Charitable Giving

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This article says that the poorest 20% of Americans donated 4.3% of their income to charity, while the wealthiest 20% of Americans donated only 2.1%. Sure, I know the2.2% delta represents a huge difference in dollars, but when we hear a lot about giving 10% or more, don’t these numbers seem low? And why, then, do we even bother donating these relatively tiny amounts of our incomes?

Well, budget senses aside, we donate because it is important to reach out and assist those in need or those causes that are important to us. It’s that simple.

A few years ago, I noticed that we donate a percentage of our income that, while it seemed generous at the time, still fell very short of where we wanted it to be. While we have no debt and a comfortable income, we are very disciplined savers. We both max out our 401(k)s to the tune of $48k in pre-tax dollars every year. And we’re stashing money away for college tuition as fast as we can. While all my conservative spreadsheets indicate that we’re doing just fine, there is still that nagging panic to save more…save more…it will never be enough.

So, how do you save for charity in the midst of life’s other priorities? Just do it.

Start with a number you are comfortable with. Imagine a number that still allows you to sleep comfortably at night. That’s how we started. The bulk (nearly 80%) of our charitable giving goes to our church. Our church attendance can be somewhat irregular, especially during the winter when bad weather keeps us away, or in the summer when other travels keep us from attending. So, I started writing a check once a month. Just get it out of the way. Write that check as soon as you are paid and then you won’t spend it on other things. Maybe five years ago, when the bonuses at my company were regular and generous, I actually would just write a check for the entire year. Boom. Done for the year.

THEN, our church started offering electronic donations. They would simply deduct a scheduled amount from my checking account each month on the date of my choosing. How convenient! Right after the mid-month pay, the church would suck the funds from my account to theirs.

Now, here’s how we’ve been working to improve our giving.

Imagine you give $250/month to your church. That’s $3k a year. Try to think about how much value or importance that charity has in your life. If you think that you get more than $3k of value, education, enjoyment, benefit, WHATEVER, try to increase that dollar amount each month. It was easier for me to think about increasing by $25/month than it was to think about another $300/year. I guess because that $25/month represented easy money to find in my budget…simply give up a lunch or two in the cafeteria and a few morning coffees, etc. Anyway, I’ve done this for the last two years and increased my church donation by 10% each year. Thanks to compounding, my donations to my church have increased by more than 80% over the last six years!

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