Individual giving accounts for over 72% of all charitable giving in the USA, according to the annual report on charitable giving in the US by GivingUSA. This number fluctuates a bit from year to year, but on a relative basis, it’s consistent. With $358 billion in total charitable giving in the US in 2014, $258 billion comes from individuals.
Much of the charitable giving by individuals falls under the category called “checkbook philanthropy” or “reactive giving”. It’s what most of us do. We support our friends who run or ride to raise money for cancer research. We support organizations because we’re on their Board – or our friends are – and they ask us for a donation. We support our house of worship. And we can rely on a request for money each year from the schools we attended.
And often times this style of giving works. It feels good because we’re supporting our friends; we’re supporting organizations that “do good work.” But for many, it feels like our giving is out of control. It can turn into a flurry of anxiety as we look at the stack of annual appeal letters that we have put away for year-end giving. We compare the number of requests to the amount we have budgeted for our giving. It usually doesn’t add up. So we either decide to give more than we planned or we decide to give less (or not at all) to organizations we may have supported in the past. And the pit in our stomach grows because we often feel like we can’t do enough.
Isn’t giving supposed to make us feel good?!
There is another option. It’s called a Giving Plan. Creating one requires a bit of thought, but it has the potential to transform the way you think about your charitable giving. Think of it like developing a budget for your annual household. But this one is focused on your charity.
How do you create a simple Giving Plan?
Create a budget – Identify how much you want to give each year. The average household in the US gives about 2% of their annual income to charitable organizations. Some give considerably more as a percent, and others give less. Think about what makes sense for you. This is your annual giving budget.
Create categories – Look at your giving from last year. Create categories for your past gifts. Depending on how many gifts you made, these might be very specific (food pantry, church, local theater) or they may be more broad (education, healthcare, arts).
Determine allocation for each category – Look at these areas and the amounts as a percent of your total giving. The categories and the amounts you donated in each area in the past should match your emotional connection to them. Adjust these allocations if they do not match the intensity of your interest. Consider including a specific amount you plan to use for requests from friends and family that you will have throughout the year.
Plan when to make decisions – The objective is to take something that feels out of control and create a process for it. This may mean you consider requests all together each month or you wait and look at them together each quarter. Or you might like the idea of making all of your decisions for the year at one time. The point is that you need a plan. Then you can follow it.
Stick to it– You have a plan, remember? So stick to it! If you find it doesn’t work, adjust the categories, dollars or percent allocation until the process makes sense. Keep in mind that you may have to tell people you’ve changed the way you do your giving. Fill them in. They will adjust.
Think about how to say no – It is likely that having a plan will mean that you have to say you can’t support them. While this may feel awkward, it’s a lot easier if you can explain why. “I love what you’re doing, but I can’t support your program. I am focusing my giving on workforce housing in our community. This focus means I can have a greater impact in an area I care deeply about. It also means I have to pass on interesting opportunities. Good luck with your efforts.” Come up with your own way to say this. It needs to feel natural to you. A statement like this gives you a graceful way to decline.
Creating and implementing your own Giving Plan will help you become more strategic with your giving. The Plan will also enable you to have a greater impact in areas you know you care about rather than spreading your giving across many areas.
A Giving Plan can be really simple or quite elaborate. Create one that works for your style.