How Much Should You Give to Charity?

How much should you give to charity? To save the reader any suspense, that isn’t a question we feel we can answer for you. No. This post isn’t about answering that question, instead, it’s about asking it.

Many of us give to charity. Even more of us want to give to charity, and even more of us still just wish that we wanted to give. Like broken new year’s resolutions or abandoned novels, most of us have wishes that we have wished in the past, which we never saw through. It can be tempting, even easy, to write these off and forget about them. Why think about what you haven’t done?

Well, maybe there’s a better way. In this post we’re going to discuss some practical ways that you can make, and maintain, a plan for charitable giving that will keep you honest, keep you giving, and not cost you a whole lot of money.

Set it and Forget It


My wife and I are definitely of the “we’ll get around to it” persuasion when it comes to so many things. Charitable giving is one of those. This is why last year, when my wife suggested that we give money to a local women’s shelter, I was skeptical that we would keep it up. But we decided to give it a try, and instead of giving a credit card or making a one-time payment, we agreed to set up a monthly automated payment of $5 a month.

I must confess that 6 months later, I had completely forgotten about the payments, until I pulled up Wallet and noticed that $5 a month had been dutifully sent to our local women’s shelter. I hope they were happy to have it, because in 6 months I hadn’t missed that money. If we keep those payments going for say, 10 years, that will eventually be equal to $600. If only a hundred people would donate that amount every month, that might represent a single mother who could be housed and fed.

Set Your Expectations Low


I’ve found that one of the tricks to getting myself to give money is not to try and knock every gift out of the park. We would all like to be recognized and applauded for our contributions, but the fact is that for many of us, after bills and retirement savings, insurance, and the cost of living, there isn’t a whole lot left.

That should not discourage you. The old saying “every bit helps,” may sound trite, but it’s actually true. Giving $1 a month is infinitely better than giving $0 a month. Giving $10 a month is 10 times better than giving $1. Everything is relative, and this includes your charitable giving. Something is just better than nothing.

Choose The Right Charity


I believe this is something that no one can do for you. Choosing a charity that feels right to you is a responsibility and a privilege at the same time. It’s important to research the charity of your choice and find out who’s running it, how much of their overhead (expenses) goes to administration, and how much to actually helping people as well.

Not all high-overhead charities are necessarily bad. Organizations like the Red Cross or OxFam have relatively high overheads because they are large organizations with the resources and knowledge to respond in many situations when other charities can’t. So while it may at first seem silly to give money when large parts of that money go to paying the salaries of the charity employees, the truth can be that these workers are in a position to deliver much more valuable and effective assistance than charities run by volunteers.

Consider Direct Giving


Still, you may not be happy about sending your money to an organization that will spend most of it on salaries for its employees. That’s completely understandable. For you, the direct giving model may make more sense.

What is direct giving? From the Foundations For Social Change:

“A one-time cash transfer is awarded to a person who is living in poverty and can be spent according to individual needs. Growing evidence demonstrates that money from cash transfers is well spent and that it can provide stability in a person’s life.

The direct giving model has been proven to empower recipients to find housing and purchase goods that improve their lives, while restoring dignity, confidence and a sense of well-being. Further, research has found that cash transfers do not increase spending on goods, such as alcohol, tobacco and drugs.”

So simply put, direct giving is exactly what it sounds like. It minimizes the middle steps between your money and a person in need of it, and emphasizes giving cash to recipients, rather than offering services, education, or other goods.

Proponents of direct giving argue that the poor are most informed on what their immediate needs are, and that trying to change people’s living standards without giving them ownership of the solutions will only result in a continuation of paternalism towards the poor.

Famed historian Rutger Bregman argued convincingly in 2017 that poverty is primarily caused not by a lack of character, or even education or connections… but simply a lack of starting capital. Check out his fascinating Ted Talk here:

Poverty isn’t a lack of character; it’s a lack of cash | Rutger Bregman

Make Charity Savings a Part of your Budget

Financial Well-being, charity

Giving is important, but being prepared to give is essential. We are almost never ready for the unexpected, because it’s not expected. Thus preparing for what we can’t see is just as important as giving when the need arises. As we have all learned painfully in recent weeks, needs and priorities around the world can change suddenly, and sometimes violently.

So consider setting a budget category for “Charitable Saving” in Wallet for 1% of your salary, or maybe even less. When the end of the month comes, send that amount to a savings account and keep track of it in your charity budget in Wallet.

Once the amount has grown to something significant, and when the time is opportune, consider giving the whole sum to a deserving charity to maximize the impact of your gift.

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