Experts estimate their best donation targets — and explain why your contribution doesn’t always need to be monetary.
Go ahead; give a little.
Americans gave an unprecedented $410.02 billion to charity last year, Giving USA’s annual philanthropy report found, a figure driven by donations from the wealthiest households. Meanwhile, a Chronicle of Philanthropy analysis of IRS data found that the share of Americans who give to charity has declined: Just 24% of taxpayers reported a charitable gift in 2015, compared to the 30 to 31% norm from a decade earlier.
This trend, which the Chronicle notes jibes with similar studies, “suggests a narrowing of support in America for philanthropy.” “Whether running capital campaigns, annual-giving drives, or direct-marketing efforts, nonprofits are relying on fewer, more affluent supporters,” the publication’s “How America Gives” special report found last fall. (Amazon founder Jeff Bezos, for example, recently announced a $2 billion fund to tackle education and homelessness.)
And analysts predict that the GOP tax overhaul — which raised the standard deduction from $6,350 to $12,000 for single filers, and $12,700 to $24,000 for those married and filing jointly — could lead Americans and U.S. companies to give as much as $21 billion less.
So just how much of your hard-earned money should you be giving to charity? The answer is subjective and varies by person. Copia Wealth Management & Insurance Services CEO Elisabeth Dawson, citing a Financial Samurai figure estimating that the average percentage of adjusted gross income (gross income minus certain adjustments) donated to charity is 3 to 5%, suggested shooting for a middle ground of 4%. Chronicle of Philanthropy editor Stacy Palmer, pointing to a stat that individual giving as a percentage of disposable income has long hovered around 2%, advised starting there. Many people of faith, meanwhile, tithe 10% of their income.
Experts agree on one point: Charitable giving is an incredibly personal choice. “It’s what you feel like you can afford, how much a particular cause or charity means to you, how deeply affected you are by something and how much you want to help, and what you feel your responsibility to a community is,” consumer psychologist and “Decoding the New Consumer Mind” author Kit Yarrow told Moneyish. “It’s just a very personal equation that everybody works out for themselves.”
Factors that play into that equation, Yarrow added, might include your personal financial constraints like credit-card debt and loans; how passionate you are about a certain cause, issue or institution; and whether you’ve actually been engaged by an organization or charity’s outreach efforts.
But while “we all have an obligation to contribute to others,” Yarrow said, that contribution doesn’t always have to be monetary. “This is particularly true for those that are struggling with their own debt,” she said, suggesting donating time or energy instead. Palmer noted that some people may choose alternate, more informal ways of giving, like helping family members or a needy person next door — acts, in other words, that “might be just as legitimate a way to help others as writing a check.”
As for pressuring others to give money, experts stress the difference between encouraging donations and guilting people. “Sometimes social media’s a good way to do it, because it’s a lot less direct than somebody calling me up,” Yarrow said. “(Or) a bulk email where it doesn’t feel like ‘Hey, Kit, you need to give.’” “I think they can talk about what they’ve done and see if it positively affects someone else,” Dawson said.
Once you’ve determined your own capacity to give, Palmer said, think first about which cause you’re passionate about, then do some research on which charities are doing good work in that area. You can find useful nonprofit reports on GuideStar; watchdogs like Charity Navigator and the Better Business Bureau’s Wise Giving Alliance also evaluate charities.
“Ask questions about what kind of accomplishments the nonprofit has achieved, and how do they know it? … If they fumble around when you’re asking those kinds of questions, that’s not a good sign,” Palmer said, adding that the best source of info is sometimes the charity’s own website.
While the number of charities you support is an individual decision, you can often do more good by paring down the list and “really giving generously to the groups you care a lot about,” Palmer suggested, selecting two or three rather than 10. And your continued contributions again and again are hugely beneficial to a nonprofit. “You can help them a lot by being a loyal giver,” she said.
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