We started a tradition the last few years. Once a year, in December, we meet together as a family to decide which charities we are going to support for the year. On a Sunday night, after dinner and dishes, we meet around the table. Our faith affects how we earn, spend, and give our money, so we typically start the meeting reading a few bits of scripture to remind us why we give and what causes we should support. This isn't a religion blog, so I won't get into it much, but suffice to say that our religious views highly motivate us to give. We like to think of it as a stewardship mentality. We are only on this sphere for a limited time period, and the money we have has been given to us to manage as best we can-for the benefit of ourselves, our family, our neighbors, and the world at large.
How to Choose Charities
I'm not going to tell you what causes to support; I'm simply explaining what we do. I do think having an underlying philosophy to your giving is helpful, however. Our general philosophy behind causes worth supporting can be summed up as follows:
- Feeding the hungry
- Clothing (and sheltering) the “naked”
- Healing the sick
- Liberating the captive (both spiritually and physically)
We also lean more toward helping those closest to us (“our own”) than those who are far away.
Around the Room – Each Family Member a Voice
After talking about the importance of giving and what causes we should support, we go around the room and let each member of the family talk about the causes they want to give money to. This year, we had a niece and two nephews staying with us that weekend, so we invited them to play along. These were the ideas family members came up with:
- Operation Underground Railroad
- Give people chickens and goats
- Help returning soldiers
- Doctors Without Borders
- Help those who want to go on a mission but don't have clothes
- Help local refugees
- Disabled children's hospital
- The Food Bank
- Homeless clinic
- Homeless shelter
- Help provide clean water to a village
At this point, we went back around the room to flush out these ideas. We not only wanted to identify a specific organization, but we wanted to classify it into one of those four categories above.
Flushing Out the Ideas Together
Operation Underground Railroad
This one was suggested by Whitney, the WCI columnist. This organization “exists to rescue children from sex trafficking. This fits with our goal to “liberate the captive.”
Care.org
This was the best option we could come up with to “give people chickens and goats,” a suggestion from our 7-year-old nephew. They focus on disaster relief, women's empowerment, hunger relief, health, education, and economic development. This one meets our “feed the hungry” goal.
Disabled American Veterans
This one came from our eight-year-old, who is fascinated with all things military and vacillates back and forth between being a soldier and being an emergency doctor when he grows up. He wanted to help returning soldiers. We considered the Wounded Warrior Project but settled on this one as it was rated better by charity rating organizations. This one meets our “heal the sick” goal.
Doctors Without Borders
We're serial donators to Medecins Sans Frontieres, so it was no surprise to see this one come up again, this year from 10-year-old Maren. I frequently consider serving with MSF as a physician, but it probably doesn't make sense to do so for another decade or two given their minimum required commitment of six months for emergency docs (surgeons can go for just three.) This one obviously goes toward our “heal the sick” goal.
Clothing Missionaries
This one came from the eleven-year-old cousin. We looked around for a few minutes for an organization doing this, but in the end, it sounds like what she had in mind was a one-time service project that had happened earlier in the year for some missionaries from Ghana. We thought a donation to our church's general missionary fund wasn't really the same thing, and took this one off the list.
International Rescue Committee – Salt Lake City
This was another one from the eleven-year-old cousin. The IRC is the best organization we know of to help local refugees. We like that they let us specify that the donation be used locally. This one is a combination item in that it helps feed the hungry, clothe the naked, and liberate the economically captive with career training and English classes.
Disabled Children's Hospital
This one came from the nine-year-old cousin. There are two local options; the first is Primary Children's Medical Center, run by the behemoth Utah-based medical system IHC. While technically a non-profit, it's been doing all it can to run us out of business over the years, leaving a sour taste in my mouth when it comes to donating to them. The other option, the local Shriner's Hospital, doesn't seem to be all that interested in getting donations, which is no surprise given what they charged us to take our daughter up there for a scoliosis check. We took this one off our list for this year. In retrospect, I kind of wish we'd looked at some international options in this department. Maybe next year.
Utah Food Bank
This one came from my wife. We feel strongly about not giving to panhandlers throughout the year. But we also feel strongly about supporting the organizations taking care of the homeless in our community. So we donated again to the Utah Food Bank. This helps us “feed the hungry.”
Fourth Street Clinic
Supporting the local homeless clinic was another suggestion from my wife. As an MS2, I was a manager of the Saturday morning clinic run by medical students and their faculty, but this clinic is open all week long. I frequently refer patients there and am glad it exists in our community. In my work with the homeless, both charitable and professional, I'm always impressed what a tiny percentage of them live on the street. Most are couch-surfing or living in their car. This clinic helps them all and I'm proud to support a true community safety net that can provide something besides the emergency care we do in the ED. This donation helps us to “heal the sick.”
The Road Home
My wife's third suggestion, this is our local homeless shelter and an organization we support most years. While a surprising percentage of those living on the street actually like camping out, it's not quite so fun in the Winter. I want them to at least have the option to be inside at night. We see shelter as similar to clothing, so this helps us to “clothe the naked.”
Tribal Outreach Medical Assistance
This was my suggestion for this year. One of my retired partners goes to Colombia with a group of people to help people in severely rural villages. It seems in one area industry has dammed up the local river, eliminating the traditional water source for a number of villages. They don't want to leave their land, so they've been walking for miles each day to scoop water out of some slimy pond. This group is drilling wells using a portable drill invented at our alma mater, that can be carried on donkeys to these rural areas. Clean water is important not just for “healing the sick” but also for “feeding the hungry.” Water is food, right?
The Vote: How Much Will Each Charity Receive?
We decided to support all of these organizations this year, but there is always the question of how much to give to each of them. Katie and I decided long before the meeting how much we were going to give total, but we left it up to the entire family to decide who got what. We'll leave the exact amounts we gave out, lest this post come across as a humblebrag, but it's fun to watch them advocate for their favored causes to get the most amount of money. In the end, the 8-year-old vote counts just as much as the adult vote. Then the kids go build gingerbread houses with mom while I do the physical work of writing checks and filling out online donation forms.
Why We Don't Use a Donor Advised Fund
It seems the big deal in 2017 on the blogosphere was the Donor Advised Fund, or DAF. This is a fund where you can put money in the fund now and dole it out over the years. The tax break comes in the year you put it in the fund, rather than the year the charity itself gets the donation. It can be very useful for someone who wants the tax break this year, but isn't sure exactly what charity they want to support or who wishes for the charity to not get the money yet or all at once. However, there is an additional fee compared to just investing in a regular taxable account.
Since we want the charities to get the money right away, and we don't want to pay DAF management fees, we haven't found a reason to start a DAF yet for us. If we have appreciated shares we've owned for at least a year, we use those for our larger donations and just donate them directly, rather than via a DAF. But mostly we just give cash (or credit card for convenience.)
Future Annual Giving Meetings
Why do we have a meeting? Why get the kids involved at all? For a few reasons:
- We want our children to learn to be charitable. We want them to be loving, giving people who care about those around them.
- We want our children to develop a stewardship mentality. Less Gollum, more Samwise Gamgee. We want them to view money as a tool and something that is used to make the world a better place, rather than something that belongs to them.
- We want our children to understand just how privileged they are. They do not need to worry about their family being financially insecure. Seeing us give money away shows them that we have enough and to spare–they do not have to lie awake at night worrying about where their next meal will come from. We want them to realize that the vast majority of their fellow countrymen, much less the world, do not have a life like theirs. We hope this will cause them to be grateful, charitable, and NOT out of touch spoiled brats.
- We want them to learn to manage money, including how to give effectively. Over the years, they are learning how to evaluate a charity and argue for one over another. These lessons will serve them well in their own lives as well as potentially managing money that we leave behind. Long term blog readers know that the majority of our children's inheritance will be what they get from us in their 20s for college (529), retirement (Roth IRA with a daddy match), and a 20s fund (UTMA) for missions, wedding, honeymoon, car, and a house down payment. While we may change our minds later, a significant part of our wealth will be left for charity, and we think it would be wonderful to have our children continue to meet around a table once a year to decide which charities to support with that money.
What do you think? Do you see effective giving as an important aspect of your financial life? How does your family decide which charities to support and how much to give? What charities have you supported in the last year? Comment below!
Terrific post. Teaching by example is waaaaay better than a sermon. I agree with you about the DAF. Crazy how people complain (rightly) about broker fees and then add them to their giving.
Really good post. I like this a lot!
We tithe our 10% to our church and give to some charities on the side after that, but am looking forward to when we can give even more once our student loan debt is gone. I want to make sure that we will be able to continue to give, and need that debt squared away first.
I really do love the round table idea, and the reasons you mentioned for teaching your kids about charities. Being in a high-income family, I am very aware of my kids having the potential to become spoiled, ungrateful, and entitled. We work very hard to make sure they know how privileged they are.
I know that you said you didn’t want to provide specific numbers on your charitable giving, but I would be curious to know what percentage of your total income you give away to charities? How has this number changed (i.e. what was it in residency compared to now)? Same percentage, but a larger number now that you have a substantially higher income?
I believe he covered that in his state of the blog address this year. I think.
We gave away over twice what we spent last year, but part of that was we gave for 2018 the last week of 2017 due to the tax law changes. 2017 was the first year we gave more than we spent (not counting the 2018 amount paid in 2017).
The number is obviously much larger than in residency, but the percentage is rising as well (particularly last year, but that’s an aberration).
Excellent topic. I just emailed my sister in law last week (also a doc family) to get their input on giving choices. Especially appreciate thoughts against Donor advised funds. We just considered this with our CPA. Also, it’s nice to hear from WCI how their faith values influence their giving, since we take this into consideration when weighing what suggestions to model after ourselves.
I’m glad you are sharing this. Even though you and PoF have different views on DAFs his writing about it inspired others to give. This post will likely inspire others as well. Personally, I love our DAF, but how you give isn’t critical.
My wife and I feel the same way as you about stewardship. The causes we support are similar too. Food banks and homeless shelters are big on our list.
Since you asked about the last year, here was our major recipient: For Parkinson’s: https://www.michaeljfox.org
They support researchers to find a cure. Lord knows we need one – after seeing my father suffer from it.
The other cause we like is: https://www.children.org/
There may be better charities out there, but this one has been great with the engagement of our kids. We sponsored a boy (Guatemala) and a girl (El Salvadore). We get letters, pictures, and updates from the kids so the giving is real for my kids to see.
I’m not on some crusade against DAFs, but I haven’t found a reason for US to use one yet, so we don’t.
I think people are a little too quick to give themselves a pat on the back for putting money in a DAF, when in reality, you haven’t helped a soul but yourself until you actually distribute the money from the DAF.
Likewise, I’m not on a crusade for them either. I gave the most in years where I had a high income and high tax bracket. I then invest those funds. That combination has allowed me to give more than I otherwise would. It also has forced us to be a little more strategic when giving. Especially since the minimum grant recommendation is for $500.
I love that you are teaching your kids giving by example. Many families hide their personal finances from the kids. How will the kids learn if you don’t teach them? When they see you give your time and money to good causes, they want to give their time and money to good causes. Let your children know who you give to and why. I’m concerned that our new tax rules will lessen the gifts to charity as many will not get any deduction for it. For some, unless they get a deduction, they will not give. I hope that people will choose to give regardless of the government’s rules. The tax break is just icing on the cake. There are benefits to the giver beyond financial. You talked about the feeling of having enough and even abundance, since you are able to give some to others. That is an important part of giving.
Dr. Cory S. Fawcett
Prescription for Financial Success
Thanks for sharing this post! My family goes to one organization every 3 months or so and we pick organizations based on our values/interests. You mentioned something about charity rating organizations when you were discussing the veterans donation. Can you tell me more about that?
Sure. There are several of them out there that “rate” charities and I think consulting them from time to time is worthwhile. It shouldn’t be the end all be all of the process, but it takes effort to give well, just like it takes effort to earn, save, invest, and spend well. Some examples:
https://www.charitynavigator.org/
https://www.charitywatch.org/home
Thanks for the resources!
Great post. What age do you start involving the kids in this process? Do they give any of “their” money to the causes as well? I’ve been trying to instill give/save/live in my kids as well.
This is a great post. I don’t have that much to give but I would add another factor that being how much your donation will effect the future. I donate only to assist abused children and their families. We have a local organization here in Jackson Tn that does that in a very effective way. Both in financial effectiveness and in improving the lives of those targeted.
You are a great man, husband and father Jim. Giving is truly what it is all about. Don’t forget your best charity has always been this blog. For seven years you have given so much so I didn’t pay a dime to learn endlessly about how to manage the world of finances. Thanks!
That’s very kind of you. The blog might have been charity the first few years, but I’m not sure I can call it that now. It’s hard to be sure exactly what it’s worth, but it’s almost surely worth more than everything else we own combined.
Heifer Project is a great organization to consider for next year— can literally give goats, sheep, etc., and recipients promise to pass along an offspring to someone else in need so the gift spreads.
Thank you for this blog.
Enjoy seeing how you raise the kids to be thoughtful with your abundance. Had never thought of asking kids to determine final allocation of charitable giving among multiple options- might have to try this idea with my kids.
Thanks for sharing,
CD
I’ve been following WCI for several years now and this is by far my favorite post– even over ‘how to do a back door roth (just kidding)’. We are not religious but spiritual and as we are becoming more financially secure I want us to be able to give more. This post gave me many great ideas. The first was to have the base — what do you care about it? For us, I came from a poor immigrant family and truly achieved the ‘American Dream’ with help of government aid and charities. Since I’m in the highest tax bracket and have been for some years, I’ll take some credit in ‘giving back’ for the government aid. I like your categories and will borrow 1) feeding the hungry 2) healing the sick and my own 3) helping new immigrants. Then, we have the obligatory donations to our public school which is not a small recommend contribution. I love the way you are having the kids be involved and seriously taking their suggestions into consideration. Thanks again for such an inspiring post and humblebrag away if it’s about donating your money or your time to worthy causes. I was starting to get a little overloaded with recent surge in posts with affiliate links and advertisements but with this post and recent guest pod-cast with Jeff from The Happy Philosopher, I’m hooked again.
Don’t worry, there will be plenty of posts with more affiliate links and advertisements!
Seriously though, finding balance in everything is key, and that includes balancing the missions of this site!
This was one of the best columns . We have done a similar “Johnson Family Foundation” with a defined amount from Dr Mom to give in addition to our tithe. When the twins were 4 we gave ducks to Heifer International and the animal shelter figured heavily in our donations through their middle school years. I like the idea of dividing the donation. Will bring the ideas up at the next Foundation meeting.
Can you develop the idea of the “20’s fund” more? Seems like a really good idea. I’ve got their college covered, have matched Roth since they were 16 and each has a beater car. House down payment and wedding/honeymoon are good ideas. I have boys and had not considered wedding funding. What else did you consider funding? Are you making plans for grandchildren’s future or education? Where have you secured those funds? Those are definitely ideas worth more thought.
Again, this type of column about how you and your family think about money is really a good balance and much appreciated. Thanks
Whitney discussed it here:
https://www.whitecoatinvestor.com/why-a-13-year-old-has-more-investing-accounts-than-you/
I don’t have grandkids. While my schooling is paid for, I’m still saving for my kids. I can imagine putting money toward the grandkid’s educations. It’ll likely go into 529s started when they’re born.
Bravo on your reason #3.
I grew up with my parents running a seasonal business and once I was old enough to realize they borrowed money to get through each winter, it had a definite effect on me, not in a good way. Always behind.
I’ve never thought about the idea of a giving meeting. That’s actually a really good idea.
Right now I just donate each quarter to a few same charities. I never really switch between charities.
It can make sense to use donor advised funds to simplify your giving, even if you don’t want to leave charitable funds there long-term. For example, you can give one block of appreciated stock to a DAF, wait a few days for the fund to sell the shares and make the funds available for grants, then immediately grant the funds to the charities of your choice. This is much simpler logistically (both for you and for the nonprofits) than giving appreciated stock to several different charities, and avoids virtually all of the extra fees associated with DAF’s.
In my case, it only requires a few keystrokes to contribute appreciated stock from my Fidelity brokerage account to my Fidelity DAF, and a few more keystrokes to grant funds from my DAF to a nonprofit – faster and simpler than giving by check or credit card. (Not sure whether Vanguard, Schwab, and others compare in terms of simplicity/efficiency.)
It can. But it hasn’t yet for ME. So I don’t have one.
An ethical person! What a rare find in the personal finance realm. I’m constantly cringing when I hear other docs mention that they “owe nothing to society” – completely oblivious to their privilege and how they benefited off the labor or sacrifice of other people. Or when I hear guys (like ChooseFI) talk about how they “just wanna win the game” even if it means getting money “not meant for people like us” through financial aid to fund their children’s college education. It’s so disheartening.
Have you heard of the “effective altruism” movement for selecting which charities to donate to? It’s basically a way of considering how to have the most impact with each dollar. So, rather than donating to, say, a large arts organization (few lives saved, likely a lot of overhead), you’d find orgs with little overhead, good outcomes, and lots of lives saved (think malaria prevention, etc).
It would certainly be less inspiring for the kids to think about. They would see homeless in the neighborhood and want to feed them, but you would say “no, that money can be used to feed the hungry in Africa more efficiently!” Just something to consider, though!
Yes, I’ve heard of it. I think it’s important to balance “most good done per dollar” with other causes you want to support. Otherwise all your money goes to one place every year. Even Bill Gates doesn’t do that.
“4 secrets to raising wealthy kids, according to the billionaire Rockefeller family”
“The strongest glue keeping the Rockefeller family together is family values, specifically philanthropy. ”
https://www.cnbc.com/2018/03/26/david-rockefeller-jr-shares-4-secrets-to-wealth-and-family.html
Love this post and idea. WCI, do you give throughout the following year based on decisions made at this meeting? Or save up a pile of cash during the year, and give it all at once after this meeting in December?
Depends. But we do most of our giving at year end. Next year we’ll be doing it at year beginning and year end (we are taking the standard deduction for 2018 so we bunched deductions at end of 2017 and again in 2019 due to the tax law changes.)
Jim –
Great post. Definitely going to work the family meeting into this year’s giving. I had one question though. For the last 5 years or so, I’ve largely donated appreciated stocks or funds to charity and replaced that amount by buying additional stocks/funds with the cash I would have otherwise donated. In my mind, it allows me to take the charitable deduction for my donation each year and prevents me from realizing the capital gains on appreciated stocks/funds when they are sold. I’m curious as to why you donate mostly cash. Thanks again for your great blog post.
I donated six figures of stocks last year. Just because I donate cash, don’t assume I’m not donating stocks! By the end of the year, I didn’t have enough taxable stocks left to give! Plus, it’s a pain to use them to give smaller donations. A good reason to use a DAF actually, but don’t tell PoF!
I would imagine someone with your net worth has a lot of appreciated stock, which is always better to give rather than cash or credit. I can’t imagine all the charities you give to would easily take appreciated stock (some might), but smaller local charities may struggle.
Why not open a DAF, fund it with all the money you plan to give that year (using appreciated stock), then immediately grant all the money the next day to your charities? There’s no minimum for Fidelity’s DAF, so you could literally donate what you’re donating now, but also benefit from the tax savings from donating appreciated stock. Your admin fee would be so small since it sits in the account for a day.
Just wondering what the downside here is….welcome your thoughts!
I’ve got a fair amount now, but almost nothing just a year or two ago. And yes, most charities will take appreciated stock if you’re giving enough. Doesn’t make sense for $100 donations, but certainly does if you’re giving $50-100K. Heck, I’d probably go through the hassle for a $1,000 donation if I had the appreciated shares to donate.
Not much downside to using a DAF like that, but not much advantage either in my situation.
Jim,
This is an excellent idea. I just put in the mail to your P.O. box a brochure for a charitable giving idea. It is for 99 severely disabled children and a world class home that takes care of their every daily need; From feeding tubes, ventilator management, behavioral problems, physical therapy, occupational therapy, and more! If you could consider showing the brochure at your meeting I think it would meet every objective you list above, and then some.
RG
We’ll watch for it.