Thoughts on charity.
Every year on Giving Tuesday I readjust my charity donation. I started this about five years ago and have managed to keep it up. I was inspired by the effective altruism movement and took a lot of their ideas and made them my own. If you have never heard of effective altruism I would encourage you to stop here and investigate that, if I accomplish nothing else this is a huge win.
You might be thinking to yourself, “I don’t have enough money to make a difference.” I am here to tell you this is definitely not true. Givewell.org estimates that it takes about $3-5k to save a life today. Even a small donation can drastically change someone’s life.
One of the best ways to donate is to make it automatic. It is better to donate a small amount every month than to donate once. You want to make charity a part of your life going forward and not just a one off. I would highly recommend starting small. I donate every month and think of it like my “charity” phone bill - it is a utility that I don’t ever expect to stop paying. This year my charity donation will finally be bigger than my phone bill for the first time! My goal is to actually keep raising it every year until I die. Some years are better than others, but I have been able to continue this trend so far. Some years I expect to raise it little or nothing, but I hope to never lower it, and even more importantly to never stop.
A strategy that has worked for me is to connect my charity donations to my investment goals. I use mint.com to calculate my net worth every year with all of my investments and also debts, but there are other ways of doing this too. I feel pretty confident in my investments growing at 5% over the long haul so I decided that giving 1% of my net worth was a good number (I actually do 1.2% because the math is easier). For me it’s as simple as going in and looking at my net worth and then dividing by a thousand and then donating that every month. If I have a net worth of $40,000 I donate $40 a month. I find this to be a sweet spot where I don’t really feel it and my investments continue to grow. I also hope to have a big chunk of money to donate when I eventually pass, but in the short term it is super satisfying to keep giving a little more over time. For me, it is the combination of these two things that is super motivating. I have found that I save much more than I did before I started doing this. Knowing that the more I save will allow me to give more gives me that extra push to avoid unnecessary expenses. I am not perfect, but I work on it every day. The most important thing is to make it easy and painless enough that you don’t ever want to stop.
My charity of choice is givewell.org - I could try to explain why I think they are the best, but they do a better job on their website than I would. Please consider donating there.