Charitable Giving: Three Crucial Considerations

The holidays are by far my favorite time of the year. From Thanksgiving to New Year’s, I relish getting to take some vacation from work, spend time with my family, and eat amazing food. In addition to the holiday festivities, I enjoy the fact that this time of year many people turn their attention toward charitable giving.

According to a survey conducted last holiday season, one in two adults said they were likely or very likely to give to charity during the holidays. And even more striking was the stat that 47% of the unemployed were going to give as well.

Donating both time and money plays a big role in our household. Last year Ben suggested that we ask for charitable donations instead of Christmas gifts. That discussion got me thinking about charitable giving in general and carving out a portion of my budget to donate throughout the year in addition to our holiday giving.

When sorting out the decision to budget for charitable giving, I focused on three things.

Why Give?

To me, this question was the most important. I really wanted to know the rationale for giving. It sounds like a strange question, but I wanted to make sure I gave “for the right reasons.”

I ended up asking a lot of people in my life – family, friends, coworkers – why they give. And of course, I got a variety of answers.  Some people give because their parents always have, others give because their religion asks them to, and others still because they just feel the need to help.

When deciding for myself, the rationale that rang most true was giving to provide opportunities for those around me. I have benefited from many caring people who have given me the tools and opportunities to better my life. Consequently, I want to pay it forward for those around me. So whether it’s feeding the poor, providing shelter for the homeless, or fighting for marriage equality, my giving strives to empower others. And to me, that’s money well spent.

 Where to Give?

This question was tricky because there are sooooo many charities.  I had also heard horror stories about sham organizations or organizations that  grossly mismanage their funds.

An obvious starting point was choosing a cause I felt passionate about. I chose one that was money related (, food related (, and relief related (   

After choosing the charities, I researched each organization on the Charity Navigator website. The site evaluates and rates different charities. It also provides in depth analysis of the charity’s budget, so you know exactly how the organization spends the money you donate.

After analyzing the info on each charity, I eventually narrowed my choice to the Greater Chicago Food Depository since it’s a local organization, spends its money efficiently, and benefits a large amount of people.

How much to give?

Of course, the personal-finance nerd in me wanted to know a specific number that was standard to donate. I thought it would be easier to create space in my budget if I had a percentage of my income to build from. 

I again looked to the web and asked my friends and family. And again, I got a wide variety of answers:  some people gave 1% of their gross income, others 10% of their net, and others just gave sporadically. Even our government leadership varied widely. According to the Obamas’ 2012 tax returns, they gave almost 25% of their adjusted gross income to charity versus 2% for the Bidens.

Since I couldn’t find a standard amount of giving, I started with how much I could afford while still meeting my living expenses and savings goals. From there, I adjusted my other expenses to meet an amount I considered reasonable for charitable giving.

Give Efficiently and Effectively

As I learned, figuring out charitable gifts is a personal endeavor. But I urge you to really consider why, where, and how much to give rather than giving blindly. This type of focused giving will serve both you and your cause more effectively. For more giving tips, check out Charity Navigator’s tip page