I'd Like to be A Better Person, but I'm Too Broke

If you'd like to be the kind of person who gives to charitable causes, but are the kind of person who can’t imagine sparing another cent, read this.

By Cheryl Lock


Giving is having a moment!

Even if it’s not for purely magnanimous reasons — guaranteed good karma! — we can probably all agree that giving to others is a nice idea. Perhaps that’s why Giving Tuesday had its most successful year yet in 2018, with more than $380 million raised and almost four million donations of food, clothing, and other goods. It's a movement for sure. But if you haven’t been able to partake and would like to, here are some easy ways to pull extra funds seemingly out of thin air and make sure they’re getting to the people who need them. Because otherwise, what actually is the point?

Create a new, donation-friendly budget

When the spirit moves you, create a budget that factors in your donation dollars. There are some basics to keep in mind when doing this, says Daniel L. Grote, CFP with Latitude Financial Group:

• First and foremost, always avoid taking away from your retirement savings for donations.

• Be sure you always have your “four walls” covered, including rent/mortgage, car payments, utilities and food/clothing.

• After your basics are covered, set a goal amount. Striving for sainthood? Consider working up to 10 percent of your take-home pay to put towards donations. But you know how organizations tell you that no donation is too small? They mean it. 

Which charity should I donate to?

Unfortunately, some organizations aren’t as philanthropic as they seem. To make sure as much of your donation is going to your cause as possible, start by making sure you’re giving to a qualified 501(c)(3). “There are many organizations in the business of vetting charities and other not-for-profit organizations,” says John Phillips, CFP and chief investment officer at Red Door Wealth Management. “Use their expertise to make sure your dollars go where they are supposed to go.” Some good places to vet your charity before donating include:


Consider paying in installments

Don’t over-extend yourself just because you’re trying to stick to your donation goals, says Michelle Lippincott, first vice president, wealth management at UBS. “Spacing out donations throughout the year may increase your overall capacity to donate.” For example, if you know you’d like to give $1000 to a specific charity, spreading the donation out to $84/month over the course of the year might be an easier (and more economically feasible) way to reach that goal.

How to help charities without donating money

If after going through your budget it feels impossible to siphon off even a small amount of cash to put towards giving, consider ways to donate without spending money, like volunteering your time or giving away items you own. You can also include charitable donations in your will. “Impactful giving doesn’t have to mean immediately out of pocket,” says Lori Kranczer, founder of Everyday Planned Giving. “Individuals can make gifts to nonprofits that are called planned gifts, or legacy gifts, that may not transfer to an organization for many years, such as a gift in a will or retirement assets.” 

If you already have a will, your attorney can draft a codicil — or an additional clause annexed to the will — to support an organization. If you don't have a will, you can always add charities as beneficiaries to retirement plans, such as 401(k) or IRAs, by filling out a form called a Change of Beneficiary form. You don't even need an attorney to make this type of legacy gift. The nonprofit can be named on the form to receive a percentage of the funds after, well, you’re not around.

Workplace giving programs

And lastly, if you’re working, it’s worth looking into your company’s charitable giving policies to see if you can make your donation dollars go even further. In addition to the fact that some employers allow employees to take pre-tax money and donate it to charities directly from their paycheck, “some will even offer matching contributions of the company’s dollars for those donations,” says Lawrence Solomon, CFP and client advisor with Mercer Advisors

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