Friday, August 8, 2008


I just read an article on WalletPop about Keith Taylor and his impressive website, Modest Needs.

Taylor's website allows people to lend a helping hand to the working poor in America.  He accepts applications from people who need one time financial help (medical bills, car repairs, and the like), posts their needs online, and allows people like you and me to fund these needs.  His goal is to stop the cycle of poverty for low-income workers before it starts.  Taylor screens the applications carefully - only 20% make it through - and employs rigorous anti-fraud measures.  I have not used this site, but I encourage you to check it out if you are interested.

However, the WalletPop article glosses over what I think is one of the most important lines of Taylor's story.  Back before he ran Modest Needs he personally gave his money - $350 a month - to people in need.  At that time, he was only earning $33,000.  This means that he was giving $4,200 per year, almost 13% of his relatively modest salary, to charity.  That impresses me.

I believe that any good financial plan should include charitable contributions.  Some of the reasons that I think you should include charitable giving in your personal financial plan:
  • Giving reminds you of what it really important in life.
  • There will always be people with more money than you.  Giving reminds you that the vast majority of people in this world have much, much less than you do.  According to the Financial Times a net worth of $2,200 puts you in the wealthiest half of the planet and a net worth of $61,000 makes you wealthier than 90% of the world.
  • Giving tends to create a greater sense of satisfaction in what you do have.
  • Giving helps others and makes the world a better place.
If you do give, my advice is to make certain that you are giving to a financially responsible organization and to be very deliberate in where you give.

Many solicitors for charity pass on far less money to the cause than you might think.  Some fundraisers keep 80-90% of the money you donate to cover their own costs, passing along only 10-20% of the money to whatever charity they claim to be raising money for.  Fund raisers and charities are required to let you know what percent of your donation is used for the cause and what is used to cover other costs.  Always ask.

Choose to support one or more organizations that you are passionate about.  Don't fritter away your donations in small amounts.  Like the rest of your finances, giving should be planned.  My wife and I discuss at the beginning of the year how we will give.  When we get phone calls and door to door solicitors (other than young children) asking for money, we explain that we plan our giving ahead of time and ask for information about their organization by mail. 

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