25 donation to a huge cancer charity for example is not even going to pay for an hour’s worth of paper pushing in their HR department. But that same $25 bucks can buy a lot of dog food at the humane society, or pay for a bunch of toiletries or baby supplies at a women’s shelter. The impact is more immediate and direct.

I actually just got back from a cancer charity fundraiser... this one was set up specifically to avoid the cancer machine that raises a lot of money which disappears down blackholes.

This one distributes money directly to families who need help buying food, paying mortgages etc. An example given was a 57 year old grandfather with lung cancer* who has sole custody of his 6 year old granddaughter. He was unable to work but was in great need of financial support while he was having treatment.

*There's an incredible stigma attached to lung cancer in that most people believe you've brought it on yourself by smoking. Truth is, it can happen to anyone regardless of whether you've smoked or not.

It's unfortunate, but some cancers are sexier than others in terms of the funding they attract.

myrax

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Re: Guidance on Donating to Charity
« Reply #12 on: September 18, 2016, 09:54:27 AM »
Donating is a great opportunity to think through your values and figure out what changes you want to see in the world and how you want them to happen. I work at a non-profit focused on advocacy and systemic change around a specific environmental topic, and I have learned several things over the years that impact how I give:

1. Recurring, dependable donations help the non-profit to get their work done effectively. It means they can plan for a stable level of supplies and staff, and focus on accomplishing the mission instead of worrying about the holes in their budget. I understand there are reasons to avoid making automatic payments, as it can become mindless, but it's important to keep in mind how valuable stable, recurring donations are for non-profits to make progress on their missions.

2. Overhead is necessary. In every non-profit, there will be at least a minimum amount of overhead because someone has to be receiving the donation and then giving it to the proper recipient and that person needs electricity to power their computer and a salary. Be skeptical of high overhead in large charities that are supposed to be giving direct aid, but seem to have a lot of staff and costs involved in doing it. When a non-profit employs people to work on pushing for policy change, keep in mind that salaries, internet access, and office space where they can host meetings are necessary for doing the job well and that counts in overhead. Instead of sticking with a certain percentage of appropriate overhead, get to know the charity, their mission, and why they have the overhead costs they have.

3. Make sure the non-profit has a plan for putting itself out of business. Non-profits usually exist to solve problems that our society can't/won't find any other way of funding. This can create a weird situation where those non-profits exist to treat the symptoms but never the cause because that would put them out of a job. I prefer to donate to the organizations that are brave enough to admit that the world would be better off if they weren't needed and were always looking for a way to make that happen.

In the U.S. we often criticize charity because we are afraid that it will teach the recipients to be dependent, but I think the real danger is that successful charities let our government institutions off the hook for seriously harmful policies. It is vital that we house homeless people, but we also need to completely redo our zoning codes that radically restrict the supply of new housing and often make the most affordable types of housing (e.g. Single Room Occupancy) illegal. Look for non-profits that are taking a systemic view of the problems they are trying to solve and have some form of advocacy around solving the problem or are at least in a coalition with advocacy groups. (Of course there are exceptions to this- large cultural institutions like botanical gardens or symphonies probably shouldn't be trying to put themselves out of business).

4. Think of yourself and the non-profits as being on the same team- you bring different skills and resources to the team, but you are tackling the same problem together. You get to pick your team, so find non-profits that you like and can trust, and give them space to bring their expertise to the table. The blog Non Profit With Balls (http://nonprofitwithballs.com/) is not only hilarious, but a really helpful way to start thinking about the challenges that non-profits face, and how we can support them in making the world a better place.

Finally, don't forget to donate to the people trying to make the world a more Mustachian place. Strong Towns (http://www.strongtowns.org/) has featured Mr. Money Mustache on their podcast, and their work is focused on making sure our towns are financially resilient and don't require car-clown commutes. (Disclaimer: I donate to Strong Towns).

MsPeacock

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Re: Guidance on Donating to Charity
« Reply #13 on: September 18, 2016, 11:46:12 AM »
I give through automated monthly do toons as well. I use charity navigator to pick the charities (grade A,B! C etc. ).

Catbert

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Re: Guidance on Donating to Charity
« Reply #14 on: September 18, 2016, 12:26:19 PM »
One thing I hate is getting on mailing lists.  More paper for me to throw away and more cost to the charity to send them.  So,before I retired I could anonymously contribute to charity through payroll deduction.  There was an annual drive and then I contributed each pay period.  I had a wide variety of charity choices (but not unlimited).  Now that I'm retired I donate appreciated stock to a charitable gift trust and then make anonymous donation randomly to established charities.

If anonymous doesn't work for you I would limit the number of charities that you donate to in order to avoid getting on multiple mailing lists.  You'll still get on some and they are impossible to get off.

HotPotato

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Re: Guidance on Donating to Charity
« Reply #15 on: September 19, 2016, 05:00:28 PM »
3. Make sure the non-profit has a plan for putting itself out of business. Non-profits usually exist to solve problems that our society can't/won't find any other way of funding. This can create a weird situation where those non-profits exist to treat the symptoms but never the cause because that would put them out of a job. I prefer to donate to the organizations that are brave enough to admit that the world would be better off if they weren't needed and were always looking for a way to make that happen.

This is an interesting take I've never heard before. Are there any specific charities that you know of that operate like this? How would you go about finding a charity like this? I would think some people would get defensive of questions like this thinking you're asking if their work is actually important.