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With a plan for your money in mind, you can stop stressing and start focusing more on what matters, and for many of us, that means giving back. Helping others (whether you’re donating money, volunteer hours or both) can be incredibly motivating. Once you’re feeling financially confident, you may be able to make a difference, even if you start small.
The good news? There are plenty of causes to support. In 2016 alone, individuals donated more than $281 billion to over than 1.5 million tax-exempt organizations.1, 2 The bad news? You can’t support everything, so how do you get started?
At its core, the act of giving comes out of kindness.
Challenge: To get in the right mindset, first consider the following:
- What are the three most generous things anyone has ever done for you?
- List the three kindest people you know. What made you think of them?
- Think of five ways you can donate your money and/or time meaningfully this year—to individuals or causes.
- Where do you want to see the impact of your work—nationally, locally, globally?
- If money were no object, what would you most like to do to make the world a better place?
“Life’s most persistent and urgent question is, ‘What are you doing for others?’”—Dr. Martin Luther King, Jr.
Your answers to the questions above probably align with your values, so it’s likely your giving will, as well. For example, if you’re focused on health and wellness, you may volunteer for a cause that encourages physical education among children. Those who rank spirituality high on their priorities list may donate to their place of worship. So with your values top of mind, start doing some research to help find organizations that match. Here are some things you’ll want to know:
- Does the organization have a defined mission and goals that can be measured?
- Is the organization tax exempt? If so, this means the IRS recognizes the organization as one that is organized and operated exclusively for charitable or religious purposes, rather than for the benefit of private interests.
- Tip: Visit the Exempt Organizations Select Check, an online tool provided by the IRS.
- How much of the charity’s proceeds go directly to the mission of the program (versus administrative and fundraising expenses)? Compare apples to apples because the kind of work being done can drastically impact overhead costs (see the chart below as an example).
Challenge: The website CharityNavigator.org is a great place to begin your research, whether you plan on donating to a large, well-known organization or something closer to home. Not only will it include the information above but also financial statements and scores for accountability and transparency measures
“Helping people in need doesn’t have to be an unsound financial model.”—Melinda French Gates6
If you plan to contribute financially to an organization, you have one final step before getting out the checkbook (or clicking “submit payment” on that online donation page).
Challenge: Add a line item to your budget for what you’d like to give and decide whether you’d like to donate on a regular cadence (such as monthly)
Finally, just like with your financial goals and investments, have a plan to revisit and re-evaluate. You can follow up with the causes you’re supporting and request a progress report to ensure your money and/or time is being well spent. Although causes thrive thanks to long-term supporters, you’re never locked into a voluntary commitment. As your values evolve, the causes close to your heart may as well.
By committing to donating a specific portion of your time or money (such as 10 percent) to your cause or causes of choice, you will feel empowered and in control, regardless of what your actual paycheck says. As you continue to gain financial confidence, you’ll be able to focus more on the causes you care about most and in turn, make the world a better place.
- One of the best ways to feel motivated is by donating time or money to causes you care about.
- Do your due diligence to select charities that align with your values and have a defined mission and goals.
- Think about how much you want to budget and if you want to donate on a regular basis.
You have what it takes to become financially confident. Keep going and get ready to pay it forward.
1 “Quick Facts About Nonprofits” April 2016, National Center for Charitable Statistics
2 “Giving USA 2017: The Annual Report on Philanthropy for the Year 2016,” June 12, 2017, Giving USA
3 ”MLK, Jr. Asked Us ‘What Are You Doing For Others?’ Here’s How We Answered,” Jan. 19, 2015, The Huffington Post
4 “Sector Analyzer,” July 2017, Charity Navigator
5 “Charities With Perfect Scores,” July 2017, Charity Navigator
6 “Remarks by Melinda French Gates,” April 30, 2007, Bill & Melinda Gates FoundationThis content is educational in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.