You want to help others every day—here's how to do it responsibly, according to financial planners.

By Nancy Mattia
September 18, 2020
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Given the fact that charitable giving was down six percent in the first quarter of 2020 alone, according to the Fundraising Effectiveness Project, making even small donations to the causes that are important to you—whether it's to aid the California wildfire victims or the Black Lives Matter movement—is more vital than it's ever been before. If you've thought about being a repeat donor, there's no better time to start than now. But how to make supporting charities and non-profits a regular part of your life?

Here, we consulted experts to better understand the financial factors that go into making a smart decision on philanthropy.

Calculate how much money you can give.

Figuring out the right amount to donate can be tricky. "It shouldn't be based solely on how much you're asked to give, because the asker likely has no insight into your personal [financial] situation," says Stephanie McCullough, founder and CEO of Sofia Financial, a planning firm whose goal is to help women manage money and stress. But contributing is not just about finances. "All spending decisions should be in alignment with your core values," she says, "and giving might be very important to you." However, you have to take care of yourself first. Look at all your expenses—including housing, healthcare, food, the gym—and any future needs to determine how much you want to donate of what's left after you've paid all your bills. It could be $15 every month or $1,500 a year—the right amount is what's right for you.

Identify important causes to support.

Take time to brainstorm what causes mean the most to you, anything from saving endangered species to funding school supplies for disadvantaged children. Some people choose to support their friends and family's various fundraising endeavors or supporting an issue they feel strongly about like cancer research or animal welfare, says McCullough. "Keep some unallocated giving budget for the stuff that comes up through the year because, as 2020 has taught us, you never know what's around the corner." But before you send any money anywhere, vet the organization through a charity assessment group like Charity Navigator or CharityWatch. Make sure any you're considering uses donations wisely and doesn't spend the bulk on administrative or fundraising costs.

Decide whether to give it all to one charity or divide it up.

While it can be tempting to "spread the wealth" and give to many different causes, says McCullough, there are advantages to consolidating your giving. "Instead of being a small donor to a bunch of charities, being a larger donor to one group may bring an enhanced level of access or involvement," she says. "Many organizations recognize larger donors with invitations to events or even the opportunity to serve on committees, which could mean having a bigger impact as well as social and leadership opportunities."

Here's how to get the money to the charity.

If you get a regular paycheck, McCullough suggests setting up an automatic payment in sync with when the income hits your bank account. If you are paid sporadically like many self-employed people, you could instead dedicate a set percentage of your income for automatic giving.

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