Someone anonymously guest posted on Monday for Len Penzo and had some strong things to say about donating to charity. Basically, he thinks that he’s given enough to charity and gives us 8 reasons why he wants to keep his money to himself.
Unfortunately, he is wrong. In fact, we should be donating MORE to charity. Here’s why:
1. Charity donations are tax-deductible.
Sure, some portion of taxes go to helping those in need (welfare, disaster relief, etc.), but if we donate $100, we get a large portion of that back if we list it as tax deductible. Suddenly your $100 donation is only $65. The point is to actually give the money away, remember?
2. Giving now is better than giving in the future.
It may seem like a small amount now, but a dollar today is worth more than a dollar tomorrow. Don’t wait until you’re super rich to give to charity. Your $100 now may have a larger impact on you now, but it also have a larger impact on the charity than if you waited 5 years to give that $100, when inflation knocks that value down to about $85.
3. You can double your contributions without doing any work.
Instead of simply sending off your money, why not find out if anyone is offering to match? Consumerism Commentary is matching charitable contributions at the moment (until December 11th), and sites like Donation Doubler have lists of companies that will match your charitable contribution. Find one you like and suddenly you contribution goes twice as far!
4. You really CAN make a difference.
J Money has been promoting Love Drop, and guess what? Your money won’t be wasted and he won’t be spending it all on beer (though maybe he wishes he could), instead it will go to someone who needs the help. Can you make any more of a difference than that?
5. You’re just going to blow it on something dumb anyway.
As pious as you are, there’s still extra money in your budget somewhere. Create a budget for charity donations, then some of your extra money (each month or each year) and donate it to charity. Use your spending money to make a difference instead of spending it on Brookstone goods you’ll use once. And if you think you don’t have enough, take that extra 2% you’ll be earning next year and put that toward a charity fund. For someone making $30,000, that’s about $500!
6. You’ll help yourself at the same time.
Studies show that when individuals spend money on gifts for friends or charitable organizations, their happiness increases while those who spend on themselves get no such boost. Even Scrooge can agree that everyone wins.
7. If you don’t help now, you never will.
Don’t pretend that instead of giving money, you’re going to donate time. When was the last time you volunteered at a soup kitchen? Don’t let your mind fall for this trick. Send the money now or you’ll end up giving nothing.
8. Be a leader, not a follower.
Since other people don’t donate, you don’t want to either? If your friends know you’re giving to charity, they’ll be encouraged as well. And your friends are probably in credit card debt, too. Are you sure you want to follow their lead?
Readers, What do you think? Which argument is more convincing? Should we be donating more or less this year?
If you don’t believe Daniel, you might believe Arthur C. Brooks. His book “Who Really Cares” is a great read if you are interested in charity and the role it playing in our individual lives and our society as a whole.
I’m with Daniel here, although I donate nothing one year, and then double my donations the next year to maximize tax benefits. :)
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Daniel Reply:
December 11th, 2010 at 10:37 pm
@Kevin McKee, That’s a really great strategy, and works with other things, like prepaying mortgages too. If you can afford to make extra contributions one year, you could increase your total tax breaks.
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I totally agree that we need to be donating more. I’ve worked for a non-profit the last five years and I think a lot of people would be surprised how little donations can make a bit impact. Just be choosy with your charities…
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I was brought up to donate to charities. It was part of my parents training me to handle money. I got to spend some, save some and some to donate. It’s something I am passing on to my girls.
I do take the tax deduction that I am due and I thank you for mentioning some of the sites where I can find companies that will match my contribution. Since I work for myself, I miss out on having an employer match my contribution.
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I disagree. I do not waste my money on dumb things. Many do, but I think if we invested it wisely in creating a business it’d do more good than sending it to Haiti. There is a place for charity however I pay taxes and a lot of them, in my opinion, which goes to people who quite frankly don’t deserve it. Maybe it’s just California, maybe I’m jaded from working in banks and seeing people on public assistance who drive around in a Lexus and who have 400 dollar cellphones.. I’d rather help someone I know personally than strangers.
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First, I love the new e-’mail interface. My only suggestion is making clearer the link to be able to comment.
Second, great post. I’d add that there really are only two ways to provide charitable services to those in need. Either we make charitable donations and control whom we give to, or we pay higher taxes and let the states and federal government decide what to fund.
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Daniel Reply:
December 10th, 2010 at 1:25 pm
@Ira, I will see what I can do to make it more prominent. I’ve always wanted a nice badge to show it, I’m not sure how to go about finding a way to do it. This isn’t a change from the old format, and as usual, you can click on the title (or the small comments link at the bottom).
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I very much agree with you! Since kids came into my life, I am much more emotional and really enjoy giving. Do you think its better encouraging your local community/charity or leaning towards bigger ones? I am wondering what are others thoughts about this.
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Daniel Reply:
December 10th, 2010 at 1:30 pm
@DoNotWait, I’m sure giving to local charities where you see the difference makes people feel better about doing it. And the connection makes it easier to give vs. giving to an organization with no face.
Everyone has their own preferences and we can rarely be sure whether our money is getting put in a pool of funds or being used for the specific thing we’re hoping for.
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Charities need our help, especially in times like ours. When economy suffers, charities are hurt the most. Demand for their services grow, but donations not. Great article. This is so true – if you don’t help now, you never will. I grew up in the country were donations did not exist (serious). I learned about them ten years ago when I moved to the US. It is a great thing and people should support it.
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Although I donate money, clothes and furniture, I believe in donating time to charitable organizations. It is actually more rewarding than just donating money or things.
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Very compelling stuff! Another reason I have heard for the case of donating to charity is that it is a normal thing for wealthy people to do. And, by donating only a little of your money to charity, you can start practicing healthy habits of the wealthy! Who knows where it will lead!?
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Daniel Reply:
December 12th, 2010 at 12:54 am
@Jacob @ My Personal Finance Journey, Very nice, I’m not sure it’s the ‘key to wealth’ but it’s a great habit to have. Help others and you are sure to be rewarded.
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Jacob @ My Personal Finance Journey Reply:
December 12th, 2010 at 12:00 pm
@Daniel, I agree completely! It took me a while to learn that lesson in life, but now that I’ve started to practice it, it is really paying off! :)
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Thanks for this refreshing rebuttal. I too read the Humbug guest post and all I did about it was grind my teeth. I am glad you responded.
I love point 6: Giving actually changes a person from the inside. I read once that a closed fist (representing selfishness) is actually the international symbol of anger. Giving forces us to open our hands and actually demonstrate care about others. I think it is impossible to be selfish and happy at the same time.
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Sorry. I disagree with #7. I do give cash to a number of charities, but I have the greatest respect for those who give of their time. Right now, I have more money than time, but I do hope one day to do something in person that helps make a difference.
I find the tithing discussion always curious. I once suggested that if money were so tight that a person had issues getting by, that donating 4 hours a week to a good cause should be sufficient, and that suggestion was shot down.
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Daniel Reply:
December 12th, 2010 at 1:00 am
@JoeTaxpayer, Time is sometimes more important than the money, especially if that time goes directly to the people who will benefit (like a soup kitchen).
Similar to Jacob’s comment, donating is a great habit to have. For many, if you don’t donate money now, the habit won’t stick, though your point about donating later in life is an easier thing to do and should be strongly encouraged. Thanks!
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I like your argument much more; my resolution last year was to donate more to charity (I called it my charitable black hole). I have done so this year, and the rewards are great for all involved, including myself.
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I’ve been trying to do my best to donate more this year. I think the economy is making it a lot harder for people to want to give but it also means there are likely even more people in need.
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It is so difficult to think of charity when you have a specific finance goal that you have been working so hard toward. I agree it’s good to give though. I also would like to donate more time, but I’m just too busy right now. In a couple of years, I will definitely donate more time. Now I’ll just send money. :)
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Daniel Reply:
December 12th, 2010 at 11:46 am
@retirebyforty, I agree that it’s hard to put someone else ahead of yourself when it means it will take you longer to reach your goals. It’s not easy to do. Still, it’s important to be selfless, even for a little bit, and it may make it easier to do if you cut back on one thing every month and donate the savings to charity.
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I agree with part of the premise of Len’s take. If I had a choice of diverting the money the government wastes on fruitless and political projects and diverting it to the charity of my choice I’d gladly do so. But until then, I do contribute some funds to local charities, but it’s tough to disagree with the contention that federal tax dollars aren’t also a form of charity, which was part of Len’s argument.
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Gotta love the deduction. We waited till the end of the year this year and then gave in one big chunk. My goal for 2011 is to be a more regular giver throughout the year. Nice post.
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Reason #9: there is a causal relationship between donating to charity and increasing personal wealth. (I read this fact last night in the book “The Happiness Project” – here is a link that talks about it: http://www.portfolio.com/views/columns/2007/10/15/Charity-Makes-Wealth/ )
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Daniel Reply:
January 5th, 2011 at 10:13 am
@Michelle @ Chasing Ambulances, Very cool, and a great read, because their research looks pretty comprehensive – add it to the list!
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It’s pretty hard to vote against giving charity in times like these.
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its not that we need to be donating more, just giving what you can helps out too. there are alot of comercials tell people that they should donate because its the right thing to do, well of course its the right thing to do but alot of people who cant afford to donate watch those comercials and feel bad because they dont have the money to do it. even if alot of people gave what they could they still are making a difference. its not about how much someone gives its about that there giving the effort to help.
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This is a great article and I loved reading the comments. I love the part about getting someone to match you. That is a wonderful idea. I need to donate my time because me charitable donation gifts are not the highest. But every bit counts right?
Thanks for the great article!!
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Giving to charity only promotes bad behavior. Keep your hard earned money and spend it on you and your family, not someone else..
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Nick Reply:
April 19th, 2012 at 12:45 pm
@James Smith, How is helping people in 3rd world countries have access to clean water “promoting bad behavior”? I’d really like to hear about that.
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I was brought up to donate to charities. It was part of my parents training me to handle money. I got to spend some, save some and some to donate. It’s something I am passing on to my girls.
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Just remember we all should give, but make sure that who you are giving it to is credible and established. A lot of people were ripped off by celebrities in the aftermath of the Haiti earthquake and Japanese tsunami because they gave to “new” organizations with no accountability.
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