Personal Finance

When Should You Give to Charity?

morning coffeeToday’s question to get your morning rolling is, Should you wait until you have a lot of money before giving to charity or should you give to charity even when you don’t have a lot?

I have two good friends that have opposing view on the best way to give to charity. One never gives to charity saving all his money in a special account. He is building it up so that it reaches $1 million where he can then use that as a base and give away all the interest the money earns from that time forward. While he doesn’t give any money now, he feels that by creating a large sum foundation, he will be able to give a lot more that will never run out even after he’s dead. When I mentioned that I have another friend that gives 10% of everything he makes to charity, this friend said that giving money to charity like that fails to provide a way to sustain the giving over a long period. Once he stops working, then he doesn’t have money to give to charity.

The other friend who gives a set 10% of the money from his paycheck each month believes that giving to charity is like most other things. If you instill the habit, you will continue to do it as you gain more wealth. When I mentioned that the other friend and how he plans to give to charity, his initial question was, “What if he never reaches $1 million?” he then explained that even if he does, he thinks it will be difficult for him to suddenly start giving money when he hasn’t done it at all before. When you have always given 10% over time, it’s a habit, but if you have never given anything to charity, he said it would be difficult to all of a sudden hand over $10,000.

While I do give money to some of my favorite charities on a monthly basis, I also keep some on the side to give to good causes that I come across. I haven’t set up a charity fund, but it is an idea that has some appeal to me. What is your view on charitable giving? Should you do it consistently or is it better to create a fund that can be dispersed later?

Please share your own experiences on this topic as a wide variety of views and thoughts are helpful to everyone. If there is one thing that I have learned about personal finances from all of you is that there are always exceptions to the rule and differing circumstances can mean completely different solutions. If you have a blog and you have written about this topic in the past, feel free to link to your writing (although a short summary would be helpful). If you have recently read a good article on this topic, please links and share in the comments.

Image courtesy of amanky

10 thoughts on “When Should You Give to Charity?

  1. There are alot of myths about who give and who doesn’t give to charity. Here is a good article on the topic:

    “But while the rich do give more in overall dollars, according to the Social Capital Community Benchmark Survey, people at the lower end of the income scale give almost 30 percent more of their income.”

  2. I don’t give to charity as much as I should. I have a hard time trying to figure out if the money really goes to the charity or just pays the people running it big salaries. I wish there was a way to have more disclosure of where the money was really going.

  3. I don’t give to charity as a rule (I occasionally make an exception for no-kill shelters). I feel that most of the large charities don’t do anything to help the people they are supposed to. Instead they just perpetuate the “I’m poor give me money” attitude. There really is no reason to give to a charity in my opinion, I feel most of them are crooked.

  4. There are some great charities out there where your money does do great good. – these are microloans to people. Your gift is paid back, but without interest so people in poor countries can expand or start a business. 100% of your donation is used for the loan. – great group that help in areas with medical needs of people many times in places where there is no other help for the people.

    There are many others as well. Do some research and pick a few of the ones you really like. Especially these days they can really use your help.

  5. How much per month does the Fund person put into their charity account? If it is 10% of their income, than it seems that they are doing roughly the same thing. And yeah, some charities aren’t going to handly your money well, but that isn’t an excuse to not help others! Give your gifts to your local food bank or hand out lunches to the homeless on the street; to me both of those are giving to charity.

  6. I think the best best is somewhere in the middle. Those are both extreme examples.

    I had to add that I always cringe at all the financial gurus with their “give 10%.” I live in an area flush with wealthy and the average I see (I prepare tax returns) is 1%. Even more probably give 0%. Doesn’t make it right or wrong, but then I see people who give 10% and are drowning just because they think everyone else is doing it. That is the part that makes me cringe.

    We prefer to give 1% and donate our time, which we have more of to give.

    When our children our older and as our income rises, we will give more. It is personally important to me. But I have trouble taking care of others before taking care of myself. Doesn’t really make sense on many levels.

    Of course, since giving is important to me, waiting to $1 mil seems a little extreme. But, if he can make that goal, it would be a very generous way to go.

    So I guess I would say I find both of those examples extreme. But both will probably work in their own right.

  7. My preference is to give now. I feel that the amount I’m giving now increases in value faster than what I could earn in interest. Examples:

    1) Donate to places that are buying ecologically important land. There’s more of that land available now than there will be later, and it’s cheaper now than it will be later, not to mention that the longer you wait, the more species go extinct and thus can no longer be saved. (I use Nature Conservancy and Conservation International.)

    2) Donate to places that loan money to poor people to start their own companies. When they repay that money, it becomes available to the next person. So my single donation today might help a new person every year indefinitely. (I use ACCION International and FINCA International.)

    3) Donate to places that are looking for cures. The sooner a cure is found, the more people it can help.

    Of course for things you are using now, I recommend waiting to donate them until you are finished with them. For example, you might use the proceeds from the sale of your house to build a foundation after you die.

    And sometimes if you have a big pile of money to donate, the receiver might not be used to getting that much money and might not use it as wisely as if they were getting a smaller amount indefinitely.

    One more note: even after retirement, one can still donate 10% of one’s income, even if the income is from interest, dividends, and capital gains.

  8. We give approximately 10% monthly. I have done this all my life. We also donate boxes of items to our local thrift stores and leftover books to our library sales. We buy or have items donated to us and those that can’t be sold in our online stores are redonated to those who can use them.

    I always had problems though when I was working and they did fund drives and wanted/expected 100% cooperation for things like United Way. I didn’t want to give to that organization as I was already giving 10% elsewhere, yet those whose only giving was through work expected me to give to their charity. I don’t like being told where to donate to.

  9. I’m a recent graduate from college and for about the last three months or so I have got into the habit of giving 10% of my paycheck away. I feel this is a better practice than simply saving for ‘someday’ in the future when you can give a large sum. If one instills the habit of giving they will continue to give for their entire lives. It everyone gave 10% it would be a much better world.

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