(Bloomberg Opinion) -- Someone recently asked me if, rather than saving her tax refund and stimulus check, she should spend them in order to help boost the economy.Another person asked how to balance supporting others with growing personal savings and paying off debt.
Both are questions many Americans are grappling with. Between a desire to support one’s community during the pandemic and wanting to contribute to organizations fighting racism and systemic oppression, there are a lot of demands for our time, attention and money.
The imperative is to be generous without causing a financial crisis for yourself.
Put on your own financial oxygen mask first. Before focusing on other financial goals, the most ideal situation would be to have at least six months of bare-essential living expenses saved in an emergency fund, no consumer debt and a steadily growing retirement account. But this was far from reality for millions of Americans even before a pandemic swept the globe and the U.S. saw staggeringly high unemployment.
Even without checking all these boxes, you can still budget for supporting causes that matter most to you. However, it is important to have a baseline prepared before focusing on charitable giving.
Make sure you have at least one month of essential living expenses saved up (the commonly cited $1,000 rule in an emergency fund for those paying off debt is horribly outdated). Of course, the goal is to keep building your emergency fund, but one month of crucial expenses before you start financially supporting a charity is a good baseline. You also need the ability to make payments on all of your debts before you lend a financial helping hand. If you can’t meet this threshold, focus first on donating in other ways.
Offer your time and skills in lieu of cash. The quarantine and shelter-in-place orders can make it difficult to physically show up, but you may be able to help different causes virtually. Look on an organization’s website or reach out via email or social media to see what tasks they need help with. Better yet, go in with a suggestion for how you can help solve one of its problems. Volunteer skills like making graphics for social media, drafting copy for a newsletter or mailing campaign, making phone calls, organizing inbound requests and handling logistics.
Ask for donations instead of gifts. Once considered an eyeroll-inducing gift from an employer or family member at Christmas, the donations-in-lieu-of-gifts move can be a particularly useful tactic. If you’re celebrating a birthday or holiday or wedding, speak with loved ones who would normally give you presents and ask them instead to make donations in your name, or you can set up a campaign yourself on social media to collect donations. Just be sure to do so early, before anyone has time to go shopping.
Seek out donation matches. If you’re financially secure enough to make a donation yourself, you can look to amplify those dollars through a donation-match program either with your employer or by keeping an eye out for companies and public figures offering to match people’s contributions. A recent study by Double the Donation, a tool to help companies streamline corporate matching, claims that over 18 million people in the U.S. work at companies with a matching gift program and that 65% of Fortune 500 companies offer a matching program.
Donate credit card rewards. You can also use your regular spending patterns to generate a little extra for charity. A lot of credit card reward portals allow you to donate your cash back, points or miles to charity. Log into your credit card’s portal to search for the option. If it isn’t offered, you can always redeem for cash back and then donate that amount to a charity.
Shop local, shop small. One of the best ways to support not just charitable organizations but also your local community right now is by shopping local and frequenting small businesses. Instead of defaulting to purchasing a book on Amazon, consider buying from your local book shop. If you don’t have one, you could use Bookshop.org, which helps support local booksellers. Circulating money in your local economy can help keep these stores open after the pandemic and strengthen your community overall.
Small but consistent donations matter. For those in a position to make charitable contributions, you should seriously consider becoming a recurring donor instead of just doing a one-time, lump-sum payment. It’s no surprise a lot of organizations receive the bulk of funding during the holidays or when a major crisis occurs. According to Classy’s 2019 Why America Gives survey, about 30% of annual giving occurs in December, when the holiday season tends to bring out people’s generous spirit. (This is around the same time you’ll see Giving Tuesday drives.) But creating a recurring donation can help stabilize cash flow for an organization, which could be particularly beneficial if you want to support a smaller nonprofit.
Even if you can’t write a check with a lot of zeros to your favorite causes — yet — contributing in smaller ways can truly add up.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Erin Lowry is the author of “Broke Millennial,” “Broke Millennial Takes On Investing” and the forthcoming “Broke Millennial Talks Money: Stories, Scripts and Advice to Navigate Awkward Financial Conversations.”
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