Unless you’ve been living under a rock for the past few months, you’ve probably heard about the ALS Ice Bucket Challenge. It’s been a phenomenal marketing success in generating awareness and donations for ALS (amyotrophic lateral sclerosis aka Lou Gehrig’s Disease) research and even perhaps combatted global warming through immense amounts of ice being dumped on the ground.* It’s been fascinating to me particularly because I work in a nonprofit charitable organization and think about fundraising all the time.
Every donation is valuable and charitable giving is certainly a wonderful thing, but I think it’s important sometimes to think through HOW we give. The occasional “give-$100-tip-to-struggling-waitress” may be heartwarming, but I am an ardent believer that systematic giving is far better than the “give-only-when-challenged-to-dump-ice-water-on-my-head” way of going about it. (Systematic here is defined simply as consistent, recurring, and planned, as opposed to impulse giving.) Here are 3 reasons why.
1. Systematic Giving Can Be More Helpful to Charitable Organizations
Regular, consistent giving is preferable to large one-time gifts for many charitable organizations (particularly the smaller ones) because the revenue from one year is used to project the budget for the next.** So organization managers can sleep much better at night when they know that a certain donor is going to be consistent over time, rather than just a one-hit wonder.
Additionally, since most one-time donations usually come in for specific projects and not for unrestricted operational/overhead expenses (which are often what’s most lacking), unexpected large gifts may force organizations to find uses for those funds not previously planned for. This may lead to unseasonable spending on things beyond the budget and in a worst-case scenario lead to disproportionate growth that actually weakens the organization. Since it is generally frowned upon for nonprofits to sit on excessively large amounts donated funds, having too much money come in all at once can actually be a problem for many nonprofits.
Now none of these things should discourage us from giving charitably, and it is ultimately up to the charitable organizations themselves to learn how to manage these issues wisely. However, wouldn’t it be better for us to be intelligent donors and give in a manner that best supports the causes that we believe in? By giving consistently and regularly, we can help mitigate a lot of these issues.
2. Giving Systematically Allows Us to Give More
Any personal finance blog, counselor, or book worth its salt will tell you that intentional planning is needed across all areas of your personal finances if you are to succeed. So this means managing well your time, budgeting your expenses, being wise with your investments, and diligently saving as much as you can. So why should it be any different in our giving?
Tell me which is better. 1) I walk into Best Buy and impulsively drop $2400 on a new computer that was not budgeted. 2) I hear a tear-jerking story and impulsively donate $2400 that was not budgeted for a project to help girls caught in sex-trafficking. Naturally, we would say that the second option is FAR better, right? “Think of all the girls being exploited, who cares if I busted my budget this month?” But the fact remains that in both cases I impulsively spent $2400 that I hadn’t planned to, and if not careful I might have even jeopardized my ability to give again in the future. This will especially be true if I was already in financial difficulties.
How about a third option? Why not set up a systematic giving plan of $200 a month that we factor into our budget? We not only end up giving $2400 the first year, we’re now in a position to contribute $2400 a year, every year, indefinitely. Far more good is done for the girls in need and far more good is done for our budget. A win-win all around.
3. Systematic Giving Develops Generosity
Often when the discussion of charitable giving comes up, many frugal-minded, financially responsible folk express that they want to focus on saving/investing now and then they will give later. Later is defined in a variety of ways, like “when I hit early retirement,” or “when I finish paying off my house,” or “when I get that next promotion,” “or when my investments reach a certain amount”. I’ve also heard it been argued that it’s better to invest what we have now, let it grow for as long as possible in order to give a much larger sum in the future (i.e. in the will). All of these reasons make good mathematical sense, but it fails to account for a significant factor: our human nature. Humans are naturally greedy, and I think we place far too much faith in our own altruism if we truly believe that we would be willing to give $10 million in the future when we aren’t willing to give $100 a month today.
Perhaps the most important reason I believe systematic giving is beneficial is because it shapes who we are as people. Generosity and charity is a universally acclaimed virtue, so why not arrange our lives in such a way to develop these traits in ourselves? As I argued in my post, 3 Better Reasons to Live Frugally, rather than being simply one other thing that we COULD do because we’ve got extra cash saved up, charitable giving ought to be a central reason why we SHOULD live frugally and save extra cash at all. I believe that generosity is like a muscle to be developed with practice over time, so why not work out our generosity muscle by structuring systematic giving into our lives? This, above all reasons, is why Deb and I have chosen to give 20% of our income to our church and other charities.
My views on systematic giving are largely shaped by my Christian faith, and as such I’m reminded of this Scripture that I believe is applicable to anyone, regardless of religious persuasion:
The generous man will be prosperous, And he who waters will himself be watered. – Proverbs 11:25
What do you think? Are you ready to give your generosity muscle a workout?
*This is a joke, of course. But perhaps someone should develop as viral of a campaign to promote the conservation of water?
**There are certainly exceptions to this, such as for disaster relief efforts.