Others and Your Money: Giving

Have a giving plan

When you become an independent adult, you’re going to encounter many people in your daily life asking you to donate money for various reasons.

We don’t mean homeless people on the streets asking you for spare change (although that’s a fact of life in most major cities too). We’re talking about people collecting money for the many causes and non-profit groups and charities out there.


The US Department of State says the average US citizen

gives 2.2% of their net income.

Giving at home

Even in your own home people will ask you to donate money. Perhaps you’ve seen some of these things happen to your parents:

  • People will come to your door collecting money for a group helping children.
  • Telemarketers will call your home asking for a donation for a number of charities.
  • TV commercials will show heart-breaking images of starving people, injured animals and damaged towns—and ask you to make a generous donation.

Out and about

When you’re away from home, you’ll also be approached in various ways for donations.

  • Co-workers at your job will ask you to give money to help fight some disease.
  • While he’s ringing up your groceries, the guy at the supermarket checkout might ask you if you’d like to donate to the local school fundraiser or to save the city’s parks.
  • Boy scouts and girl scouts will come up to you outside stores and in parking lots asking if you’d like to buy cookies or popcorn or a whole bunch of other stuff, to help raise money for the many causes they support.

Things to consider before you give

One of the greatest things you can do with your money is to use it to help others. You’ll also find a very selfish reason to give—it feels great to do it.
But you need to keep a few things in mind about giving.

  • How does it fit in Your Whole Money Picture?
  • Who are you donating to?
  • What is your giving policy?


In 2010 Ronald McDonald House Charities opened its 300th Ronald McDonald House.

Giving Within Your Whole Money Picture

Before you give, you need to know you have enough money to afford it.

Donating money is another form of spending, and you need to place it—like any other spending you do—in the context of Your Whole Money Picture.

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Don’t forget Monday Me. Putting $250 a month into an IRA will yield $500,000 when you retire.

Where is your donation going?

You should know about the organization asking for your donation. There are plenty of scam artists out there.

Some send young people to knock on doors selling items, claiming the profits go to charity. Or saying they’re earning a college education. Often these groups aren’t part of any charity. You should be very cautious with people showing up at your door. They are counting on your discomfort.

Some telemarketers collect donations over the phone, but then send only the minimum required by law to the named cause. Sometimes it’s only a few percent of what you give them. They keep the rest as “administration,” which is really just profit to the people collecting the money.

Do some research before you donate. Search the web. If you find horror stories about scams, then you know not to waste your money.

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Big Brothers Big Sisters of America has a network of 370 agencies across the country and serves nearly 250,000 children.

Does this fit with your giving policy?

A third thing to keep in mind is what your giving policy will be.

Keep in mind that people and organizations will approach you all the time for donations. Without a well-thought-out policy about how you want to donate money, to whom, when and for which causes, you’ll have a hard time meeting your personal goals for giving.

So let’s look at how you can create a giving policy that works for you.


People donate an average of 3% to 5% of their income.

Have a giving policy

We suggest you sit down and think through a plan for charitable giving. To develop this plan, you should answer questions like:

  • Is there a set dollar amount I want do donate, or a percentage of my income?
  • What types of causes or charities do I want to donate to?
  • How do I want to give? (Paying by credit card over the Internet, sending checks to charities, giving cash for causes at the store?)
  • Should I reserve my giving until the end of the year, so I can donate to the needy around the holidays?

You’ll probably think of other questions you’ll need to answer, but when you’re done you should have a good policy for giving. Let’s look at a couple of examples.


The average U.S. consumer spent $140.73 on Mother’s Day gifts in 2011.

Examples of giving policies

Example 1:
I’ll donate $200 a year to charity, and I will give only to one of three causes—needy families, cancer research and helping The American Red Cross.

Example 2:
I’ll donate 5% of my income, and I will reserve it all for the end of the year, so I can donate to The Salvation Army and other charities that help the poor and hungry during the holidays.

Example 3:
I’m young and starting out and really need all my cash for my own needs. I choose not to donate to anyone right now.

If your Giving Policy looks like #1 or #2 above, then you’ll want to make sure you add it to your budget.

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In 2011 couples spent an average of $68.98 on their significant other or spouse for Valentine’s Day.

Add “Donations” to your budget

Donating money is a form of spending. So you should give your charitable giving a place in your budgets.

You can simply add “donations” to the list of variable expenses on your budget. Or, if you plan to give the same amount to the same charities every month (or year), then you can add “donations” to your fixed expenses.

The important thing to remember is to keep track of your donations, just as you do all your other expenses.


The Bill & Melinda Gates Foundation is the largest transparently operated private foundation in the world.

Your standard phrase for giving

With your giving policy, you’ve listed the ways and places you’re going to donate your money. This means that sometimes when people ask you for a donation, you’re going to have to say no.

So you’ll want a standard phrase for not giving. Your standard phrase might be one of these:

  • “I give only to certain charities.”
  • “I’ve donated all the money I have to spare this year.”
  • “Sorry, but I’m broke.”
  • Or simply, “No, thank you,” with a friendly smile.

You should be prepared to answer multiple times because people who want your money will keep trying. Most reputable organizations will not ask you more than three times.

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Having a standard no-lending phrase is an example of what financial principle?

Having a standard no-lending phrase is an example of the financial principle Stay in Your Money Stance.

Give it one last look

In summary, when it comes to giving, you’ll want to:

  • Have a giving policy.
  • Put your donations in your budget.
  • Have a standard phrase for giving, so you’re never caught off-guard.


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