Donating your money actually improves your financial position. This may seem counter-intuitive. Most people believe that saving and investing in their future precedes donating. By moving donation onto your priority list, you change how you view money. You’ll learn to have discipline, put things into perspective, and focus on managing your finances. You’ll no longer be managed by your finances.
How does this work? Let me tell you a story.
Many years back, a man who had just started a video production business was looking for clients to produce a decent portfolio of work. In his search for clients, he could not find any leads, so rather than waiting for a client to offer him a paid project, he began providing free video services to area nonprofit organizations. It appeared from the outside view that he was simply working for no compensation on these projects, but as it turned out, he had made a very smart decision.
The nonprofit organizations that he was providing services for were able to obtain useful content for free, while the videographer was able to gain exposure to thousands of people and obtain real-world experience. This lead to him obtaining additional client work and to grow the business very slowly. Most importantly, he received great satisfaction knowing he helped the nonprofits.
This experience created a habit of donating time and skills to various charities on a regular basis.
Giving sometimes opens doors to opportunities that will not be opened by any other means.
The importance of giving is something many people only reflect on during the holidays, when they are thinking more about gratitude and generosity than at any other time of year. During the holiday period, discussions about how we can help others feel more like a natural progression towards something more meaningful.
Giving should go beyond simply being done at the holidays.
Giving is actually one of the best habits to develop financially throughout your entire year. This creates a connection between you and your money that helps to develop a better relationship between the two of you, not simply to make you feel good about yourself or as if you are being trendy.
When you are giving on a regular basis to charitable organizations or other individuals, you will begin to have less of a focus on money.
Finding the Cause that Matters to You
When it comes to deciding where to donate your time and/or money, there can be so many great organizations to choose from that it can be difficult to pick one. A great way to determine your cause is by reflecting on one question to get your mind working towards the right answer:
What touches your heart or what keeps you awake at night?
This could be poverty, education inequality, environmental degradation or human trafficking, just to name a few. For those things in your life that you are most passionate about, there is generally a strong emotional connection to those causes or situations.
Having this emotional connection will ensure that your giving has a greater purpose than simply being a financial transaction, but rather becomes a lifetime gift to both you and those that you support with your gift.
Giving Is Easier When You Care
A Lot Of Nonprofit Organizations Are Structured Differently
One thing that people often don’t realise is that the IRS categorises nonprofit charitable organisations into different tax categories for the purpose of collecting donations. An example of this would be a nonprofit organisation that allows donations to be tax-deductible (i.e., deducting the amount from your taxable income) versus a nonprofit organisation that is not a tax-deductible organisation but is tax exempt from paying taxes. This difference in how nonprofit organisations function does not signify or indicate that one is better or worse than the other. Understanding the difference allows donors to make smarter giving decisions and have the maximum impact with their donations.
Take Some Time To Conduct Some Research Before You Make A Donation To An Organisation
It is always beneficial to conduct some basic background checks prior to making a donation to an organisation. A simple website and social media checks, as well as reviewing the organisation’s communication channels (e.g., newsletters), go a long way in establishing if the organisation can be trusted. A reputable organisation is generally very transparent in their communication with donors and shares up-to-date information about their mission and keeps the lines of communication open to potential and current donors.
Transparancy Is Critical
If the organisation is currently providing transparency by having their financial records or how they are currently using donations, it shows their accountability to donors as well a building their credibility with donors.
Trust is vital when your financial resources are used for helping other people.
What Percentage Should I Donat?
Next we have the difficult part of actually determining how much to donate.
Some people prefer to follow the established ten percent rule of donating, however, some may only give a lower amount depending on their individual financial circumstances. Therefore, there is no one correct requirement for everyone.
The most prominent aspect is quite simple – create a plan for donating your money and do not just do it on a whim.
If giving is a planned item in your monthly budget, then it will become a routine; as opposed to just being done off-handedly, creating consistency and an overall pattern of discipline with regards to your finances.
Additionally, by establishing a consistent structure of discipline in one area of finance, it creates an upward spiral effect of giving and better discipline in other areas of your financial life.
The act of Giving Creates Contentment
One of the more underappreciated aspects of donating is that it creates the feeling of contentment.
When you create the habit of donating regularly, you begin to recognize that you have enough. By eliminating this feeling from your financial life/pattern, you have also eliminated the continuous pressure to acquire more wealth/earning potential or desire for more material items.
This change in your thought process is generally referred to as moving from being in a state of scarcity to developing a sense/feeling of abundance.
Transitioning your way of thinking by replacing – “I need more money” – with – “I have enough money to share with others” – creates a much more healthy and rewarding financial existence.
Economically, feeling this way cannot be bought simply by mere monetary acquisition or assets.
Non-Monetary Donations
Besides monetary donations there are other ways to contribute:
- Time
- Skills
- Knowledge
- Support
- Expertise
In some instances, participating in a community project can produce more results than giving a donation alone, particularly for people beginning their careers or budgeting closely.
The intention behind giving (i.e., why it is done) is more significant than the quantity given.
How to View Money in a New Way
In challenging circumstances (e.g., globally uncertain economies or through an unanticipated event), the majority of people will protect their assets and put themselves first. This is a natural reaction to a new condition.
However, if someone simply considers their own needs at these times they may isolate, cause stress or anxiety to their surroundings, but if they are contributing, they have an opportunity to see what is happening outside their own life or situation; i.e., when giving creates compassion and understanding in relation to one another within that larger view; then you develop understanding for others.
Interestingly enough, when you help someone else, you’ll often find yourself benefitting from it both emotionally and mentally.
Putting giving first does not mean that you’ll lose money, but instead gain perspective, discipline and purpose; when you give regularly, money becomes a tool rather than an added pressure or worry.
As a result of giving, you will feel more connected to others; grateful for what you have today; and confident in how to manage your finances.
Over the long term, giving will not cause your wealth to decrease.
Instead, it will change the way you perceive wealth.
