Easy Steps for Giving to Charity, on a Budget


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New technology and emerging approaches to charity make it easier than ever to make a contribution -- small or large -- and make a difference.

Many dream of winning the lottery and using the money to help others. Besides the obvious good done by helping others, philanthropy, even on a small scale, expresses our values and connects us to the world on new terms. It delivers personal satisfaction, and, if all that’s not reason enough, there’s a tax deduction too.

But you don’t have to wait to become rich. If you think the words “philanthropist” and “small budget” aren’t compatible, you’ll be surprised.

A small budget can’t stop you

You may also be surprised to learn that extremely small-budget donors are the most generous Americans, measured by how deeply they dig into their pockets to give. Atlantic Magazine writes:

In 2011, the wealthiest Americans — those with earnings in the top 20 percent — contributed on average 1.3 percent of their income to charity. By comparison, Americans at the base of the income pyramid — those in the bottom 20 percent — donated 3.2 percent of their income.

Charity Navigator, a free online service that lets anyone scrutinize charitable organizations, compiles its own statistics on the proportion of income donated by segments of society:

  • Wealthy: 3 percent
  • Middle-class: 2.5 percent
  • Poor: 4 to 5 percent

The generosity of lower-income donors is especially meaningful when you consider that most won’t get a tax deduction. Only a third of Americans itemize deductions and most of them are wealthy, according to FiveThirtyEight.com.

Why poorer people give more is anyone’s guess. Some speculate it’s because the need is visible all around them, and wealthier people tend to live and work in more isolated communities.

Start where you are

How much can you really afford to give? The question is best answered with a budget.

(There are lots of great tools for keeping a budget these days. Our favorite is our partner PowerWallet.)

The guidance from Jesse Mecham, founder of the budgeting software and education site You Need a Budget, is to use your budget to identify and fund non-negotiable basic expenses before spending money on anything else:

You have to cover your immediate obligations—the non-negotiables — first. And then you have to think through your True Expenses — larger, less frequent expenses that you have to plan ahead for. We teach people to break True Expenses up, and treat them like monthly bills. So, Christmas, for instance. It comes every year. If you set aside $100 every month, when Christmas comes you have $1,200 just sitting there waiting to be spent without guilt or stress or relying on credit cards. This works the same for insurance premiums and car repairs and vacation funds.

After you’ve covered those basics you are free to set priorities for the rest of your money. Those priorities are different for everyone. They could include philanthropy, recreation, investing, entertainment, etc. — whatever matters most to you. Says Mecham:

The money that is left over, after obligations and True Expenses, is where you start making decisions about priorities and what is really important to you and what you want your money to do.

Mecham and his family put giving at the top of their priorities. “I think there are intangible rewards to giving back, but that shouldn’t be the motivation,” he says.

If it is important to you, more important than other things, you will be able to start funneling money toward that priority. And don’t be afraid to start small. Giving is a muscle and the more we do it, the more it grows, and the easier it becomes. Start small and be consistent. Get in the habit of putting a little bit of money toward giving every month, even if it is a very small amount.

Start small

Micro-philanthropy, the practice of giving in small amounts, lets you scratch the giving itch even when your budget is tight. Technology has made it easy for charities to accept and process small contributions — making it easier than ever to give.

Donating small amounts when making a purchase is familiar to many of us. For a few examples:

  • Round It Up America: This charity, which funds other charities, takes the collection jar next to a business’s cash register to the next level. Many chain restaurants use it to help diners make small donations as they pay their bills. The money collected goes to food banks, homeless shelters and other charities.
  • Checkout charity: Grocery shoppers often encounter “checkout charity” campaigns that suggest they add spare change to their grocery receipts. These campaigns have raised nearly $4 billion in the last three decades, says the Chronicle of Philanthropy.
  • eBay Giving Works: This interface allows both buyers and sellers give to causes while conducting transactions.

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