Anything worthwhile doing needs planning. That’s including making donations to a charity. Don’t let your caring heart cause you financial loss.

Anybody can make a donation nowadays. With abundant online fundraising initiatives, making a monetary donation is so easy. But, in reality, there are many factors to think over before you actually give money to charities.

Consider these 8 (eight) things before giving to a charity.

1. Affordability

Before donating money, be sure your finances are in order. Determine that parting the money will not jeopardise your financial well-being.

Our elders taught us early on to extend our hand to those in need. That is an admirable quality to cultivate. But this teaching omitted one point: Donate only when we can afford it and don’t need financial help ourselves. It’s like putting on your own oxygen mask first in a flight emergency before helping others. Financial planning follows the same rules:

Don’t contribute money until your finances are in order.

How would you know that your financial house is in order? Simple. Just ask yourself these questions:

If you can’t answer yes to any of these, don’t contribute in money form for the time being.

If you still want to help, there are many ways such as volunteering your time. By doing so, you may both benefit the community and meet new individuals and keep your financial house in check.

2. Prepare a Budget

Make a budget to see how much you can donate monthly.

Is there a mathematical formula to follow if we wish to donate? Unfortunately, no, there’s no set formula. Instead, each person must decide how much to contribute based on your own money situation.

Knowing how much money you have and how much you spend helps you figure out the amount. Isn’t it freeing to own your own life and money? Many individuals fear not having enough money for retirement or leaving a legacy for their loved ones. But we can achieve both…with a budget and financial plan.

First, list all of your usual monthly costs and earnings. Keep tabs on these for a few months, then ask yourself these questions.

  • How much have you saved?
  • Do you have excess money each month?
  • What can you give up to save money?

Once you know the answers, you can easily assess if your monthly contribution goal (say to contribute 10% of your discretionary income) is workable.

3. Do Your Homework

Get the facts right. You don’t want to fall for a fake charity scam. Check the charity’s authenticity and its use of funds before donating.

At a minimum, you should perform an online search and assess the results. For a name search and a company profile, you may approach the Malaysian Companies Commission. Long-standing organisations with recorded good actions gain trust. Take note that in Malaysia, there is no single institutional register or regulatory organisation for charities for you to check. 

What you can do to learn more about a charity before donating money?

  • Select the subject that interests you.
    • For example, “flood relief” or “homeless children.” After finding a charity you want to support, search for it with “criticism,” “overview,” “ranking,” “fake,” or “fraud.” If you see nasty reviews, move on.
  • What information does the official website have about the initiatives you’d like to support
  • How much of your donation goes to the causes you cared about and how much to cover the operating costs?  Don’t trust a charity if you can’t find out what it does.
  • Determine if the donation is tax-deductible.
    • If you care about tax-exempt status, check with the IRB. Because the Inland Revenue Board only grants tax exemptions to charities that meet all the conditions, we consider them more trustworthy.
    • Section 44(6) of the Income Tax Act of 1967 requires tax-exempt organisations to provide official receipts for all monetary donations (cash, internet banking, check, etc.). This includes in-kind gifts. The contribution receipt must also include a serial number and state the charity. Before contributing, always ask whether the charity can provide you with a receipt.

You should also consider doing more background research into your charity of choice and some thought to giving the charity a call.

4. Donate to Local or Global Charities?

Next, determine whether to give locally or globally. How to make the right choice? There is no right or wrong choice but you can make an informed decision by knowing the pros and cons of both type of charities.

Local Organisations
Pros

  • Local charities tend to be smaller than international organisations. Giving to these charities is more effective and less likely to be abused.
  • Donating locally enables donors to interact with the nonprofit’s staff and have a better understanding of their mission. If you’re a local donor, you may visit the NGOs’ facilities to learn more about their work.

Cons

While giving locally brings a sense of community, it also has certain negatives.

  • Because of their size and lack of finances, some are forced to shut their doors. Local non-profits have a lower chance of success than those run by global corporations.
  • Because local organisations have smaller administrative expenses, funds are more likely to go towards keeping them open than really helping people. Lesser-known local nonprofits lack access to funds and grants.

Global Organisations

Contributing to global NGOs has rewards even if donors cannot visit them.

Pros

  • Donations go farther with foreign charities since they concentrate on the world’s poorest countries. Feeding kids in some of the world’s poorest countries is significantly cheaper. Furthermore, since the majority of international charities have been in operation for many years, it is simple to assess their worldwide impact.

Cons

  • Many people who want to help people all over the world have to decide whether to help people in other countries and help people in their own communities at the same time. Donors who give to charities that aren’t near risk meeting scam charities.

It’s hard to decide where to donate money. Donors should consider the advantages and disadvantages of supporting both local and global organizations.

5. Donate Non-Cash Assets.

Giving may take many forms where cash donations is widely accepted and appreciated by charities. In the absence of cash, there are alternative ways to contribute. Donate clothes, technology, art, and antiques instead of cash.

We often donated things as we prefer giving to tossing away goods no longer in use. But to maximise the impact of non-cash gifts, donors should do their research.

  • Consider its worth. Some high-value non-cash assets such as artwork can be sold by the charity in an auction.
  • Analyze non-cash assets’ usefulness. Talk to the organisation to verify if they are in need of used yet functioning appliances, for example.
  • Some charities accept large non-cash donations like furniture but may have to fork out the delivery costs. Donate these items to a local charity instead of out-of-state or overseas charities. This might save you and the charity on the delivery charges.
  • Don’t give up on things not accepted for donation. You can generate money by selling then, then you can then donate the money to the charity.
  • Take the tax deduction. You may accept some public goodwill as a return for your humanitarian activity. When giving anything other than cash, get a tax-deductible receipt and any other documents you need.

Donating useful non-cash assets may benefit charities just as much as cash donations.

6. Payment Methods for Donations

Paying with a wire transfer or a gift card is not a good payment method. The scammers ask for money in this way because it’s hard to track down these types of payments. It’s best to give with a credit card or check.

It’s important that if you give money online, the payment page has “https” in its URL. All of your personal information is safe. But, encryption is not a guarantee of legality. Criminals may also use encryption.

If they ask for cryptocurrency, don’t give it to them. It’s usually a scam if anybody says the organization only takes cryptocurrency and not checks or credit cards.

7. Consult with a Financial Advisor and Your Family

A desire to help those in need and a want to express kindness typically motivated charitable giving. Nevertheless, it’s important to remember that donating money is a financial choice that should be made with much thought and planning. Giving with a strategy in mind might make it easier to feel like you’re making a difference while also being more effective. It is possible to give consciously in this way.

Giving back to the community is easier when you deal with a professional financial adviser. A financial adviser can help you find methods of giving that better fit your budget and your wealth management plan. Talking to your family about your charitable giving is a good idea. With the aid of your family and friends, you’ll be able to achieve your charitable objectives.

You can learn more about money by paying more attention to how much you give back to the community. Strategical giving can help you learn how to use the resources you have smartly, which can help you better manage your money and your taxes.

These skills also help teach the next generation about money and empathy at the same time.

8. Doing Charity in Other Ways

Finally, think about what you can do to help the things you care about, in any way you can.

It’s OK if you can’t afford to contribute money right now. There are many ways you can contribute your time and talent instead. Here are a few ideas.

  • Conducting workshops
  • Helping with bookkeeping
  • Manning social media accounts
  • Creating awareness and publicity
  • Assisting or coordinating fundraising events
  • Refreshing their computer system to ensure it is running smoothly

Conclusion

You should give generously when you can; provided you do so cautiously so as not to spend needlessly. Before you give money, make sure you know about the eight money issues above so that your money is channeled to a legitimate charity with the relevant cause you intend to support.

 

What are other factors you consider when making donations?

 

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