Monday, January 23, 2017

Thrift Week, Day 7: Give Wisely Day

Today is the final day of Thrift Week, which was originally dubbed Share With Others Day. I think it's very useful to include a discussion of charitable giving in a celebration of thrift, because many people mistakenly think "frugal" is just a synonym for "stingy." The water is probably muddied by shows like "Extreme Cheapskates," which deliberately portray frugal people as tightwads in the worst sense of the word: embarrassing their families with their aggressive haggling, serving guests Dumpster-dived food that makes them sick, stealing napkins and sugar packets from restaurants, stiffing hard-working wait staff for tips, and so forth. Rather than just avoiding waste, these cheapskates scrimp and and save money at the expense of others. (Or so they're made to appear, at least. According to people who have been on the show, such as like this guy, the producers deliberately stage scenes to show the participants in the most outrageous and unflattering light.)

In fact, this kind of behavior is exactly the opposite of what frugality is all about. The point of being frugal is that you use what you have wisely, instead of squandering it—and using it wisely includes giving to those who need help. In fact, for some people, that's the whole point of being thrifty. This couponing site, for instance, urges people to learn coupon skills not so they can amass a huge stockpile for themselves, but so they can get free stuff to donate to their local food pantry. And as this pamphlet from the Institute for American Values points out, "thrift cultivates generosity"; the more you have, the more you can share with others.

However, giving generously doesn't mean giving indiscriminately. Just as you avoid waste in your own spending, you want to make sure the money you donate doesn't go to waste. Simply opening up your wallet for anyone who asks doesn't put your money to good use, because there are a lot of so-called charities out there that are outright scams. Others operate within the law, but are really charities in name only, spending only a tiny fraction of the money they raise on their programs while devoting the rest to generous salaries and perks for their founders. And still others are perfectly legitimate charities, but not very efficient with their use of funds, frittering away more than half of every dollar on fund-raising and administrative costs.

Fortunately, there are several websites that evaluate charities and help you sort the wheat from the chaff. My favorite is Charity Navigator, which evaluates charities and rates their performance in two broad areas: financial health (how effective they are at raising money and distributing it where it's needed), and accountability and transparency (how open they are about how the charity is run and how the money is used). Its ratings, the website explains, "show givers how efficiently we believe a charity will use their support today, how well it has sustained its programs and services over time and their level of commitment to good governance, best practices and openness with information."

Whenever I'm thinking of giving to a new organization, I look it up on Charity Navigator first. The website provides a whole pile of details about each charity, but I usually focus on just three: the overall score and rating, the "mission" section that describes the organization's work, and the figure for "program expenses," or the percentage of the charity's total spending that goes toward its actual programs. If this figure isn't at least 80 percent, I strike the organization from my list. Some people think this is too harsh of me, since every organization has expenses, but frankly, I don't think it's too much to ask that 80 cents of every dollar I donate go toward actually helping people. After all, there are lots of worthy organizations out there—more than I could ever possibly support—and if this particular one doesn't meet the 80-percent criterion, I can surely find another that does.

I also use Charity Navigator to check up on organizations I regularly support. Each year, before renewing my annual donation, I punch the charity's name into the website to make sure it's still meeting my standards for overall quality and efficiency. This doesn't take too long, because I space my charitable donations out through the year instead of doing a big pile of "annual giving" in December. Giving to just a couple of organizations at a time spreads out the financial impact, since the money doesn't all come out of my account at once, and also spreads out the work so that it only takes a few minutes a month.

Before making my donations, I check each charity on my list for the month and see how its overall score and program expenses compare to what they were last year. If I find the organization's efficiency has increased from last year, I often bump up my annual donation, since I know the extra dollars will go to good use. If its efficiency has declined but is still over 80 percent, I still make a donation, but I don't increase the amount. And if it's fallen below my 80 percent cutoff, I strike the organization from my list and look for a new one to replace it. Charity Navigator helps with this by providing a section at the bottom of the page labeled "Charities performing similar types of work," which makes it easy to compare different charities in the same category at a glance.

Of course, the folks at Charity Navigator can't do all the work of evaluating these charities for free. Instead of charging for the use of the site (which would limit its usefulness) or selling ad space (which could compromise its integrity), they run the whole thing off donations. I always give the site a small donation every year—just a few dollars—as a fee for its services. The owners of the site say that if just one-third of the people who visit the site every year gave a single dollar as a donation, that would be enough to meet their entire annual budget, so I think it's a small price to pay in exchange for helping me donate my money effectively.

So next time you have some spare cash to donate, I urge you to check out this site and see if it can help you put your money to good use. And if you find the site helpful, please consider throwing in an extra buck or two to support its work.

And with that, we've come to the end of Thrift Week 2017. Best wishes to everyone for a thrifty year.
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