A strategy for charitable giving makes donations go further

Personal Finance

Do you have a charitable giving plan? President Obama placed a spotlight on charity when he published his tax return information recently, showing a vast array of causes supported by the First Family.

While that strategy may be wise for the Obamas, who have the means to donate generously and can use their high-profile giving to highlight the many causes that need money, it’s not a good approach for most ordinary folks, experts say.

In fact, when ordinary people give small gifts to dozens of different groups, it may be a tell-tale sign that their giving is off the cuff, rather than strategic. It’s an indication that you’re responding to a friend or pitch, and treating giving much like buying shoes.

If that’s how you give, your tax return will look like a Yellow Pages of worthy causes, but the amount that you give will likely vary substantially from year to year. Then, too, executives at the organizations you give to probably won’t know your name (except as an entry on the mailing list), and may not be willing to take your phone calls or respond to your concerns.


Sound familiar? Then you’re probably missing an opportunity, say the authors of a new book called “The Art of Giving.”

Wise donors consider their gifts an investment rather than an expenditure, said Charles Bronfman, a Seagram’s heir, noted philanthropist and co-author of the book. And they expect those gifts to pay dividends, he said.

What does that mean? Charitable dollars are an investment in fixing a problem that you’ve identified and feel strongly about, he said. A strategic giver should be able to see measurable progress that’s commensurate with the amount invested.

You don’t need to be rich to be a strategic donor, Bronfman added. But you do need to be systematic and purposeful.


Your first step? Create a budget and a giving plan.

“When you become intentional about giving, you budget,” said Jeffrey Solomon, the book’s other co-author and president of the Andrea and Charles Bronfman Philanthropies. “It becomes a part of your day-to-day existence.”

Determining the right amount to dedicate to charity requires balancing what you’d like to accomplish with what you can afford. While some experts note that the typical family gives about 3% of their income, some — including the Obamas — give more and others give substantially less. There’s no right amount.

People typically give for three reasons: to accommodate a friend; to help an organization that they’re fond of, such as a church or alma mater; or to support a cause. Most of your giving should be concentrated in that last category, but you should also be realistic enough to know that you’re not going to turn away every friend’s request, Bronfman said.


Figure you’ll reserve 35% to react to requests and emergencies, such as the earthquake in Haiti, that pull at your heartstrings. But the other 65% of your charity dollars will be “invested” in causes you want to help, he suggested.

Investing in a charity now becomes much like picking a mutual fund. There are literally thousands to choose from. Many will have the same mission but differentiate themselves by the approach they take to solving the problem.

To start narrowing the field you need to “dive into your soul” to find the topic or topics that are nearest and dearest to your heart, Solomon said. Once you’ve settled on a topic — be it education, art, animals, music, hunger or religion — you also need to consider the approach you prefer.

What’s that? “The Art of Giving” explains it with a riddle: If you saw a bunch of people drowning in a fast-moving stream, would you want to jump in to save them one by one, or would you want to run upstream and stop more people from falling in? Some charities address causes, others address consequences.


A soup kitchen or shelter, for example, is a “consequence” charity, which helps those already in trouble. If you wanted to address the cause of homelessness, you might choose to support education or mental health programs that aim to reduce the number of homeless people.

Each of your choices will narrow the field until you have just a handful of groups to check out more thoroughly. At that point, you need to investigate the charity you’ve chosen by looking through its written materials or website or contacting its employees.

Questions you might ask: What population does the charity serve? How does it deliver its help? What is it trying to accomplish? How does it measure its success?

What do you do if the group says its success can’t be measured, or that it’s so special that there are no relevant benchmarks? Consider it a warning sign that you’re dealing with the Bernie Madoff of charitable investments, Bronfman said.


“If the charity says we’re unique and can’t be compared to anyone,” he said, “that’s the wrong charity.”