When was the last time you gave money to an organization other than a bank? Many of us contemplate charitable giving but worry that with our debt load, it can’t be done. What if I told you it should be done and should be at the top of your list?
There comes a point in our lives when we find an organization or cause we strongly believe in. Whether it’s our strong desire to stop global warming or to help feed suffering children around the world, giving gives back to more than one soul. Not only are you helping others, but it also allows us to feel we are contributing to society and attempting to make the world a better place for us all.
For the past six months, I’ve been contemplating whether I could fit giving into my budget with my current debt load. The sad reality is it should have always been there and hasn’t. Just as we ensure we “pay ourselves first” by saving 10% of our income, we should also consider giving back to others at the top of our list.
Don’t get me wrong, I’m not a scrooge and haven’t been giving all these years, I just never had a plan for it. I usually give at certain times of the year or to causes when co-workers approach me, so my giving has been a bit sporadic and generally no more than $50-100 a year.
I’m also of the mind that unless you’re helping, you have no right to bitch and moan about something not getting fixed.
As of last Friday, I made the decision to give each month to Nature Conservancy of Canada and World Wildlife Fund. Once my debt is paid off, I’m planning on adding Salvation Army and Sick Kids Foundation to the list. For now, I’m keeping things low key.
How did I decide on how much to give?
I looked at my current debt load and my net monthly income. The honest truth is I said to myself am I making a decent debt repayment each month? YES, $1000. Am I saving at least 10% each month? YES. Do I have money left over after all my regular non-frivolous expenses (of which there should be none)? YES.
DONE. Decision made.
I thought a lot about how I used to waste my money on fashion and realized that there are many other positive places my money could be going to.
WAIT! You have debt and a set debt free date! What are you thinking?
Not to worry, I’m starting small with only $10 a month per charity, a grand total of $20 a month. So if you’re nervous as to how giving will fit into your budget as I was, or if you’re new to it as I am, start small.
At this point, $240 a year is not going to derail me any further than I already am from my debt free date and it’s a heck of a better thing to do than buy clothing.
The final conclusion is that you MUST look at your budget and determine if it can fit in. If you don’t have anything left over, don’t do it. No matter how much you would love to be giving to your favourite charity each month, if you don’t have the cash, you shouldn’t be donating. Instead, find another way to give. There are many non-monetary ways to give such as donating old clothes and household goods, volunteering or participating in a charity fundraiser.
When to give? Monthly or one time?
This is entirely up to you, but as I see it, monthly breaks it down into a more manageable amount for your budget. You also won’t forget to make your donation or postpone it because you haven’t saved up enough yet.
Am I putting it in my budget?
This one’s a no brainer. Of course, silly! It will be a monthly category as all my other expenses are. Quicken 2015 has an option for Charitable Giving.
How am I paying for it?
Most charitable organizations will allow you to pay by debit, credit or the old fashioned way via check. I decided to use my credit card so I can a) keep track and b) earn reward points c) not have to pay the direct debit fees.
Which charity should I give to?
This is a personal decision. What causes are near and dear to your heart? If you wanted to contribute something to society, what would it be for? I’m a nature lover at heart, so naturally I would choose some planetary loving and environment saving. I also adore children and used to volunteer for the Salvation Army, so those are top of mind as well.
Another item to take into consideration is how the charity uses it’s funding. We’ve all heard the stories of those organizations that pay the CEO’s most of the money and hardly anything goes to the cause.
How do you figure out where the money is going?
Thankfully, it is required by the government for all charities to disclose where the money is going. You may have to do some digging, but most have a nice infographic on their donation page or you can go hunting through their financial statements. What you’re looking for is what percentage goes to helping the cause vs. Admin fees, salaries and fundraising costs.
For example, here’s what WWF Canada’s looks like:
Immediately I know that 45.8% goes to conservation program implementation, 14.5% to research, in other words, saving the world’s animals. On the flipside, 3.7% goes to admin and 20.8% to fundraising activities.
Generally, you want admin fees to be no more than 5% and fundraising around 20%. If it is significantly higher, they’re either doing really big things or paying people too much.
Tools for choosing a charity:
Canadian resources for finding charities:
US resource for finding charities: http://www.consumer.ftc.gov/articles/0074-giving-charity
In the end, charitable giving is a personal decision. There’s no right way or wrong way to give and most of all, it doesn’t always have to be monetary. If money is tight, volunteer; when you’ve paid down debt, then consider a cash donation. If you’ve never made a charitable donation, I highly recommend starting; you’ll be amazed at how uplifting it is.
Do you believe in charitable giving while in debt? Do you have a favourite charity?