It’s that joyous season when everywhere you look, people are smiling, laughing and — asking you for money. Most of us want to give. And with a little effort, could probably find ways to do it. But then we’re faced with the common predicament of figuring out the details. And then come the questions. Why do you want to give? What do you want to give? How do you want to give? In this guide my goal is to help you come up with answers to all those questions and set a plan for giving that works for you.
Grab a pen and a sheet of paper. This year, your giving is going to be driven by thought, not guilt.
Requests for donations are everywhere. Flyers from the Salvation Army, the Red Cross in your mailbox, charity coin boxes from the Humane Society in front of the register at your local restaurant, and a troop of girl scouts knocking at your door. And then, when you try to go to the supermarket and make it through that gantlet, what do you get at the checkout line?
“Would you like to make a donation to…”
“No. No, I don’t want to make a donation. I mean yes, I do.” People are looking at you… judging you... are they donating?! How much? And then, are you just going to donate because of social pressures? That doesn’t seem right… Suddenly you’re sweating bullets, your face is turning red, and all you wanted was to buy a darn kombucha.
Does this sound familiar?
Look, I’m going to go ahead and make a leap of faith here, and assume that you are able to GIVE. What, in particular, we’ll dive into later — but you have the ability.
But I’m also going to make an optimistic leap of faith, and assume that you also WANT to give. It’s been my experience that most people are aware of their good fortune, and empathetic (to some degree or other) to those less fortunate around them.
Most of us are able, and most of us are willing. So why do we find the topic of giving so … frustrating?
It’s because we never took the time to create our own plan. Having a plan is not foolproof, but it will certainly prevent some of this frustration.
Here’s one way to think about it: Next time some stranger accosts you on your way to the grocery store asking you for a donation, you can weigh that against your plan and either feel totally comfortable giving (if it matches your plan), or say “Thank you, I’ve chosen to give in other ways.”
Did you know that giving may be the secret to happiness?
I want you to try something.
Imagine you’re at the grocery store (I know, a lot of grocery store talk in this guide — bear with me). There are aisles with toilet paper and light bulbs, and others with fruit and breakfast sausage. You’ve got an empty cart, and you’re ready to get what you need.
But wait — you don’t even know why you’re there.
Now, what are you going to put in your cart?
Whether giving to a charity, or putting together an investment portfolio, if you don’t know why you’re doing it, it’s hard to know what to do, or how to do it.
The why is the foundation.
Once you’re clear about why you’re giving, the actual act of giving becomes not just easier, but so much more enjoyable, and rewarding. Because it is done with intention.
I could tell you why I would give. But that’s not the point. The point is to figure out that answer for yourself.
If you’re having trouble coming up with a good enough reason to motivate you to give, that’s O.K. No one’s here to judge you. But I would remind you that there’s a pretty well-documented benefit to you. In fact, according to Time Magazine, giving is the secret to happiness.
Secret to happiness? What other reason could you need?
So let’s start planning out your giving intentions by creating a one page Guide to Giving. It will help you document your motives and structure for giving throughout the year. That way when you’re asked to give, you don’t have have to rethink it each and every time. Grab a piece of paper and a pen, and up at the top, jot down an answer to the question, “Why do I give?”
Large checks, pennies, hugs or old clothes, let's consider what you have to give.
The next step is to figure out what you can afford to give. And this is where it would be great if there was just a simple formula. Unfortunately, that formula simply doesn’t exist. I’m sure we can all think of the Scrooge-like character in our lives who wouldn’t donate a penny to a starving orphan. On the other end of the spectrum, we’ve all heard stories of extreme altruism. Most of us fall somewhere in between.
My wife and I base our giving around the age-old tradition of Tithing — or, giving 10 percent of your income to charities. That’s an idea that’s been around as long as the Bible, and maybe even longer.
If 10 percent seems like a lot — ignore the percentages and use this simple formula: Just give what you reasonably can.
While you’re trying to figure out what you can give, let me ask you a question…Who said anything about money?
As soon as the word “give” is used, our minds automatically turn to dollar signs, but it’s a well documented fact that experiences provide more happiness than things. Sure, giving someone an experience could cost money. But it could also be free. And we value experiences far more than we do things bought with money.
Let me give you some examples:
One of the most meaningful charitable experiences I’ve ever had was taking a group of youth from our church to serve dinner and spend time at a shelter for homeless youth in Salt Lake City. Sure we served dinner (which costs money) and people were really appreciative of that, but even more impactful was the interaction between the kids we brought, and the kids in the shelter.
Something as simple as playing music from a past era for people in a nursing home can have a huge impact.
Find a local environmental project you care about. Clean up a park. Pick up trash on the highway.
Or, maybe you just set aside an hour a month to call your grandma. Donate one hug per day to your significant other. The possibilities are endless.
So take a few minutes, get quiet, and think about it. What do you want to give?
Then get out your Giving Guide, write “What to Give”, and then, fill in the blank.
Find a giving method that works with your personality.
Take a look at your One Page Giving Plan. So far, you’ve figured out why you want to give, you know what you want to give. The last step is to figure out how.
For those of you that like your giving to be based on research and optimized for effect, the best answer that I have come across is GiveWell. GiveWell conducts “in-depth research aiming to determine how much good a given program accomplishes (in terms of lives saved, lives improved, etc.) per dollar spent.” They do the digging so you don’t have to.
GiveWell works great for what I like to call the Spreadsheet Method of giving. The Spreadsheet Method is calculated and practical. If the return on investment (R.O.I.) you are looking for out of giving is a purely altruistic one, the Spreadsheet Method is probably the way to go. It may not feel spontaneous, or creative — but the research shows it’s the best way to make a difference.
A good place to start? Check out two of GiveWell’s top rated charities:
Whichever you pick, find a charity, then automate your good intentions. Decide what you can afford to give, and set up an automatic withdrawal from your bank account each month to the charity you choose.
If the spreadsheet method that doesn’t sound fun enough to you, then maybe you’d be interested in the $20 In Your Pocket method? It’s not tax deductible, but it may lead to a significant increase in warm fuzzy feelings.
It works like this: Every monday, go to an A.T.M., and take out $20. Before next Monday rolls around, your job is to use that $20 to help someone out. It can be paying for your buddy’s burrito at Chipotle, giving it to a homeless person on the street, or buying coffee for a couple of coworkers. It’s up to you.
$20 per week times 52 weeks is $1,040/year. If that’s more than you can afford, maybe you change it to $10 or $5. Or maybe you commit to giving one hug a week to a complete stranger, or one visit a month to someone lonely. Your call. Look, $20 in Your Pocket is just a creative name. This method doesn’t have to be about money. It’s about creativity and spontaneity, which (for some people) makes giving feel a bit more rewarding.
The point here is to figure out how to give in a way that makes you feel good. If giving hugs does that for you, then that’s great! There’s absolutely nothing wrong with that.
But however it is you plan to give, write it down. Grab that One Page Plan for Giving, and fill in the remaining blank: "How."
One question that comes up when it comes to charitable giving is the tax implications. But for about 70 percent of us this is easy to clear up: You get no tax saving from your donation.
I checked in with my friend Michael Kitces, who is the closest thing the financial planning profession has to a super-hero, and he pointed out if you take the standard deduction on your taxes there is no option to deduct charitable donations. The most recent data I could find was for 2014, and about 70 percent of us took that standard deduction. So there’s no reason to worry much about it and instead focus on the giving you want to do, because it won't matter to your tax picture.
For those of you that do itemize your deductions, consult your accountant for specific guidance, but generally donations to qualified charitable organizations for which you have a receipt can provide some tax benefit.
Now, keep in mind that I doubt that any of you listed in your "WHY" section that you wanted to save in taxes, and since it doesn't even matter for most of us, this allows you to focus on giving for the sake of giving. Don’t let the tiny, little tax tail wag the giving dog!
Now that you have a giving plan — and remember it’s yours, not your brother-in-law’s, neighbor’s or random Twitter follower’s — you can be more relaxed about this often complicated and uncomfortable subject. But you have to write it down! Don’t just make this a mental exercise, and then forget about it.
If you haven’t done so already, go back and create a physical document that you can point to, called your “One Page Plan for Giving.” This touchstone will serve as a reminder — a note to self — of what you said when you had the space to think clearly about it. That way when you’re asked to give, you don’t have have to rethink it each and every time.
The whole point is to align your giving with what is important to you. And because you’re going to be faced with this question so often during the year, this can serve as a tool, a map, a reminder of why, what and how you want to give.