Should I Donate Money to Charity?

Now, I have a confession to make. Up until a couple of months ago I didn’t donate money to charity on a regular basis. I sponsored friends and family for walks and runs, but didn’t make any monthly contributions. My reasons behind this were something like the following:

“I’ll donate in the future when I have a higher disposable income”

“I prefer to volunteer my time rather than donate money”

On reflection I’ve now changed my thinking. Read on to learn why I believe more of us should be donating money, along with some tips on getting started.

Overview

What’s In It For Me?

There is plenty of research to show that charitable giving makes us happy. The video below explains a little more about this.

“If you’re in the luckiest one per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”
– Warren Buffet

The above quote highlights the responsibility that comes with privilege. It comes from Warren Buffet, one of the richest men in the world. What you may be surprised to learn (as I certainly was!) is just how close you come to that 1%. Global Rich List allows you to calculate your position in the global rankings. For somebody on the average UK salary of £36,611 (who could expect to have a net income after tax around £26,969) you may be surprised to learn that you’re in the top 0.84%!

Donating money to charity is a reminder that you yourself are in a fortunate position and have the ability to help others who aren’t as lucky.

Should I Wait Until I’m More Wealthy?

The problem with waiting until you’re more wealthy is where do you draw the line? For those of us in our 20s and 30s with no dependents, the reality is that we likely have a higher disposable income now then we will once children start coming along. It’s better to start small now and increase your donation in proportion to any salary increase.

Donating doesn’t need to have a big impact on your finances. Someone on a salary of £28,000 takes home around £1,788 a month after taxes. Donating just 2% of that would allow you to give away £36 a month. I think a lot of people could donate that amount and not notice any impact.

Timing is key. Set up a direct debit that pays your donation straight after your paycheck goes into your bank. That way there’s no manual effort involved and you’ll still be left with a healthy bank balance. If in doubt choose a lower amount you feel comfortable with and build up over time.

Should I Donate Money to Charity or Give My Time Instead?

Donating time and money are both beneficial, so choose whichever fits best with your lifestyle. In the past I’ve used my time to assist with raising money for the Prince’s Trust, but once that stopped I didn’t replace it with anything similar. As a result I’m now keen to donate money until I start up another voluntary role as otherwise I’m not giving back at all.

If you’re in a full-time job it can be difficult to find opportunities that work around your schedule. One good place to look is Do-It. The site allows you to search for volunteering opportunities in your local area, along with remote working opportunities too. There are an extremely diverse range of things to get involved with. In my local area they’re after volunteers to throw cocktail parties in care homes!

You should also keep an eye out for one-off commitments, such as National Trust working holidays or supporting Crisis at Christmas.

How Do I Find a Good Charity to Donate To?

Choosing where to donate is a personal choice with no right or wrong answers. However, as a starting point I’d suggesting considering whether you’re focused on getting the biggest impact for your money, or if there are particular causes that mean something to you.

If you’re simply keen to get the most impact for your money I’d suggest checking out Give Well. They search for charities that save or improve the most lives per pound, selecting those who would benefit the most from additional funding. These charities are typically aimed at funding prevention rather than cure, supplying low cost vaccines, tablets, mosquito nets and vitamins before a problem develops. These causes may not be as high profile, but your donation will make the biggest difference to people’s lives.

Alternatively, if you’d prefer a more selective approach to donating, I’d suggest starting by working out how much you’d like to donate, then make a list of what causes are most important to you. Most charities will allow you to make a small monthly donation so you could choose several causes.

My list of causes was something like the following:

Children in poverty
Wildlife
Food banks
Homeless

Once you have an idea of target areas you can start conducting research (unless of course you already have a favourite charity in mind). I’d suggest taking a look at Charity Choice which allows you to browse charities in different sectors and read their reports.

Does My Donation Matter?

Every donation matters, but some go further than others. If you’re concerned about the impact of your donation do be sure to check out Give Well as I mentioned above. They assess the cost-effectiveness of all of the charities they feature so you can gain an understanding of how many people your donation will help.

It’s also important to look at the big picture. Take the example above of someone donating £36 a month (2% of their salary). It’s an amount which is unlikely to ever be missed, but across a 40 year career it would amount to £17,280. That’s a lot of money that can do a lot of good.

Are There Any Tax Benefits?

For most people the main thing to be aware of is Gift Aid. If you are a taxpayer the government will top up any donations you make by 25%. You can claim this by filling in your Gift Aid details when you make a donation.

Higher rate taxpayers also have the perk of being able to claim the difference between the rate you pay and the basic rate on your donation. This can be claimed back through your self assessment tax return or by asking for your tax code to be changed. Example below.

Alternatively, if your company runs a payroll giving scheme, you may wish to donate money to charity directly from your payroll. This allows the charity to access the funds before they are taxed and results in the following.

Cost When Donating £1 Through Your Payroll