3 Tips on how to create a giving budget
I don't recall my parents giving to charity. Maybe they did it, but if so they never talked about it or modeled it with their kids. Instead, I had to come to this as a young adult. I remember shrugging off Development Office requests from Mount Holyoke College, but got more enthused about helping the community after attending a United Way drive at work in my twenties. After joining a Unitarian Universalist Church I've had plenty of opportunities to develop a more thoughtful giving program through the years. I suspect that every church everywhere has a "Stewardship Campaign." But it wasn't until a casual comment from my mother-in-law that I realized that there are people in this modern world who still "tithe".
TIP 1: How much?
So how much to give? I rarely tell the people I serve an amount: it's far more important to their financial wellbeing that they give something at all. If they say (or think) "I can't afford to share, I'm a charity case myself!" then they've impoverished themselves. (Honestly, anyone living in America in the 21st century has a better life than most humans that ever lived on this planet through-out time, so an attitude reset is usually warranted in those cases.) Nudging people into remembering to give, and reminding them to let me know what part of that was deductible at tax-time, is usually what I do with my clients.
However, over time I've developed a way to figure out the right amount for ME to give. Once you start seeing the need, it feels like an endless maw of need. The instinct is to look away and not get around to giving hardly anything. I've found that creating a charitable budget is the best way to do this. Here's my trick: sometime in '21 I'll look at my '20 and find the line for "Adjusted Gross Income". Then I'll find 3% of that. Why that number? Because I figure the Biblical injunction to tithe 10% is somewhat superceded these days by the 7.65% amount we have to pay into social security and medicare. Why not use the projected income for '21? Because I already earned and theoretically have access to the '20 income, for one thing, and for another it's easy, and lastly because it's a solid number I can revisit if I lose my budget workpaper.
You won't be surprised to hear that I'm a spreadsheet person. I've got a Google Sheet with my charities listed, with room for the AGI calculation. The sheet has two columns: one for the planned budget, the other for the actual I've already done.
Personally, I include in this gifts to GoFundMes and other non-deductible gifts. I do NOT include gifts of used clothing or household goods. The charitable budget is for my own use allocating my money. It's related, but not the same thing, as what I can deduct at tax-time. (Insert link to what you can deduct at tax-time.)
TIP 2: Fund Your Values
How to pick my charities? A good rule of thumb is that if you've gotten a mass marketing campaign mailing then they are probably a charity that spends too much on marketing. If I like the cause I usually go to Charity Navigator to find out who else is doing this same thing more effectively. I evaluate the charities over two ways: how good are they at their objective is one.
The second way I evaluate them is against my values. I try to make the world a better place because I existed by funding my values. [Pull out quote] There are many good and worthy causes in the world. I had to pick a few that are just mine. For example, I do not fund charities that feed the hungry, cure diseases or help veterans. I think they're marvelous causes and I sure hope other people do, but I fund charities that provide economic empowerment, defend the natural environment, support homeless teens, and support refugees.
This tip is helpful in resisting peer pressure. The endless maw of need has to have some edges around it, don't you think? I needed a rubric for when to comfortably say, "good luck, but you're not my charity."
TIP 3: watch for "user fees"
I try to limit the amount of charities that are essentially "user fees", that is, museums I like to attend, radio stations I like to listen to... I do some of these but try to match them with gifts to Give Directly. When I can, I try to support the organizations by buying annual passes and don't count those in my charitable budget. For example, I have a Y membership at the highest tier that I reliably pay every month despite not having been since the pandemic started. I pledge my church to fund its operations, but match that gift with a donation to the local library building fund. It's too easy to fund just the causes that benefit rich people if you just do the "user fee" things.
BONUS Tip:
When our kids were little we told them that they should "make the world better because they existed by funding their values." This was a really useful conversation about what was important to them. (I think touching back on that from time to time has served them well as they navigate choices in their young adulthood.) We told the kids that we would match their contributions. I loved seeing what they chose... and then we got the tax deduction for the gifts they made, too, LOL.
We continue to model charitable giving to our kids even now that they're grown. When we made our wills we set it up that 80% goes to the kids or their heirs, 10% goes to a group of named people (but not their heirs), and 10% goes to five named charities that were important to us during our lifetime. When our wills are read our heirs will be reminded again of how important we felt it was to "make the world a better place because we existed by funding our values."
TIP 1: How much?
So how much to give? I rarely tell the people I serve an amount: it's far more important to their financial wellbeing that they give something at all. If they say (or think) "I can't afford to share, I'm a charity case myself!" then they've impoverished themselves. (Honestly, anyone living in America in the 21st century has a better life than most humans that ever lived on this planet through-out time, so an attitude reset is usually warranted in those cases.) Nudging people into remembering to give, and reminding them to let me know what part of that was deductible at tax-time, is usually what I do with my clients.
However, over time I've developed a way to figure out the right amount for ME to give. Once you start seeing the need, it feels like an endless maw of need. The instinct is to look away and not get around to giving hardly anything. I've found that creating a charitable budget is the best way to do this. Here's my trick: sometime in '21 I'll look at my '20 and find the line for "Adjusted Gross Income". Then I'll find 3% of that. Why that number? Because I figure the Biblical injunction to tithe 10% is somewhat superceded these days by the 7.65% amount we have to pay into social security and medicare. Why not use the projected income for '21? Because I already earned and theoretically have access to the '20 income, for one thing, and for another it's easy, and lastly because it's a solid number I can revisit if I lose my budget workpaper.
You won't be surprised to hear that I'm a spreadsheet person. I've got a Google Sheet with my charities listed, with room for the AGI calculation. The sheet has two columns: one for the planned budget, the other for the actual I've already done.
Personally, I include in this gifts to GoFundMes and other non-deductible gifts. I do NOT include gifts of used clothing or household goods. The charitable budget is for my own use allocating my money. It's related, but not the same thing, as what I can deduct at tax-time. (Insert link to what you can deduct at tax-time.)
TIP 2: Fund Your Values
How to pick my charities? A good rule of thumb is that if you've gotten a mass marketing campaign mailing then they are probably a charity that spends too much on marketing. If I like the cause I usually go to Charity Navigator to find out who else is doing this same thing more effectively. I evaluate the charities over two ways: how good are they at their objective is one.
The second way I evaluate them is against my values. I try to make the world a better place because I existed by funding my values. [Pull out quote] There are many good and worthy causes in the world. I had to pick a few that are just mine. For example, I do not fund charities that feed the hungry, cure diseases or help veterans. I think they're marvelous causes and I sure hope other people do, but I fund charities that provide economic empowerment, defend the natural environment, support homeless teens, and support refugees.
This tip is helpful in resisting peer pressure. The endless maw of need has to have some edges around it, don't you think? I needed a rubric for when to comfortably say, "good luck, but you're not my charity."
TIP 3: watch for "user fees"
I try to limit the amount of charities that are essentially "user fees", that is, museums I like to attend, radio stations I like to listen to... I do some of these but try to match them with gifts to Give Directly. When I can, I try to support the organizations by buying annual passes and don't count those in my charitable budget. For example, I have a Y membership at the highest tier that I reliably pay every month despite not having been since the pandemic started. I pledge my church to fund its operations, but match that gift with a donation to the local library building fund. It's too easy to fund just the causes that benefit rich people if you just do the "user fee" things.
BONUS Tip:
When our kids were little we told them that they should "make the world better because they existed by funding their values." This was a really useful conversation about what was important to them. (I think touching back on that from time to time has served them well as they navigate choices in their young adulthood.) We told the kids that we would match their contributions. I loved seeing what they chose... and then we got the tax deduction for the gifts they made, too, LOL.
We continue to model charitable giving to our kids even now that they're grown. When we made our wills we set it up that 80% goes to the kids or their heirs, 10% goes to a group of named people (but not their heirs), and 10% goes to five named charities that were important to us during our lifetime. When our wills are read our heirs will be reminded again of how important we felt it was to "make the world a better place because we existed by funding our values."