Dear Kate – July 2016

Dear Kate,

I will be starting a new job in the fall and now that I will finally have a paycheck, I am starting to think more clearly about financial planning.  Other than investing, I am also curious about charitable giving.  At MIT, I’ve donated to the class gift and a scholarship fund.  I don’t have a financial planner and cannot afford one but am looking for helpful resources online.  Based on your experience, what advice do you have for women who want to think about and manage their charitable giving?

– Curious about Financial Planning

Dear Curious,

Congratulations on the job! And congratulations on thinking about this right out of the gate.

First: Draft and try out a budget that includes your plan for charitable giving. I found that making ad-hoc decisions over and over (should I buy this thing or donate the money to charity?) was a lot more stressful than coming up with a plan. A plan meant I could make the decision once, instead of repeating it every time I was in the checkout line.

So pick a time period (start small: a month? Six months?) and try out a given level of spending, saving, and giving. At the end of that time, re-evaluate. Was it too hard? Or do you want to stretch a little more? Adjust the budget.If you find yourself doing impulse giving and would rather save the money for a more carefully chosen cause, make habits to divert this. If you feel bad turning down those people with clipboards, keep a tally of how much you would have donated and then give the total to a more effective charity at the end of each month. Or you might decide that donations that support your community and relationships (like the fundraiser 5k your best friend is running) come out of your personal budget rather than your charity budget.

And how to decide where to give?

Don’t pick charities that come to you; if you give reactively based on who calls or emails you, you’re selecting for the charity with the most aggressive marketing department. Be proactive. Set time aside to consider what you value, and to find the best charities in the field.

When it comes to choosing charities, GiveWell is a charity evaluator that I’ve found helpful (full disclosure: I’m on their board). Rather than trying to rate the 1.5 million nonprofits registered in the US, they try to find a handful of the ones with the best evidence of effectiveness.  Their tips for giving include:

  • Don’t make large donations by credit card, because your favorite charity will pay a hefty fee
  • Consider whether you’ll be itemizing deductions or taking the standard deduction, and what tax rate you expect to pay next year, to decide whether to give this year or in January

All the best!

– Kate W
(community manager for the Centre for Effective Altruism, and co-organizer of the Boston Effective Altruism group)

On behalf of the GWAMIT mentoring committee, thank you to this month’s Dear Kate contributor and Kate W. 

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