The Blue Blaze

Giving: How To Do The Most Good Without Disrupting Your Financial Plan

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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 may fade -- though if you’re spending with purpose, it shouldn’t.  

Even if that big purchase thrill does fade, there’s plenty of anecdotal evidence and actual scientific studies to assure us that giving forges feelings of connectedness and community that don’t fade away.

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:

  1. 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 impact?
  • Do we have any personal connections to causes, such as medical research or support for the arts?
  • Do we want to support friends or family by contributing to causes that impact their lives or fulfill their passions?
  • Do we want to support a religious organization, such as our church?
  • Are our charitable impulses motivated by on-going problems, such as education or homelessness, or would we rather position ourselves to react to events such as natural disasters?
  1. Do your homework.

Once you’ve settled on a cause, do some research on potential recipients. Visit the local nonprofit you’d like to support and meet with its leadership team. Is the organization 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 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’s doing what it says it’s going to do with your money.

All not-for-profit organizations must be registered with the IRS and many will have their tax form, called a 990, available for review. You can also review organization profiles on Charity Navigator and Guidestar for more information.

And if you know anyone else who has been supporting an organization you’re researching, it makes sense to take the time to speak with them about their own experience.

  1. 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 into a scam artist’s pocket. You’ll never know for sure unless you know the person organizing the campaign.

In this, as in other opportunities such as using robo-advisors to help make investment decisions, our recommendation is always the same. Absolutely use tech tools to empower and enable you to reach your goals, but never substitute tech tools for guidance and counsel from human, professional partners who are invested in your success.

  1. Find out what will do the most good.

There’s more than one way to give. Yes, mission-driven not-for-profits need financial support to do their good work, and if, after self-reflection and doing your research you do write that check -- you should feel great about your support.

But 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 simply 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.

  1. 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.

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.

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-centered financial plan: use the money you have to get the best life possible. With a little planning, you’ll make life better for those around you as well.

You deserve to live the best life possible with the money you have.

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Topics: Charitable, Values, Purpose,, Optimal Life,, Planning