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Three Things To Know
Hitting your philanthropy goals starts with having a goal. No surprise there! GivingFund recommends using a salary-percentage goal and sharing that goal with others. This helps you:
Avoid getting stuck in old charitable routines, even when your lifestyle changes.
Hold yourself accountable to your goals and impact priorities.
Find a way to connect with community and get advice on philanthropy decisions.
Let’s Get To It:
What percent of your salary do you think is the right amount to give to charity?
Now, think about how much you actually gave to charity last year.
Do the two numbers tie up?
If your like most of the millennials we polled, you might notice a gap between the two. For the majority of individuals we polled, their goal was roughly 2x their actual giving! At GivingFund, we call this “the impact opportunity gap” - the distance between what your best self thinks is right to give, and what you give in practice. We’re on a mission to close that distance.
The easiest way to hit your philanthropy goal is to start by having a philanthropy goal. If you’re new to philanthropy, we recommend using a percentage of your salary, a goal that can shift and change as your means shift and change. For example, take Kyle Clark - a member of the GivingFund community. Kyle has, like many millennials, made a number of career changes - he’s gone from being a management consultant in Texas, to a non-profit manager in Wisconsin, and now works at a San-Francisco based tech company. “Allocating a fixed percentage of my income keeps me honest about giving. It’s a joyous feeling for me when I come across opportunities to give and know that I have this pre-allocated budget to just dive in and help.”
Here are some benefits to committing to a salary percentage:
1. Scale overtime
You may be surprised to know that Americans who make less than $50k a year, actually donate the most on a percentage basis than any other cohort of income levels, under $10M per year. In fact the generosity curve, looks like a U - with percentage of income that goes towards charities decreasing as people make more money - up until they reach 250k in Annual Gross Income (AGI).
Donating as a percentage of your salary is a helpful way to make sure that your commitment to philanthropy grows alongside of your means, and matches your professional and life decisions and changes. This is especially relevant for young professionals who are beginning to develop financial habits and design long term financial strategies. As your salary grows, so too will your impact.
Just like you may do a check to see if your rent is more than 30% of your income (pro tip: it shouldn’t be!) do a yearly check to see how much you’ve donated as a percent of your salary. If that number is startling, or on the decline, think about earmarking cash for philanthropy on a basis of your salary.
2. Be Your Best Self
Framing your philanthropy as a percentage of your salary also helps to put things into perspective. GivingFund recently ran a survey among millennials in high income jobs such as consulting and big-tech. Respondents were asked how much they gave to charity the previous year. Independently, they were also asked “if this January, you had to set aside a percentage of your salary for philanthropy, what percentage would you elect?” The results of this two-question survey were gaping: people generally had a giving goal that was about double what they had actually given.
When shown the gap between their current and desired states, respondents often responded, “I didn’t realize I was giving so little.”
In practice, meeting your goals takes planning, and reviewing of how much you spent, and where. The Web 1.0 solution to this is tracking all your receipts and filing them in the same email folder, or Google Sheet. Web 2.0 givers might consider using a budgeting system such as Nerdwallet.com or Mint.com where you can hook up all your accounts for one easy dashboard of where you’ve been spending. If you’re interested in a more end-to-end approach, a Donor Advised Fund like GivingFund could be the best solution for helping you budget up-front.
Regardless of whether you go high-tech or low-tech, identifying a percentage of your income to anchor to, and help you put your charitable goals into perspective amongst your other expenses.
3. Making it Social
For millennials we’ve spoken to, the percentage of their income they give to charity can vary dramatically. Some folks have anchored on 2-3%, noting that it sounds like a threshold they should be able to hit - after they ask others if that “sounds about right”. If you’re new to philanthropy, that may be a good goal to start with as well.
Other new donors look towards their communities of faith for inspiration - for example, giving 10% of their earnings to charity as part of a tithe or other religious commitment. If you’re driven by a larger cause, consider reaching out to your place of worship for advice.
By making a percentage-basis commitment to charity, you may find it easier to talk with friends and family about your giving practices, seek advice, and encourage each other to share more. Risa, who works in the tech industry in San Francisco, looks to her network as a source for charitable accountability, “Similar to how I think about how my energy usage compares to other households in my neighborhood, it’s helpful to know how my giving compares to norms. It motivates me to give more.”
Risa is on point - it’s much easier to establish a target, if you know what the ‘average’ or ‘normal’ is for your income group or community. Developing a community of like-minded young donors can help you to share best practices, exciting opportunities to give, and a sense of accountability to your goals.
Summary & Next Steps
If being more charitable is one of your goals, starting by making a income percentage-based commitment, and sharing this goal is a great starting point.
Use a percentage goal if:
You want to make sure your philanthropy grows in line with your life
You want to hold yourself accountable to your goals
You want to find an anchor and a community to help you in charitable decisions
Start by assessing your current giving, and your giving goals, and determine the amount that’s right for you. For more updates on giving strategy, budgeting for philanthropy, and financial tools to make giving to charity a better experience, sign up to join the waiting list to use our Donor Advised Fund product and we’ll add you to our community.