Is Donating to Charity Part of Your Financial Plan?
Written by Anne Papmehl
Monday, September 17th, 2018
Most of us want to give back and help others, and there's no shortage of worthy charities that can use the money—especially during tough economic times.
Unfortunately, it's during those tough economic times when we tend to donate less, fearing for our own financial security.
Even in good economic times, staying on top of the daily costs of living, paying off debt and saving for retirement is challenging. Finding extra money for charitable giving on top of that can be a real financial stretch.
Many of us (myself included) approach charitable giving haphazardly, giving to whoever crosses our paths at the time—neighbourhood kids fundraising for a sports trip, air cadets canvassing outside the grocery store or email donation requests. Or we might make a mental promissory note to donate "one of these days" when we have some extra cash, and then neglect to follow through.
Making a Plan to Donate
Obviously, we can't give to everyone, but by making regular charitable giving part of our financial plan we can give back and do good in a budget-friendly way.
- By planning our charitable giving, we can narrow down the causes we want to focus on – poverty and hunger, church, medical research, local sports teams or animal welfare – and identify our donating priorities.
- By creating a charitable donation strategy, we can take time to research the charities' legitimacy, transparency and performance and make an informed choice. Speaking personally, I like to know the charity is spending most of my donation money on the cause, not administrative or fundraising fees.
- Incorporating charitable giving into our financial plan also lets us set limits as to what we can comfortably afford – while enjoying the good feeling that comes with helping someone else. And by making conscious decisions and concrete plans for our giving, we're more committed to following through—and that's good for the charities that survive on our donations.
How to Go About Giving
A simple way to start is to look at your monthly income and see where you have any extra money after you've covered your expenses, savings and investments. How much of that extra do you want to put aside for charity?
- What kind of charities would you like to support and how many? Do you want to give most of your donation money to one charity or spread it over several? How often do you want to give – once a week, once a month, or a few times a year?
- Do you have a fairly stable income or are you a contractor or freelancer with a variable income? If the latter, you may want to build some flexibility into your giving plan, recognizing that you can be more generous at some times than you can at others.
- Is getting a tax receipt important to you? Then you'll want to give to registered charities only — and be sure to track your receipts so you're not scrambling at tax time.
Finally, it pays to review your donation strategy from time to time — ideally when you review your financial plan — to determine how well it's working and whether it's time to loosen or tighten the charitable giving purse strings.
A Proactive Approach to Giving
By including charitable giving in your financial plan, you're taking a proactive approach to giving back, instead of reacting to every request that comes your way and feeling a bite in your wallet from saying yes or guilt in your conscience from saying no.
If you're giving to charity in a way that suits you and your finances, you'll be able to do a better job helping others.