Many studies have shown that charitable giving provides greater happiness than buying more stuff. Giving to a deserving cause forges feelings of connectedness and community.
Incorporating charitable giving into your financial plan is a great way to make sure that your generosity is aligned with the things that are most important to you. It’s important though to keep your good intentions from ruining your long-term plan.
1. Have a purpose.
The most effective charitable giving is thoughtful and intentional. It may be helpful for you to ask yourself some questions to narrow your focus.
- Do you want to give to a national or local cause?
- Are there pressing issues in our community that you can help impact?
- Are there any personal connections to causes such as medical research for a family member suffering from a specific disease?
- Do you want to support a religious organization like your church?
- Are your charitable impulses motivated by on-going problems such as education or homelessness?
- Would you rather react to events such as natural disasters?
2. Do your homework.
Once you’ve settled on a cause, do some research on potential recipients.
- Is the leadership running the organization responsibly?
- Does the charity have measurable goals and offer progress reports?
Don’t sink your money into a well-intentioned black hole.
If you want to give to a national organization, keep in mind that even some of the biggest names have come under fire lately from watchdog groups for misusing donations.
Make sure you’re giving to an organization that is transparent with what it’s doing with your money. Websites such as CharityNavigator.org or Give.org can do much of the work for you. They evaluate and rate charities based on a number of factors. Those with a rating of 80 or above can alleviate any concerns.
3. Beware the internet.
Whenever something bad happens in the world, our inboxes and social media are flooded with donation links. Read before you click.
Be especially wary of crowd-funded campaigns on sites like GoFundMe. The cause may sound worthy, but these sites do not provide meaningful oversight on every campaign. Your money could be going to a cause, or it could be going straight to a scam artist. You’ll never know for sure unless you know the person organizing the campaign.
4. Find out what will do the most good.
There’s more than one way to give. Maybe the local adult literacy center needs volunteer tutors as much as it needs money. Perhaps you’d feel more fulfilled helping out at your church’s food bank than you would feel by writing a check. Taking a more active role in a cause that’s important to you might be the most valuable thing you can give.
5. Know your limits.
Your giving should be a planned part of your budget — especially as you near retirement age. Don’t make a large one-time contribution that’s going to force you to dip into an emergency savings fund. Don’t sign up for a recurring gift that’s going to put a strain on your monthly bills. If you can’t give as much money to a cause as you’d like, think about supplementing a smaller contribution with regular volunteering.
Our best intentions can sometimes get us into the most trouble. It’s great that you want to use your money to try to make the world a better place. But your comfort and happiness are important, too. Even the wealthiest people have to say no.