Giving: How To Do The Most Good Without Disrupting Your Financial Plan
As we near the festive period, here’s a useful guide to manage the joy of charitable or philanthropic giving, without disrupting your own finances.
The Isle of Man must be one of the happiest places to be judging by the strength of our ‘3rd Sector’; Charities.
Many studies have shown that charitable giving provides greater happiness than buying more stuff. Eventually, you get used to your fancy new car, and the enjoyment it provides goes down. But giving forges feelings of connection to the community that don’t fade away. You can find some inspiration for good local causes on our One Island page.
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. Some forethought about these key issues will also make sure that your good intentions don’t throw off the rest of your long-term planning:
Have a purpose.
The most effective charitable giving is thoughtful and intentional. It may be helpful for you and your spouse to ask yourselves some questions that will narrow your focus, such as:
Do we want to give to a national or local cause?
Are there pressing issues in our community that we feel we can help with?
Do we have any personal connections to causes, such as medical research or support for the arts or a particular sport?
Do we want to support friends or family by contributing to causes that impact their lives or fulfil their passions?
Do we want to support a religious organisation, such as our church?
Are our charitable impulses motivated by on-going social problems, such as education or homelessness, or would we rather position ourselves to react to events such as natural disasters?
Do your homework.
Once you’ve settled on a cause, do some research on potential recipients. If there’s a local charity you’d like to support, go to meet with its leadership team. Is the organisation running itself responsibly? Are there good, competent people in charge? Will these people get the job done? Don’t sink your money into a well-intentioned black hole.
If you’re looking to give to a national organisation, 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 organisation that’s doing what it says it’s going to do with your money.
Also, remember that big organisations – even non-profits – have to manage overheads like, salaries, and insurance. Are you happy supporting the organisation itself? If you want to see your money in action more visibly, you might be happier giving locally.
Beware of 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 into a scam artist’s pocket. You’ll never know for sure unless you know the person organising the campaign.
Find out what will do the most good.
There’s more than one way to give. Maybe the local Age concern, or Junior Achievement centre needs volunteer ‘tutors’ or ‘coaches’ 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 cheque. Taking a more active role in a cause that’s important to you might be the most valuable thing you can give.
However, if you want to help with large-scale problems outside your own community, like hurricane recovery on the other side of the country, money is usually the most effective way to contribute. Unlike toiletries or canned goods, money doesn’t have to be boxed and shipped. You’re better off contributing to large, trustworthy organisations that already have systems and pipelines in place.
Know your limits.
Especially as you near retirement age, your giving should be a planned part of your budget. 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.
Sometimes our best intentions get us into the most trouble. It’s great that you and your spouse 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.
When in doubt, let your core values be your guide. Apply the same principle to your giving as you do to the rest of your life-centred financial plan: use the money you have to get the best life possible. With a little planning, you can make life better for those around you as well.