Giving to Charity When You're on a Budget
Don’t forget that your time has value, too. Volunteering is the best way to see if you like how the charity is run.
A few issues ago, I interviewed Doug Lynam, a former monk who now works as a money manager in Santa Fe, N.M. (see Building Wealth With a Higher Purpose). One of the topics we discussed was the importance of charitable giving, and it got me thinking: How can I make a difference on a limited budget?
One strategy is to combine philanthropy and saving by investing in companies that seek to make the world a better place. There are apps that will help you do that. The Stash app, for example, identifies exchange-traded funds and individual stocks that allow you to invest in companies that align with your convictions, from clean energy to workplace equality. (You can also invest in specific sectors or pick ETFs that match your risk tolerance.) You need only $5 to open a Stash account, and you’ll pay just $1 per month for a beginner’s account. Another option: Find out if your 401(k) plan offers a socially responsible fund, such as Vanguard Global ESG Select Stock (symbol VEIGX) or Parnassus Mid Cap (PARMX), a member of the Kiplinger 25 list of our favorite actively managed no-load mutual funds.
Apps and socially responsible funds may sound like an easy way to hop into the charity lane, but they may not be a smart investment strategy—particularly if you’re new to investing, says Pamela Capalad, a certified financial planner and founder of Brunch and Budget. You could end up with a portfolio that’s not sufficiently diversified, she says. Capalad believes there are ways to give money that are more effective.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Giving directly. Like most millennials, I’ve been bombarded with charitable solicitations on social media. Facebook added a feature in 2017 that allows users to request donations to their favorite charity in lieu of birthday gifts. Depending on how many Facebook friends you have, the posts can be overwhelming, and unless you vet the charities, you have no idea how the money will be used. Donating small amounts to multiple causes may seem like the most generous thing to do, but experts say you can make a much greater impact by limiting your donations to one or two charities.
GoFundMe pitches tend to populate my Facebook news feed as well, and some of these are even more troubling. You’re usually prompted to help people or organizations that one of your friends has heard about, but you have no way of knowing if help is actually needed or if the fund-raiser is a scam. In 2017, a couple collected close to $400,000 from donors purportedly to help a homeless man who lent the couple his last $20. All three have been charged with fraud.
If something on your social media feed does catch your attention, do your homework. You can look up charities on Charity Navigator and the Better Business Bureau’s Wise Giving Alliance site (www.give.org). Charity Navigator rates charities on financial health and accountability; the Wise Giving Alliance checks out governance, fund-raising, effectiveness and donor privacy. You’ll also want to search the internet for complaints and reviews about the charity. If the charity is mostly local, try searching for it on your region’s Better Business Bureau website.
To be able to give more generously, Capalad suggests creating a line item in your budget for charity and shifting money from things you don’t use often, such as subscriptions to streaming services. For example, if I canceled my streaming subscriptions, which cost me about $21 a month, I could give $252 a year to charity. And don’t forget that your time has value, too. Lynam says volunteering is the best way to see if you like how the charity is run.
I’m still on the fence about where I would like my charitable dollars to go, and I’m reluctant to give up my HBO account. So in the meantime, I’m looking into volunteering at local cat shelters.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Rivan joined Kiplinger on Leap Day 2016 as a reporter for Kiplinger's Personal Finance magazine. A Michigan native, she graduated from the University of Michigan in 2014 and from there freelanced as a local copy editor and proofreader, and served as a research assistant to a local Detroit journalist. Her work has been featured in the Ann Arbor Observer and Sage Business Researcher. She is currently assistant editor, personal finance at The Washington Post.
-
Stock Market Today: Markets Slip on Hot Inflation Print, Layoff News
Economic data continues to complicate expectations for Federal Reserve rate cuts.
By Dan Burrows Published
-
CPI Report Points to Gradual Pace for Rate Cuts: What the Experts Are Saying
CPI Inflation surprised to the upside last month but the disinflation trend remains on track.
By Dan Burrows Published
-
What Does Medicare Not Cover? Seven Things You Should Know
Healthy Living on a Budget Medicare Part A and Part B leave gaps in your healthcare coverage. But Medicare Advantage has problems, too.
By Donna LeValley Last updated
-
When Renting Is Smarter Than Buying
real estate There are some situations when renting is smarter than buying. You're not necessarily throwing your money away when you rent.
By Miriam Cross Published
-
The 50-30-20 Budget Rule: A Simple Way to Save Money
Saving Using the 50-30-20 budget rule is an easy way to save. It helps you prioritize saving while paying off debt.
By Erin Bendig Last updated
-
How Do You Pay off Credit Card Debt?
Making Your Money Last Pay off credit card debt with these tried-and-true strategies.
By Ellen Kennedy Last updated
-
Bear Market Strategy for Millennial Investors
A focused, goal-oriented approach to investing can help millennials navigate a bear market.
By Rivan V. Stinson Published
-
Rent vs. Buy: Sometimes Renting is Better
Personal finance experts have long held that homeownership is a key step to building lasting wealth. How does that hold up in a pricey real estate market?
By Rivan V. Stinson Published
-
How Our Family Fights Inflation
Budgeting Millennials typically spend more than other generations on certain expenses that have been increasing most rapidly. Here are some tips to cut your losses.
By Lisa Gerstner Published
-
Gas Prices Around the World
Budgeting Many world gas prices can make what Americans pay at the pump seem like a bargain. But not all.
By David Muhlbaum Last updated