According to the Miriam Webster Dictionary, philanthropy is goodwill to fellow members of the human race. More specifically, it is an active effort to promote human welfare.
The term ‘philanthropy’ has lofty connotations. Picture Andrew Carnegie or Bill Gates, titans of industry establishing charitable foundations to effect change. However, anyone who contributes time, money, or talents can consider themselves a philanthropist.
Last year in America, individuals gave $374.40 billion, which accounted for 67% of all charitable giving. The average yearly charitable donation from middle income earners was around $3,300. Two thirds of charitable households gave an average of 4% of their income in charitable donations. We are a generous country, with Americans donating 3-15 times more than other developed nations.
Now you might be asking, how do I decide how much to give? The great thing is, there is no right answer- just find what feels right to you. Some financial advisors suggest that you use the 50/30/20 rule as a starting point with 50% of your income going to necessities, 30% going to things you want, and 20% going into savings. Once you’ve calculated these categories, you can dip into the 30% category to set aside an amount to give away.
Another common practice is to follow religious guidelines and tithe 5% or 10% of your income. Surprisingly, among low-income households that give to charity, a significant number share double-digit portions of their incomes. For donors considering tax-savvy options, donating appreciated stocks and mutual funds can enable individuals to give more than they would if they donated cash or cash equivalents.
Once you are comfortable with the amount of money you want to donate, it’s time to do research to find organizations you feel are worthy of your support. One common myth is that the lower the overhead costs, the more impactful an organization can be. According to the Nonprofit Leadership Alliance, equating an overhead ratio as an indicator of effectiveness doesn’t consider investments needed to ensure that nonprofits can operate smoothly. A better way of measuring effectiveness is to consider overall financial health, program outcomes, and long-term sustainability.
Did you know that being a philanthropist is also good for your health? Not only do you develop a stronger sense of empathy, but you broaden your perspective while making a difference. Helping others gives you purpose and has been proven to increase your happiness and sense of optimism.
As Tifany R. Boyles writes in The Power of Philanthropy, “Supporting causes or specific organizations inspire us to learn more about social issues and the approaches to resolving them. Most nonprofit organizations go beyond trying to achieve their mission and also invest significant dollars in communication efforts that educate their stakeholders and create awareness.”
As we work together to improve the lives of our neighbors know that every gift, no matter the size, is meaningful and impactful!
Give now at www.shimcares.org/hope.
