As the year 2017 draws to a close, we look at giving and spreading the cheer especially if you have had a good year.
Joy in giving
Giving takes you out from focusing inwardly on yourself to sharing with others. Happiness and fulfillment comes from helping others. The act of giving helps make your own life richer and more meaningful. Along the way, you will need to overcome the fear of having less in our culture today where we are wrongly conditioned that more is always better.
You are privileged
Many of us are more privileged than we know. Most of us are in the top 10% of richest people in the world and by giving away just 1% of our income annually, we can save 20, 50, or more lives each year.
Warren Buffett, Bill and Melinda Gates on giving
Make a difference in the world
You don’t need to be a millionaire to make a difference. Only 15% of giving comes from foundations. 72% of giving comes from individuals like you. Each one of us can make a difference to change and save lives. Wouldn’t you be proud and inspired to know that you saved dozens of lives? This may spur you on to give even more.
There was a man who had worked all of his life and has saved all of his money. He was a real cheapskate when it came to his money. He loved money more than just about anything, and just before he died, he said to his wife: “Now listen, when I die I want you to take all my money and place it in the casket with me. Because I want to take all my money to the after life.”
When one day he died. When they finished the ceremony, just before the undertakers got ready to close the casket, the wife said, “Wait a minute!” She had a shoe box with her, she came over with the box and placed it in the casket. Then the undertakers locked the casket and rolled it away.
Her friend said, “I hope you weren’t crazy enough to put all that money in there with that stingy old man.” She said, “Yes, I promised him that I was to put that money in that casket with him.” “You mean to tell me you put every cent of his money in the casket with him?” “I sure did,” said the wife. “I got it all together, put it into my account and I wrote him a check.”
Where to Give?
Local, overseas, or both
You may choose to give locally, overseas where the need is the most or both.
A note though that in developed counties, there is sufficient spending on healthcare, education and most key areas. Overseas or international giving can be focused towards developing countries that face diseases, malnutrition, etc where your dollar (Ringgit) can make the biggest impact.
Causes that you feel strongly on
You can give in one or more areas that you feel strongly about, including:-
- Environment / animals
- Public society benefits
- Arts and culture
Organisations that channel 90% or higher of funds received
You want to make sure that your funds reach the intended recipient and not end up paying bloated salaries of people running these “charitable” organisations. Avoid and be wary of organisations that spend a large amount of resources in marketing and soliciting funds.
Note: Look for options that will allow you to give without getting charged additional fees or credit card charges.
Tax benefits: approved organisation
You may also consider giving to LHDN (Inland Revenue Board) approved organisations to reduce the amount of tax payable. Note that this giving is only for monetary giving and not for items or in kind.
How Much to Give
There is no fixed formula to giving but here are some suggestions to get you started:
Give up to 10% of your income. Simple and easy. Put it aside every month when your pay comes in, or have it setup to be automatically sent monthly.
Deduct required living and lifestyle expenses. Set aside amount needed to reach your investment and retirement goals. Donate the rest. You will not only reach your financial goals, you make a difference in lives along the way!
Give 1% of first 100k, 10% of next 100k, 20% of next 300k, etc. This helps to make sure you have enough for your needs, and you can give increasing amounts (which would be taxed anyway at high rates).
Give now or later?
There is no right answer to giving now or later when you are financially established. You need to decide this for your own on what is right. But it is difficult to get rid of selfishness, fear, and lifestyle consumption inflation.
However, if you do not have your emergency savings prepared or are stressed out from debt, you may want to prioritize these first. Having this peace of mind is financially prudent and will enable you to give even more generously later.
If you are new to giving, you can start with a small amount like RM50 or RM100 and see if it brings you joy, fulfillment and satisfaction helping others.
Donations and gifts for tax savings in Malaysia
- Gift of money to the Government, State Government, or Local Authorities.
- Gift of money to Approved Institutions or Organisations.
- Gift of money or cost of contribution in kind for any Approved Sports Activity or Sports Body.
- Gift of money or cost of contribution in kind for any Approved Project of National Interest Approved by Ministry of Finance.
- Gift of artefacts, manuscripts or paintings.
- Gift of money for provision of Library Facilities or to Libraries.
- Gift of money or contribution in kind for the provision of facilities in Public Places for the benefit of disabled persons.
- Gift of money or medical equipment to any healthcare facility approved by the Ministry of Health.
- Gift of paintings to the National Art Gallery or any State Art Gallery.
- Zakat given by Malaysian Muslims.
Note: 2, 3 & 4 amount is limited to a combined 7% of aggregate income (e.g. 100k aggregate income, max gifts 7k)