What I Spend on Cash Donations and How I Do It

A bridge I encountered walking on a trail a while back – I don’t remember where exactly

Happy Monday, Everyone! This is the second post in my Annual Expenses series. If you didn’t see the introduction post that summarizes all of my expenses, check it out here. I plan to go into detail on every category with a post on one each Monday. Over 2017 and 2018, I spent an average of $2100 on cash donations. In most areas of my financial life, I feel pretty comfortable that I know what I’m doing. But since I have only been relatively wealthy for a few years now, this is one area where I’m just getting started and as a result, I’m still figuring things out. For that reason, any feedback or suggestions would be greatly appreciated – even more than usual. So far, the money I’ve spent in this category has mostly gone to either charitable organizations or personal causes people had. I’m no expert on this yet but I have figured out a couple of things.

One, lots of charitable organizations are questionable at best in terms of the way they’re run and the percentage of funds that are actually put towards their causes. I’m not opposed to reasonable costs that are necessary to run an organization, including paying what the market necessitates to employ highly talented people. However, it is pretty clear that some of these organizations are excessively lining the pockets of individuals in one way or another, which is disgusting given that the money is donated for charitable causes.

Two, once you donate to a charitable organization, it will pursue you relentlessly trying to get more out of you. While I lived in Wisconsin, I donated to a couple of very location specific organizations whose mailers have followed me through two different Texas addresses already. It is baffling to me that no one in these organizations has made the connection that I’ve obviously moved and haven’t sent a dime since. I also wonder what portion of the money I donated they are going to spend on sending mailer after mailer before they finally (hopefully) give up. Is it really possible that the entirety of my donations will eventually be spent that way?

While I’m no expert at charitable giving, I have developed a few guiding principles for myself. First, I believe in making sure you are able to donate before doing so. After all, if you’re living on the edge yourself and you donate money, that could be the difference between your being independent and you needing help yourself, which would likely cost society more than your donation helped in the first place. As such, my donations have gradually increased as my personal wealth has and will likely continue accordingly. Second, I believe in helping those who either try to help themselves or have been dealt such a terrible hand that it is almost impossible for them to. I believe there is a distinct limit to how much money can help anyone – the “teach a man to fish” concept. I believe the capability to earn money is much more valuable than the result itself. So I’d be much more inclined to give money to someone who is dealing with a misfortunate setback or set of circumstances and would otherwise be a productive person than to someone who has never made a serious effort to do anything productive. Not only do I want to do the greatest good for society, but for the individual. I believe there is a huge psychological benefit to being self sufficient.

I don’t have any particular target in this area in terms of the amount I spend as it is pretty new for me. I think it is crucially important that people with resources help the less fortunate and I am certainly in that category. But trying to do so in a way that is both effective and not frustrating has proven difficult. I’ve had some success volunteering in local organizations, getting to know how they operate, and then donating additional money once I’m comfortable doing so. But that doesn’t stop the endless hounding from following me to the ends of the earth. I’m nearing the point where I will only donate money if it can be anonymous. I don’t itemize deductions on my taxes yet, so that isn’t an issue and I don’t care whether people know what I donate or not so recognition isn’t either.

Here is a particularly egregious example in my opinion. My alma mater has been after me since the day I graduated and I’ve never even given it a dime. My reasoning there is pretty simple. Tuition was raised by the state allowable maximum every single year I attended. This happened to be in the early part of the Great Recession and in spite of this economic backdrop, perfectly good buildings were constantly being torn down so fancier ones could be built in their place. This struck me as being very out of touch with both the mission of the school (presumably to provide a high quality education to people from a wide variety of backgrounds – including those who, like me, grew up relatively poor) and the reality of the times. A couple years after I left, it was discovered that the school had been sitting on a slush fund in excess of $100 million. I believe the tuition increases immediately stopped to avoid making the PR disaster even worse. But at no point was there any mention of doing anything to make things right with the students who had unknowingly contributed so much to that slush fund. Many of my former classmates seem to have similar reservations since they went through the school during the same timeframe.

If I were going to send any money in this direction, it would be directly to a student or group of students from a financially disadvantaged background who had already continued to demonstrate a good work ethic and continued to do so. I think both elements would be important for me and I would need a way to ensure that both were present to feel good about what I was doing. Additionally, I don’t think I would want to have my scholarship, or whatever form it took, be school specific. But I haven’t started looking into how to do any of that yet. Maybe it will be my first substantial charitable endeavor. For now, I typically donate a hundred or two when I see something that moves me to do so. Like I said, this area is a work in progress.