Has the economy changed your charitable giving?

Are you giving less to charities now that gas prices have topped $4.00 per gallon and the price of a gallon of milk is $5.00?  It has to be getting tougher for families to donate.  In my house, we give most of our charitable donations as a tithe to our church.  We have been giving about 10% of our net income for around ten years now.  We don’t really miss it since we’ve been doing it for so long.  As a result, I don’t see us decreasing what we give. 

Of course, a lot of the money that charities receive comes from corporate donors.  If their profits are less, then one can rest assured that their giving will go down.  After all, businesses have stakeholders they have to be responsible for and protect.  It will be interesting to see what charities receive in total donations this year.  I hope that individuals and corporations realize the importance of their giving and keep it up.

Impact and benefits of charitable donations.

I have personally benefited from the generosity of others after my home got destroyed by a tornado.  So, I know the importance of giving and I feel a sense of responsibility to donate and to encourage others to do so as well.  With so many people impacted in such extreme ways by the flooding in the Midwest and the fires in California, I can assure you the need has not decreased and neither should the giving.  We have to pull together as a country to get through difficult times. 

Of course, charitable giving is not completely selfless.  We get the following benefits from giving:

1.  Tax deduction

I’m not qualified in anyway to give tax advice, but I know that generally contributions made to charitable organizations are tax deductible.  So, instead of giving your hard-earned cash to the government, why not give some of it to your favorite charity?

2.  Good feeling from helping those in need

We’ve all heard the old adage that, “it is better to give than to receive”.  Well, it is true.  Haven’t you ever been more excited about giving someone a special gift than you were about what you might receive in return?  Giving to worthy causes is a great way to feel good about yourself.

3.  Improve your community

By giving to local charities, you are actually making your corner of the world a better place to live.  You then reap the benefits of living in a community you helped to improve.  The better your community the more economic development which can lead to higher home values, better jobs, and a better tax base.

Alternative ideas about giving when finances are tight.

If your budget just won’t allow you to give much in the way of cash, then you might consider these ideas to help:

1.  Donate your time.

A great way to make a contribution even when you don’t have any money is to volunteer.  You can even volunteer online if that suits your situation better.  Charities always need workers that are willing to do tasks for them.  My wife recently folded and stuffed newsletters for a local charitable organization.

2.  Recycle a single donation.

Microloans are an excellent way to make a difference.  As an added bonus, when you loan someone money, they pay it back.  Once the loan is repaid, then you can relend it to another foreign entrepreneur.  This makes a single small donation go a long way!

3.  Give items you no longer use.

You’ve probably done this before, but I thought it was worth mentioning anyway.  We could all probably be more intentional about this instead of waiting until someone calls us or until our next spring cleaning.  Why not donate your items today?  You could probably use the extra storage space!

4.  Apply snowflaking to charitable giving.

Snowflaking is a technique often used to gather small bits of money together to pay off debt.  However, why not throw your spare change in a jar at the end of each day and see how much accumulates over a month to give to charity?  You might be surprised how much these small sums add up to be at the end of a month or a quarter.

Don’t give up on giving because your budget is tighter.

I hope you won’t throw in the towel on your charitable giving just because money is a little tighter this year.  It is still important to be generous with what we have.  We still live in a very rich country and most of us aren’t recovering from the disasters that others are facing.  I hope I have provided you with ideas on how to continue making donations even in tougher economic times.

What other ideas do you have for finding ways to give when finances are tight?  Leave a comment below and share your thoughts!

Photo by Elaine Vigneault

The concept has been a successful alternative in third-world countries like Bangledesh to traditional loans and charity.  Personally, I really like this idea.  Regular banks generally wouldn’t go near these borrowers and it seems that social assistance so often enables people to remain impoverished instead of encouraging them to be more self-sufficient. 

I strongly believe in the “teach a man to fish” principle.  Microloans seem to give those with some initiative a hand without creating a crutch.

Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. ~ Chinese Proverb

How microloans work.

 Most microcredit loans are around $30 to $50.  They are rarely more than $200.  However, this can be enough for a person to buy the supplies they need to start a small business in these very poor countries.  They then reinvest their profits and perpetuate the business paying back the loan in very small installments.  Usually, the loans are paid off in 6 months to a year.  In addition to the loan, the lenders provide training on how to effectively run a business and other life skills.

Banker To The Poor success story.

Probably the most well-known example of the success of microcredit is told in Banker To The Poor: Micro-Lending and the Battle Against World Poverty.  This book was written by Muhammad Yunus and tells of the author’s experience in founding the Grameen Bank in Bangladesh in the 1970s.  Grameen Bank uses a form of peer pressure to ensure that no one defaults on a loan.  Each borrower is put into a group with five other borrowers.  Only the individual is liable for the debt, but if a member defaults on a loan, then the bank will not loan anymore money to the members of the group.  This creates a real incentive to pay back the loan.  I love this approach!  Yunus won the Nobel Peace Prize in 2006 for his efforts in economic development through Grameen Bank.

Example of how microcredit helped a family in Nicaragua.

In one example I read, a woman in Nicaragua named Sonia was loaned $100 for her business.  She used this to buy pineapples directly from a farmer instead of through the middleman she was using before.  This helped her lower her cost and increase her profits.  As a result, within a year, Sonia had enough money to send her children to school and start building a bigger house.  Over this period, she received three loans and paid them all back with interest.  She has even saved $120!  This is pretty impressive when you consider that according to UNICEF, 45% of the population in Nicaragua makes less than $1 per day.

How can we help change lives with microloans?

Fortunately, there are ways for individuals to get involved to make a difference in this very successful financing alternative.  Here are a few ideas:

1. Contribute to a loan at Kiva.org – Kiva is the first person-to-person microlending website.  You can actually choose your entrepreneur, read about their need, see a picture, and loan them all or part of what they need.  From the site:
   

   When you browse entrepreneurs’ profiles on the site, choose someone to lend to, and then make a loan, you are helping a real person make great strides towards economic independence and improve life for themselves, their family, and their community. Throughout the course of the loan (usually 6-12 months), you can receive email journal updates and track repayments.

   This sounds incredibly cool to me!  I like the idea of loaning someone money so they can build a better life.

2. Go on a microfinance tour in a poor country – This article at Brave New Traveler suggests that if you are traveling to a country in Africa that you could make a microfinance tour a part of your trip.  The idea is to meet with a microlender and then to be introduced to actual entrepreneurs that need help.  From the article:
   

   For breakfast, you visit a 30 yr old married woman with 2 children, who bakes and sells bread at the main intersection in a rural town. She welcomes you. She and everyone else you visit this day will know that you have come in support of their skills and their businesses. She gives you some of her sweetbread, teaches you the way she makes it, and shares her hopes and plans for opening a bakery.

   How fascinating!  I would love to do this.  It would be awesome to meet people that you could truly help.  In America, we are all so rich in comparison to the rest of the world that it often seems that you are getting taken when you want to help.  On the other hand, these opportunities address real needs.

3. Contribute to an organization like ACCION – ACCION has been involved in microfinance efforts since 1973.  They have been given a four-star rating for efficiency and fiscal management by Charity Navigator.  From their site:
   

   Today, ACCION and its partners measure success in the millions: 2.4 million microentrepreneurs served in 2006 in 23 countries, with more than $3.7 billion in credit loans – as low as $80 – and other financial services. We witness the impact of these services first-hand, and frequently: reliable income, children in school, improved health care, a solid roof overhead.

   If you would like to contribute without direct involvement, then this organization seems like an excellent choice.  ACCION accepts donations on their website. 

Microloans are making a difference in a positive way.

Microlending is making a difference in the world by enabling people to help themselves.  This is the kind of assistance that I can really get behind.  It already has a great track record and there are some fabulous ways to get involved.  I hope you will take a few minutes and learn more about how you might be able to change the world for at least one aspiring entrepreneur!

If you have experience with microlending, please share it with the rest of us in the comments section.

Photos by mgrenner57 and worldwatch