Hope for your financial life and beyond

How to Develop a Purposeful Plan for Giving Away Money

If you have found your way to this article, you most likely have a charitable heart and enjoy giving away money to a church, charitable organization, favorite cause or the girl scout who shows up at your door selling cookies. But have you ever thought about how you give away money? Do you give purposefully or haphazardly as opportunities pass in front of you?

giving away moneyDeveloping a purposeful plan for giving away money might seem silly. Perhaps you want to give wherever and to whomever you like without feeling constrained by a plan. There is great freedom in that philosophy. However, as I’ve found out over the years, there are also great dangers.

Putting together a purposeful plan for giving away money is a fundamental exercise you should go through to have success with your personal finances.

We try really hard to make a monthly budget that works. We plan for how we will pay for college and support ourselves in retirement. So why would we ignore this area of our finances where a lot of money could potentially pass through our fingers over the course of a lifetime?

Why We Got Purposeful

My wife and I both enjoy giving away money to our church and other causes we believe in. However, as we became more financially healthy, we realized we had a greater responsibility to manage our giving wisely. We decided to get purposeful with our giving for several reasons:

1. We wanted to be intentional with our money. By that I mean we decided to make deliberate and calculated decisions about where our money went. We were tired of giving away money haphazardly, here and there, without any specific structure or purpose to the process.

2. We became frustrated that guilt and other emotions got the best of us at times. I’ve  mentioned before (“Giving For the Wrong Reasons”) that guilt giving and emotional giving are two of the deadliest forms of giving. It’s hard to think rationally when overcome with these emotions. It’s too easy to get swept up in the emotion of the moment and give beyond our means or to things we weren’t really prepared for.

3. Lastly, our desire to develop a purposeful giving plan stems from our faith. That reason may not resonate with you, but regular readers here know the importance faith plays in my life. I believe the Bible clearly teaches giving and it’s my desire to follow through in that regard with a cheerful heart.

In fact, in the New Testament book of II Corinthians, the missionary Paul discussed some pretty specific teaching about purposeful giving. His teachings include how the church in Corinth was to prepare monetary gifts in advance of his coming to them. Paul clearly advocated planned and purposeful giving (See II Cor. 8:10; II Cor. 9:5).

How to Develop a Plan for Giving Away Money

So how do you put a purposeful giving plan together? Here are the steps we took, plus some additional giving suggestions I’ve learned along the way.

Step 1: Do an attitude check

Giving always begins with your attitude. Why are you giving away money in the first place? Giving should not be done for selfish reasons such as to get noticed or to receive kickbacks from others. Giving is not about our needs, it’s about meeting the needs of others.

I know that’s simplistic. However, if you are not giving for the right reasons it will upset the entire plan. Frustration will set in as you try to implement it. Giving will become a chore and an obligation if you don’t keep the right perspective.

What I’m talking about here is developing the proper motivation behind giving away money. It should revolve around being a blessing to, caring for and helping out others.

Step 2: Decide What You Value

Ask yourself, “What are you passionate about?” Answering this question is what step two is all about. If you are single, this is something you can decide on your own or with the help of a trusted friend. For married couples, it will take a great deal of communication and agreement before moving forward. The last thing you want to do is end up in a relationship money fight about giving.

Don’t neglect this step. Take some time here. What values you end up identifying will play a big roll when you determine where the money actually goes in Step 4.

Step 3: Start With A Baseline Amount

Now it’s time to figure out how much to give. Obviously this varies on the individual and is based on your circumstances and comfort level. There is no recommended set percentage or amount that you should give. Whether that’s 3, 5, 10% or more of your monthly income, it’s a decision you have to make.

You might be sensing that I’m hinting at giving regularly. That would be correct. We have found the best success when we incorporated giving into our monthly budget. It helped us avoid certain pitfalls that come from not giving at all or giving too much.

My wife and I determined a baseline amount that we would not go below each month. For us, that did start with our faith and our belief in the Biblical teaching of the tithe. So we set aside at the first of each month 10% of our monthly income to give to our local church.

We set that payment up on automatic payment from our bank. This step created consistency and discipline and removed the possibility of it being forgotten. To some this setup may make giving seem like an obligation (like a bill). In order to keep it from becoming that, I always check my attitude when I see that transaction go through my bank registry. Remember step #1?

Our regular giving is on the top line of our monthly budget form. We subtract that from our income before any other expenses.

I believe this to be important for people who want to give monthly. If you wait until the end of the month, you run the risk of not having any money left over to give. There will always be things that your mind will tempt you to buy during the month that could take the place of your giving.

Once you have your baseline amount to give each month, you can go from there with other giving opportunities. As your income increases there will be ways you can give above and beyond your baseline limits.

Step 4: Determine Where the Money Goes

Now it’s time to tackle the toughest step of all – figuring out where the money goes. Honestly, this can be completely overwhelming. There are so many worthy causes and only so much money to go around. And a word of warning, which you already know – there are many shady causes trying to persuade and trick you into giving to them. Be alert for these.

So how do you figure this out? Remember what you valued in Step 2? Time to focus on those things that you are passionate about.

For example, out of our Step 2 discussions my wife and I learned we valued the support of our local church, organizations that support military families, crises pregnancy centers and overseas missions work. So naturally we look for ways to give in those areas first.

We keep three things in mind as we determine where our money goes:

1. Our first priority is to give to that which is closest to us (family members, our church, our kid’s school, and organizations within our community and state). After that we broaden our horizon to national and world affairs and organizations.

2. We look to give to reputable organizations that don’t dig into our donation with excessive administration fees. We want a high percentage of our donation being used for the cause, not paying for someone’s salary or their building overhead.

3. We try to give where it has the greatest potential impact. This has probably revolutionized our giving more than anything else. Does our donation have the chance to help 5 people or 50 people? Can one family be fed or perhaps 20? See where I’m going with this?

Now that’s not to say we never give to that one family in need. There is certainly a time and place for that. But our main focus has become maximizing dollars and getting the largest possible return on our money. That’s what we do with investing. So why not with giving? If I can support one missionary overseas for $20 a month and their ministry alone could impact thousands, then I’m taking that opportunity.

Step 5: Advanced Giving Steps

Here are a few final things to consider as your net worth continues to grow and you find yourself giving away money more often:

1. Consider setting up an emergency-giving fund. My wife and I have done this and it’s been such a blessing. Within our savings we have allocated a certain amount to be used each year for spur of the moment giving.

We always come across opportunities that were not on our radar – things that pop up for which we did not plan. Having a bit of cash set aside to give on occasions like this loosens some of the rigidity and hesitancy to give that can come with following a set plan.

2. Look at tax considerations for giving. Never give JUST for tax reasons. But if getting a tax break lines up with a passion of yours then consider giving to it. In such instances, run that decision by an accountant before pulling the trigger.

3. Set up a charitable giving account. Wealthier individuals may consider setting up a charitable giving account through an investment company to keep track of their giving. Individuals are able to contribute cash or appreciated assets into the account.

The big advantage of these accounts is that they allow investors to realize certain tax benefits. Specifically, they are not hit with capital gains taxes because they sold an appreciated asset. Instead of selling, the asset is simple transferred into the charitable account, thus bypassing the tax consequences. The funds can then be used to support your favorite charities over time.

Giving Away Money Can Be Fun

The purposeful giving steps we’ve taken have greatly enhanced our ability and desire to give. It has reduced the stress we feel about giving and kept us from making unwise decisions with our money. Giving away money is more enjoyable now as we think about all the lives we are impacting.

Get started working on your giving plan today if don’t have one. You don’t ignore your monthly budget or your retirement. So why ignore this? It will change for the better the way you think about giving away money.

Questions: Do you have an purposeful plan for giving away money? If not, how do you determine where your money goes? How do you decide how much to give? Do you give regularly (monthly) or at designated times during the year? What else could you add to make these steps better?

Image Courtesy of 401kcalculator.org at Flickr Creative Commons

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  1. Super entry, very useful, it’s a pity that only now I found this blog.

  2. Nice giving plan. I think we have to assess where our money, which we will donate or give, can have a big impact.

  3. Giving should always be selfless and natural. It does feel good when I share my blessings with others and I kinda notice the return is greater.

  4. We really like helping out children, so we make sure most of our giving goes to charities that help out disadvantaged kids around the world. We do not give away as much as we would like, but I think it works just as with saving. Start with something and then gradually build on it from there.

  5. My wife and I pray the amount that we should give each year. Then we put together a plan of where that money should go and who the Lord is looking to bless. It’s a blast to give 🙂

  6. That’s a good idea, Brian. The more you give, the more blessed you will be. I think as a family man, a giving plan is one best example to my kids for them to grow with a selfless giving heart, and it doesn’t stop there because an opportunity to help happens any time so it’s good that it be a natural thing for everyone.

  7. Great article! You points are spot on. We love to give, it’s not a obligation it’s a passion. I would like to repost this article for others to see.

    • “…it’s a passion…” That’s when it gets really enjoyable Boris, when you can engage in the giving process with that level of enthusiasm. Thanks for the comment and please do share! 🙂

  8. Thanks for the tips!

  9. I’m really not that good with this – when I give, it’s because something pulls at my heart strings, and I get sucked into the moment. I don’t make a plan like you’ve suggested.

    • “…I get sucked into the moment.” That’s a big reason why we started doing this. We got sucked into so many emotional moments it was sucking our wallets dry.

  10. Good post Brian! I think this is something we tend to overlook too much when it comes to finances. My wife and I do something similar with our giving. Our primary giving is to our church and have a set amount that we generally don’t go below. As our business fluctuates we will give more, or as we feel necessary. From there, there re a few local organizations that we’ll give to in one off situations. We’re also trying to model this to our kids, especially now to our six year old as she’s starting to understand why we do it.

    • Modelling giving to the kids is huge John! As you know, they pick up on everything. It’s neat when they start to develop the right attitude about giving. Who better to learn from than mom and dad.

  11. Brian, LOVE this, especially your idea about an emergency giving fund. Our heart is heavily on the starvation and other troubles that third world families and children face, so we focus most of our giving in that direction. When you’re giving from the heart to something that means a lot to you, giving can be a wonderfully fulfilling thing.

    • That emergency giving fund idea sort of came out of nowhere in our thinking about giving. I think it helps protect us a bit against the emotional side of giving. We do still get caught up at times when we hear something that touches our hearts and we want to give immediately, on the spot without much discussion. We also use it if one of us feels strongly about giving to something that the other one is only marginally interested in. I guess the biggest thing is that it just gives us some flexibility.

  12. Credit Card Shoppe says

    Great post and interesting. Couldn’t agree with you more on the topic of giving. My husband and I give 10% every month right off the top before spending any other money. We do this to help others but to also make sure we don’t treasure our ‘stuff’ so much and keep our own hearts in check.

    • “…to also make sure we don’t treasure our ‘stuff’ so much and keep our own hearts in check.” Giving surely does that. Every time I give it humbles me and makes me thankful for what I have.

  13. What my wife and I do is every year we review the organizations we give to and how much. We make changes at that time and we are then set up for another year. The donations are auto-deducted from my paycheck, which works great as it’s spread out over the course of a year.

    • I like that approach DC. And it’s good that you continually review it. Sometimes an organization’s mission or philosophy changes and it no longer lines up with our values.

  14. Green Money Stream says

    The giving plan is a great idea. I hadn’t thought of it in this way before, but you are right, we spend time coming up with plans around other “spending” items in our budget. This just makes good sense.

    • If I’m going to send my dollars to others, I want to really think it through. I just feel like planning in any area of life equates to winning.

  15. While I give, I don’t budget it. The reason for this is because I do it spontaneously. I find it more rewarding. I do it when I see someone in need or a situation presents itself. That is just how I give.

    • I think there is definitely a place for giving spontaneously. We’ve worked that into our plan through the emergency-giving fund. That lets us feel free to give when unforeseen opportunities arise.

  16. Six Figures Under says

    I think giving is a part of finances that is too often overlooked, so this is wonderful (as was your post yesterday).

    My parents and church leaders instilled a testimony of giving (particularly tithing) in me from the time I was young. No matter how poor we are, we always give the Lord his 10% and he “opens the windows of heaven” to us and pours out his blessings.

    • Speaking from an entirely faith perspective, I believe the Bible teaches that the blessings of God are on those who give. It’s seen all too often throughout the pages of the book.

  17. Fit is the New Poor says

    We have a great giving plan in place, but we think in amounts instead of percentages so that we can save throughout the month for bigger giving at the end of the year. We divide the bigger gift between our church and our animal rescue organization. We occasionally give to a heritage center in our city if we have any leftover or go over our savings goal.

    • It’s fine to think in terms of amounts. Our giving to church is the only thing we do in a percentage. The rest is done by agreed upon amounts.

  18. Love this, Brian. Our church is an automatic beneficiary of our giving plan. We also annually adopt a family at Christmas. Beyond that we, as a family, discuss what other organizations or causes we will support with our family money and time. Philanthropy is an important part of our lives and it’s something we involved the girls in early. I agree wholeheartedly that it has to done for the right reasons. When I started having the girls share their money, they didn’t mind sharing toys or clothes but were more resistant to sharing their money, particularly Taylor. I didn’t push it because I didn’t want her to resent sharing. But after she saw how much her sister enjoyed it, she decided to try sharing too. Now they both love it. It’s great that your family has such a great giving plan and your children will grow up with the mindset to give, rather than view it as unusual.

    • I am excited to see how our giving is already rubbing off on our children. It’s sweet to see how they sometimes take some of their dedicated spending money and choose to give that instead of spend it on themselves. Makes me think we are on the right track.

  19. We give at least 10% to our church of all out gain. Our church advocates to do it off the top before it hits the account, but we write a large check every 3-6 months. I write the check, no questions asked and have my whole life.

  20. Just a quick addition to the tax consequences — if someone is over 70 1/2 and has an IRA that they are required to distribute from, they can donate to a charity directly from the IRA and save the income taxes on the distribution. This little perk is scheduled to go away in 2014, so I would definitely check w/ a professional before doing this.

  21. My wife and I are very similar to you in how our giving works. We have a pre-budget amount that we give (percentage of gross) to our local church, then we have a giving/charity line item that is allocated to other ministries or charities. Having a plan is key, because it’s too easy for us to spend money in our minds as soon as we have it.

    • “…it’s too easy for us to spend money in our minds as soon as we have it.” That’s exactly right! We were so lost without a plan and not experiencing much joy with our giving either.


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