4 Ways to Get Smart About Giving
April 28, 2021 by Eileen Loustau
Charitable giving is a great way to help your community, the causes you care about, and yourself. One of the most rewarding things you can do with your hard-earned money is support the organizations you believe in.
As wonderful as it is to give back, it’s also important to make a plan to fit it into your budget and ensure it happens regularly. Here are four ways to create an effective charitable giving strategy.
1. Find a favorite cause
The universe of charities and non-profit organizations is vast, which can be overwhelming from a giving perspective. Narrowing it down to one or two favorite causes can help you feel like you’re making more of an impact with your funds, rather than
spreading tiny payments across multiple organizations.
Take the time to identify an organization that really inspires you. Research how they use the funds and ensure you feel aligned from a values perspective. You’ll be able to give more confidently, knowing that the money will be used for
things you believe in.
2. Start small
Small donations can feel inconsequential, but that’s not how the charity sees it. Between the advent of online giving and the influx of younger philanthropists with less to give, many nonprofits have started to focus on small donations and appreciate whatever you have to give.
Starting small gives you the chance to figure out what fits in your budget — you can always increase your giving over time.
3. Automate your giving
Hopefully you are already automating some aspects of your budget.
You can do that with your charitable giving, too.
One way you can do this is by setting up a recurring gift from your bank account directly to your favorite organization’s bank account. Another idea is to use an automated giving option like Amazon Smile, which diverts a percentage of each Amazon purchase to the charity of your choice.
Automating your giving takes it off your to-do list and ensures it will happen, even if you forget.
4. Keep the receipts
One of the benefits of charitable giving is the ability to deduct donations on your tax returns. You can only take advantage of this if you itemize deductions on your tax return — it’s not available if you take the standard deduction. It’s
limited to a certain percent (typically 60%) of your adjusted gross income. Make sure to ask for a receipt if the charity doesn’t send you one.
Giving back: A personal finance strategy
It’s natural to think about personal finances in terms of how your decisions affect you and your immediate family. But thinking beyond that and using your financial resources to make the world a better place can be incredibly gratifying. It’s worth putting a strategy in place to make sure it’s part of your plan.