A Few Problems With End-Of-Year Giving – And Another Way

Around Thanksgiving, most of us will start to receive solicitations from various charities regarding giving before January 1. There are often various toy drives, canned good drives, and other financial campaigns. I love the idea of giving at the end of the year. We give throughout the year, but also sometimes give a donation in someone’s name, or purchase a gift that supports a particular ministry or work that matters to us. There are, however, a few problems with the end-of-year giving model that we would be wise to think about, even as we prepare to give generously. These thoughts should not stop us from generous actions, but instead can help us be more focused and generous throughout the year.

Each of these examples is about giving at the end of year exclusively. There are many outstanding reasons for additional giving, and if this is the time you choose to focus on giving: great. However, I would urge you to consider some of the problems with exclusively giving in November-December.

1. Giving at the end of year is bad for on-going charitable work

Organizations need to plan for their needs and work not just in the current year, but also in the future. Focusing on an end-of-year push for financial contributions is poor business planning for charities. Just like companies often make short-sighted decisions because sock-holders emphasize earnings on a quarterly basis, charities struggle to show how much they’ve done annually as we come to December. The problem is that most charities are addressing seemingly intractable global human problems. Measuring their performance annually doesn’t make sense. Of course, evaluating how your dollars are used, is important, and I do this continually. I am a firm believer in accountability. Imagine you make $50,000/year. January-October, you earn $3,000/month ($30,000). November-December, you might earn $10,000/month ($20,000), or you might not. You’d really struggle to figure out how you can manage your money each year, right? It’s the same for most charities. Not only is measuring annual performance short-sighted in many ways, focusing on last-minute giving is difficult for on-going efforts.

Another way:  Give a smaller amount at the end of this year, but instead sign up to give monthly, or become a regular volunteer.

2. Giving at the end of year doesn’t help the majority of people with reducing taxable income

One of the main reasons for the December push for contributions is that individuals are not taxed on donations to charities. The logic is that people want to give because of the “holiday spirit,” but also because it helps them pay less in income tax. Unfortunately, unless you make an income that lands you in a particularly high income tax bracket, the amount you save in taxes is usually pretty limited. Particularly with the increase in the Federal standard deduction in 2018, arguing that you should give because of a tax write-off makes little sense. If you are paying in the 15% tax bracket (the case for most people after the standard deduction), they would save $75 dollars in taxable income on a $500 donation. While for those in higher tax brackets, financial planning around additional charitable contributions does indeed make sense, it dramatically reduces that total number of people who would have an interest in donating for this – let’s call it what it is – self-interested reason.

Another way:  Be wise about financial planning, but recognize that building a habit of giving is more worthwhile than giving for a particular financial benefit.  

3. Giving at the end of year doesn’t allow you to partner with an organization

The greatest reason you may want to adjust thinking about charitable giving at the end of the year, is that you do not have the opportunity to truly partner with an organization. Large and small charities alike need people to give financially, but also to work with them as partners. They need people to volunteer throughout the year. They need people who read their materials, and think about the on-going struggles and big problems that these organizations are working to alleviate. Toy drives, small and large donations alike, and giving through alternative giving gift catalogs all fail to give you and the organization one of the richest opportunities for growth: partnership. One of the greatest decisions our family has made in the last few years is to limit the organizations we give to, but to participate as much as possible in the few that we do partner with. This experience has been transformative. I spend more time listening and being thoughtful. I’m better able to explain what we are doing to my children. We focus on big world problems, but break it into tangible smaller actions throughout the year. We are donors, yes. But more than that, we are partners, and we are proud to tell others about the work we support.

Another way: As you look at the causes that get your attention this season, think about why, and then consider one organization that you could take some time to get to know better that focuses on that area.

4. Giving isn’t about you

Perhaps the problem I see most often at this time of year, is we forget that our giving is, from a certain standpoint, not a reflection of how good we are. Giving $50, or even $5,000, does not mean you are a good person. None of us are good because we give. We give because we have been given much. We are not given much in December. We are given much every day. We have the opportunity for life, and every morning brings a new chance to bless others. Giving is about the opportunity to bless others every day. It is the opportunity to do more than get through the day. It is the opportunity to be faithful in the small things, and to imagine a new unburdened world.

Another way:  Give yourself freedom from guilt this season – it’s never about you, anyway.

Photo by Providence Doucet on Unsplash