The Case for Consistent Generosity
In conjunction with today’s post, please check out my recent Society of Grownups article “Choosing a Charity: A Hands-on Approach.” I wrote it because I know it’s overwhelming to trust someone else to manage your money well, and there are an overwhelming number of options. So I describe a step-by-step process for selecting a trustworthy nonprofit to donate to. Now to today’s topic…
”I prefer to give time instead of money.”
“There are so many corrupt charities—I don’t want to line the pockets of some rich con artist.”
“Giving doesn’t have to be financial. You can give time, possessions, or simply kindness.”
“I like to give when I feel there is an urgent need.”
“I love to give really generous tips to servers.”
I hear these sentiments about charitable giving all the time, and each one conveys a piece of the complicated puzzle that is generosity. Yet each could also represent a misconception about philanthropy.
Last month I shared my belief that the purpose of money is to provide for needs and wants, for myself and others, now and in the future. We dissected wants. Vs. needs, and probably ended up more confused, though grateful, than we started.
This week let’s look at the next part, “for myself and others.” We’ll explore different types of giving, and I’ll make the case for one approach you can’t afford to skip.
There’s More Than One Way to Give a Dollar
Sometimes people conflate the idea of generosity with being a nice person in general. Volunteering at your kids’ school or helping old ladies cross the street could be called generosity under this definition. I find it a bit odd that on personal finance blogs, we’d suddenly jump topics and start talking about random acts of kindness. By all means, help the old ladies, but let’s stick to the theme: money. (Things that you buy and then donate count, too). Here’s a list of ways one might give away the green stuff:
|Others Wants & Needs|
|Gifts for friends and family|
|Giving to a faith-based group|
|Giving to charitable causes and non-profits|
|Random acts of generosity to individuals|
|College funding for your children (?)|
I see two main categories:
- Personal gifts
- Charitable gifts
Both are valuable and important. And there can be overlap between these categories. But we’re not going to count our familial Christmas shopping as philanthropy. I love giving and receiving thoughtful gifts, but personal gifts—even very generous ones–can’t and shouldn’t replace charitable giving in your financial plans. Giving to those outside your own tribe cultivates compassion in a way that guards against greed and grows your real worth all at once.
Under charitable giving, there are two main approaches:
- Spontaneous gifts
- Planned gifts
Many people practice spontaneous giving. Perhaps it’s the Boy Scouts selling popcorn, the Salvation Army Santa outside the grocery store at Christmas, or the community food drive. Then there are the urgent calls for disaster relief or refugee care. Being able to respond to needs in the moment is incredibly important. These are times when compassionate, spontaneous giving is invaluable.
The Case for Planned, Consistent Giving
If we rely on spontaneous giving alone, we will not give as generously as if we plan ahead. Yes, it’s more work up front. Yes, it will require more money. But it also allows for a long-term partnership where you know your money is actively and effectively helping others on a regular basis. We plan ahead for ourselves with emergency funds and retirement accounts. It only makes sense to plan ahead to help others, as well.
There’s a reason many of the world’s faiths call upon followers to give away a portion of their income, such as ten percent. I don’t believe 10% is a magical number or even required by my faith, but it’s a good starting point. Choosing a percentage is helpful because it’s easy to feel like I’m doing so much good because I’m giving away $50 a month! That’s a great starting point, but if you’re making a median $51,900 per year, you’re giving away a whopping 1%.
It’s also easy to give less (percentage wise) as your income increases by simply giving the same amount you always have. The average individual American charitable giving by percent is lower for those with higher incomes.
Whatever percent or amount you choose, please choose ahead of time! We read all the time about why we should save a certain percent, invest a certain percent, don’t let housing costs exceed a certain percent, etc. Plan your giving like you plan your saving, investing, and spending. If you believe sharing is part of what money is for, grant giving the forethought and importance it deserves by choosing what to give ahead of time.
We choose the causes we want to give to, then the amounts we want to give. Next we add ’em up and see how that compares against our income, i.e. the percentage. Then we can adjust the amounts and/or causes as we see fit. Finally, we sign up to have these auto-drafted from our checking account monthly, just as we do with most of our expenses and investing. Giving to urgent needs is determined as they arise.
All types of giving are valuable, but planned, consistent giving is the key to unleashing more funds toward improving our world. I believe many people would be moved to greater generosity if they thought of giving as a strategic financial commitment. If it’s truly better to give than to receive, let’s plan to make giving happen.
For more on charitable giving, check out:
What type(s) of generosity do you practice? Has anyone found they give more when they commit ahead of time?