Making a large charitable donation

[m741]

TL;DR: How would you go about donating $10k?

Something I've struggled with on the road to FI is getting overly caught up with money and counting cents. It sometimes makes me feel like uncomfortable trying to add to my fortune. I mean, it's easy to think about money constantly. That's an attitude that's good to have in the beginning of your journey - but depending upon your situation, may prove toxic down the line. Especially for me, as I'm really seeing FI come into reach.

I've been toying with the idea of making a big donation. Basically saying "I'll work this month purely for charity." (Or something similar... donate an amount equal to my growth in net worth over the month, or whatever). I suppose this is similar to a tithe, but in a lump sum - and I'm not religious.

Has anyone done something similar? Hypothetically, how would you approach making such a donation? Alternately, has anyone set aside a bundle of money to use for charity projects once they reach FI? I'd like to hear people's opinions about this.

(In terms of charities, my priorities are environment; high-impact third world poverty - clean water, malaria, alternate energy; animal welfare, in roughly that order).

I currently donate a bit each month through Kiva and to the ASPCA & Children International. I'm aware of Charity Navigator for validating expenses, and would be looking for a way to donate that wouldn't require a whole lot of effort on my part (that is, I'm not looking to start my own charity or scholarship or what have you).

[henrik]

You could also take a period of unpaid leave and offer your time and skills (professional or other) to a charitable cause. Financially, it would be the same, but it might give you some useful experience and perspective for the next time you'll want to do this. Considering the interests you listed, it could even be volunteer work in an affected area somewhere. Just a thought.

[workathome]

If you have 25k to start with, you can setup an account at Vanguard Charitable. The donation is immediately deductible, but you can slowly give-it-away while most of your deducted contribution sits (hopefully grows!) in an index fund.

It's a nice option if you have a high-income year and would like to take the deduction now, but spread out the actual charity donations over a long time period.

[jennypenny]

If you have 25k to start with, you can setup an account at Vanguard Charitable. The donation is immediately deductible, but you can slowly give-it-away while most of your deducted contribution sits (hopefully grows!) in an index fund.

It's a nice option if you have a high-income year and would like to take the deduction now, but spread out the actual charity donations over a long time period.

^^This is a nice option. http://www.bogleheads.org/wiki/Vanguard ... nt_Program

You could also set up a trust. You're in a position to essentially set up an endowment to fund your charitable giving for a few decades. That would be kinda cool.

Make sure you're familiar with the best ways to give large donations, like giving appreciated securities. http://www.bogleheads.org/wiki/Donating ... securities

[JamesR]

It is apparently far more efficient to donate money than to volunteer an "equivalent" amount of time. Cash is the true bottleneck. Also, 1 hour of your time in your job can probably pay 3+ hours of low wage charity workers.

[Devil's Advocate]

I'm afraid that, to me, simply saying "I want to donate $x, how do I do it" is like saying "I want to spend $x, how do I do it". Doesn't make sense. Why do you want to donate?

What is it you want to do, achieve, bring about, buy, acquire, facilitate (by donating, or by spending)? That's the key question, rather than how much you're spending or donating.

Once you've answered that question, you'll be more than half-way to answering the question in OP.

What I myself do is (a) sponsor the education of 2 very poor (non-first-world poor, don't-get-to-eat-daily poor, would-otherwise-go-literally-half-naked poor) children by personally paying actuals, and (b) donate to a religious organization that does a good deal of social good. The latter amount is very much smaller than the former.

Just sharing my thoughts, since you asked. Don't mean to imply that donating for the sake of donating isn't cool, but I wouldn't do it.

[workathome]

I agree with DA's point. I was donating to a "general fund" for an organization I supported, but didn't find it particularly satisfying, and it's hard to track actual usage of funds.

It's better to be directly involved in the organization and donate funds for a very specific cause. For example, a local religious organization needed very specific HVAC repair. I was able to see how much it cost, contribute a specific amount from my already deducted donor-advised fund (which is much nicer than saying "how do I quickly put $X to good use and write it off!"), and will be able to get some satisfaction out of seeing the issue fixed and things function correctly. Hopefully I can continue doing similar things over the next decade.

[Devil's Advocate]

Post-script to my earlier comment, above :

This appears such an obvious and common-sense point of view to me now, but I remember being very vexed with just such a question not long back. Some very helpful responses from folks here helped highlight that equivalence of throwing dollars at charity and spending dollars. After that, I did step up my charity expenditure, but in a very different manner from what I was originally considering.

We aren't consumerist suckers when spending, so why be consumerist suckers when donating?

[workathome]

We aren't consumerist suckers when spending, so why be consumerist suckers when donating?

+1! It's like the value-investing approach to making sure it's not wasted and has maximum return.

[jennypenny]

I dunno. I think the donor can get a lot out of it even when they don't optimize the gift, especially when they give enough that it hurts. Deciding in advance how much to give isn't that different from tithing.

[jacob]

Kickstarter and the likes have some appeal to me due to the direct funding of actual projects(*). You can spend as much effort and money as you like. It's easy too.

(*) Some projects are fake/stupid, so there's the risk of being suckered if that matters.

Here's one which seems compatible with your values. I didn't vet it. Please do so. In searching for "energy", I also found a guy promising to build a perpetual motion engine, so ...

https://www.kickstarter.com/projects/14 ... nav_search

[m741]

@workathome, jennpypenny - Thanks! This is a really interesting idea. The amount is (a lot) more than I had contemplated donating, but it is a unique way to donate. I like the idea of setting up something that can generate its own funds in perpetuity (hence, why I like Kiva). Will definitely be looking into it more. Fidelity seems to have a similar way of funding, that has a $5k minimum.

@jacob - I actually recently heard about rally.org, which is basically a kickstarter for charities.

@Devil's Advocate - I wasn't suggesting that I'd donate for the sake of donating. I very much want to see the least amount of money go to waste (and I feel that many charities either straight-up waste money, or address symptoms rather than root causes). I was just soliciting ideas of how people have approached the idea of giving to charity in the past. I've donated small sums, but for a larger sum of course I want to be more careful and methodical in my donation.

From my perspective, the question was closer to "I have a budget of $X for shelter, by what process would you reach a decision on housing?" Except there's an awful lot less literature about this than buying shelter.

[anomie]

Heya m741 -

worthy of consideration - an interesting place to donate:

http://www.givedirectly.org/ and a recent letter from them

http://hosted.verticalresponse.com/8201 ... ce4fbf8c0/


and re: Kiva --- sure you are aware of some controversy over the micro-lending practices of Kiva , mainly the local lending rates by the local lenders 30% and higher I think ... to the result that Kiva itself created

"KivaZip.org facilitates loans at 0% directly to entrepreneurs via mobile payments and PayPal. "

KivaZip.org


I am following this thread ; very interested in the outcome and suggestions made on it!

best of luck and wishes!

[m741]

@anomie - I'm aware of some controversy; I myself use the 30% interest rate as a benchmark, and will not donate to loans above that level. Although, I guess there's some justification that people taking higher loans would otherwise have to go to - presumably worse - loan sharks.

Anyway, I hadn't heard of Kiva Zip, but will look into it.

[JamesR]

I'm afraid that, to me, simply saying "I want to donate $x, how do I do it" is like saying "I want to spend $x, how do I do it". Doesn't make sense. Why do you want to donate?

Great response!

Questions #1:

Does charity beget charity? That is, does charity help population growth and increase demand on charity?

Questions #2:

Charity is about giving to those in need. Should this be optimized for what makes the world a better place? Along what dimensions does a world become a better place?

What about giving to a college student that has a potentially world-changing idea and just needs living expenses covered for a year in order to develop that idea?

I suspect that funding lots moonshot projects via living expense support could potentially have a much greater impact on making the world a better place. But who knows?