How much of my budget should go to charity?

A donation basket filled with dollar bills.
Donations, like all things financial, are a very personal decision based on multiple factors, including religious and social beliefs and budgetary restraints.

In 2010, Facebook founder Mark Zuckerberg gave $100 million to help revamp Newark, N.J., schools, and Lin Arson, whose husband founded Carnival Cruise Lines, pledged $39 million to the arts.

You may not have the same deep pockets as these multimillionaires, but it is possible to financially support charities on a smaller salary. In fact, 65 percent of households in the United States donate to charity [source: National Philanthropic Trust]. What's more, those who earn the least usually give the most. According to a McClatchy analysis of U.S. Bureau of Labor Statistics data, in 2007 the poorest fifth of Americans donated 4.3 percent of their incomes -- more than double the percentage pledged by the nation's richest fifth, who gave just 2.1 percent of their incomes [source: Greve].


A typical amount that people aspire to donate ranges from 3 percent to 10 percent of their taxed income, and often is influenced by religious affiliation [source: Weston]. Some branches of Christianity, for example, encourage their followers to donate 10 percent of their earnings to the church or to charities. The act, known as tithing, originates from Old Testament Bible verses that referred to sharing one-tenth of agricultural produce or other household profits with the church [source: Dictionary]. Followers of the Jewish faith traditionally give 10 percent of their earnings to charity, a move referred to as tzedaka [source: Jewish Virtual Library]. However, of the billions of dollars donated annually by Americans, religious giving makes up less than a third of the total [source: CBS News].

However you decide to divvy up your donations, funding your charitable giving requires forethought. A good rule of thumb is this: You should be able to pay your bills, cover expenses without the use of credit cards and put some savings away for retirement before you make a donation to charities. To further boost the amount you're able to donate, consider cutting back on nonessential outlays such as premium cable, a daily latte or a seldom-used gym membership.

After your financial house is in order, determine your charitable goals. Pledging your money offers you an opportunity to support causes you really embrace, so you may want to single out one charity to which you can make a sizable donation over time instead of taking a shotgun approach to helping others. If you'd like to learn more about a charity, or discover one you didn't realize existed, sites like GuideStar publish comprehensive descriptions of nonprofit organizations around the world.

One of the best ways to work charitable giving into your budget is to make a monthly pledge. You also could opt to have a charity deduct the amount directly from your checking or savings account, or ask your employer if it will send a portion of your check directly to a charity [source: Weston].

Before making any donation, check out sites like Charity Navigator, which independently evaluates some of the United States' largest charities by tracking their transparency and financial health. You also can learn how much of your donation will go to the charity's mission and how much, if any, will be spent on marketing or administrative costs.


Lots More Information

Related Articles

  • CBS News. "To Tithe or Not to Tithe?" Feb. 11, 2009. (Oct. 22, 2011);contentBody
  • Dictionary. "Tithe." (Oct. 21, 2011)
  • Greve, Frank. "America's Poor are its Most Generous Givers." McClatchy. May 19, 2009. (Oct. 21, 2011)
  • National Philanthropic Trust. "Charitable Giving Statistics." (Oct. 22, 2011)
  • Weston, Liz Pulliam. "How much should you give?" MSN. Jan. 6, 2010. (Oct. 21, 2011)