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Donations and the Road to FIRE

If you have followed this site for a while you have likely read one of our year-end reviews.  Mentioned as one of our goals each year is to donate a certain percentage of our income.  Without fail each year someone notices that goal and is pleasantly surprised by it.  This never ceases to amaze me as I view donations to charity as something that should be the part of everyone’s financial plan.

Excuses for Not Donating

I have heard it all before.  The excuses why someone does not give.  Comments like “Why should I donate when I pay taxes” are one thing.    These comments are clearly from someone who doesn’t understand the positive feedback loop of helping your fellow man.    But honestly, for the most part those type of comments are relatively easy to ignore as someone trying to justify not sharing their good fortune.   

Waiting to Donate

No, the comments that truly irk me are “I will wait to donate until I am financially independent”.  Frankly, that is a cop-out from someone who most likely will never donate to charity.  At least if you are going to be a bit stingy with charity own up to being that way instead of making an excuse.    Be honest with yourself.

Donations Come in Many Forms

And that’s just what it is, an excuse.  Frankly, the poorest among us are the most prolific donators on average.  If they can do it so can pretty much anyone who will ever read this.  “But what about building myself a stable platform first?” someone with such an excuse might ask.  Well, there is an obvious answer to this comment.   That is that donations take many forms, not all of them have an impact on your net worth trajectory.    While I try to utilize a wide swath of these options, regardless of your situation you should be able to utilize some of them.   The rest of this post will focus on some of those options.  I will attempt to list them in order of minimal impact to the donator.

Donations of Excess Stuff

There are three ways to dispose of something you no longer use that is in semi-decent condition.  The first is to throw it in the trash.    This might be the easy way out, but it’s also the worst for society and the environment.   The second option might be to sell such an item.  I have found selling niche or expensive items might work well, but most things are not worth your time to attempt to resell.

Donations of Items not Worth Selling

For example, used young children’s clothing is not worth my effort to attempt to sell.  Fortunately, it’s very easy to ship off some of these items to help others in society.  It could be via your local Good Will, the Salvation Army, or should you prefer something more local like in my case the local cancer support organization.  In any case, there is likely always someone out there who would benefit from your decent condition used items.  Last year we donated a few thousand in items including our prize to charity.  This year our donations were a smaller portion of our giving as we shifted more donations to other categories.

Donations of Time

Still don’t feel you can donate your money to a cause?  Then donate your time.  In some cases charities appreciate time even more than money.  At certain times of year money is more easily obtainable than volunteers, say at a soup kitchen during the holidays or a food drive in the winter.  The volunteers in those cases are rarer than those giving the donations.  Giving your time can really help.  Even better many employers, including my own, provide paid time off to go help your local community.    If that is the case for you then you really have no excuse to not donate some time each year.

I do a few charity activities a year even with my busy schedule.  I’ve participated in everything from playing an instrument to entertain, cleaning, painting, serving food, sorting food in a food pantry, and even giving blood.  Your imagination is the limit when determining how to donate your time.

Donate Points and Rewards

Did you know that many points and rewards programs like credit card rewards have a charitable giving option?  We all have stranded points, how about donating them rather than letting your card company craw them back?  I’ll admit I have only done this one once with some old Qantas points I had stranded.  I’d rather UNICEF have my $20 worth of points then return them to Qantas due to expiration.

Purchases with a Donation Match

I don’t personally include this next one in my donation numbers, but we have been known to utilize this method to provide funds to organizations we support.    We all know the scenario, X dollars of each purchase goes to a certain charity.  Well if we support the charity we have been known to direct an otherwise planned purchase to this source.

So, for example, we like to eat out from time to time.  The local pizza joint every so often has a night that benefits my son’s school.  Sometimes we’ll choose to have pizza when otherwise we would have tried something else, for the benefit of the charity.  Now a caveat here.  Donating directly is a more impactful method.  Do not purchase things just because they will donate.  But if you are buying anyway, then redirecting those expenses is the right way to go.

A note, there is an online option for purchases with donation matches.  If you use Amazon simply navigate to before starting your purchase and Amazon will donate a portion of the cost to the charity of your choosing.

Gifts in the Form of Donations

Don’t have funds or items to donate?  Well, another simple solution is the next time your birthday or other gift giving holiday comes around, ask your loved ones to donate on your behalf in lieu of another gift that will collect dust in your basement.

Donations of Cash

Yes, you can give cash to your charity of choice and still not appreciably dent your path to Financial Independence.  The key is to budget and plan ahead of time for that amount.    Nominal amounts well planned should have little to no impact on your trajectory.

For those who itemize their tax returns or donate significantly, this may even provide for a tax deduction as an added bonus.  Unfortunately, the recent increase in the standard tax deduction has decreased the number of individuals that will see a tax deduction for a donation.

Cash is still the most immediate and impactful donation you can make to most charities.  We try to give to a few organizations with cash each year.  Many employers will match employee donations at certain times of the year.  Where possible you can have a greater impact by taking advantage of this.  See your HR department for details.

Donor Advised Funds

Donor advised funds are a fund you create for a donation to charity.   However, as part of the donation you continue to control how the donation is invested until which time as you choose to donate the funds.  The benefit here is tax efficiency.  If you have something like stocks that have appreciated, moving them to a donor advised fund essentially skips the capital gains tax of selling the appreciate instrument while still providing the income tax deduction for the total value.  In essence you are still donating cash, but you are doing it more efficiently.

Donations and Corrupt Charities?

I see one additional excuse for not donating, belief that some charities are corrupt or redirect funds to overhead.  Frankly, there are plenty of methods for researching charities.  There is even a tool called Charity Navigator that provides reviews on charities.    With millions of charities out there, there is surely one deserving of your patronage.  Why wait, donate today!


  1. Dan
    Dan December 3, 2018

    Having been laid off twice with extended (6+ month) hiatuses between full-time employment, I have been caught with charitable donations and not enough in itemized deductions to write the donations off.

    For that reason, I make the majority (65%) of my donations in the fourth quarter of each year after I have cleared the itemized deduction hurdle (still primarily due to state & local taxes for me). That is even more important (in the US) with the new Trump tax plan’s increased standard deduction. That means I make the majority of my donations in November & December which is when my expenses go up due to Xmas gifts but that is the way it has to be. It is also the time when I get the most solicitations from charities so there are always a number of good charities to select from.

    In the US, if you drive to a Goodwill or Salvation Army Center to donate used goods, you can deduct the mileage at a 14 cents/mile.

    As my father used to say, charitable donations are never cost effective. You donate a dollar to reduce your taxes by 25 cents. The people I derisively called “frugal freaks” should not be motivated to donate to charity as that dollar would be more effectively spent elsewhere. The motivation to donate to charity must be extracurricular to one’s FIRE activities.

    • FullTimeFinance
      FullTimeFinance December 3, 2018

      Life isn’t simply about Money…

      • Dan
        Dan December 3, 2018

        “Life isn’t simply about Money…”
        You couldn’t tell that from certain blogs.

        Your post doesn’t really address the question of “Why donate?” You refer to “the positive feedback loop of helping your fellow man.” However, if you are a cynic, you don’t believe that. I read an interesting article. Charity or philanthropy is against human nature so why do humans engage in it? Back in the cave man days, they didn’t invite strangers to share their food. There wasn’t enough food to go around. They killed strangers. They likely killed old people from the same tribe who were no longer capable of physical exertion. They killed blind babies and physically handicapped ones. Somehow humans developed this concept of charity & even imbued it with positive social attributes.

        To be honest, I can’t answer why I donate to charity and I scoff at “the positive feedback loop of helping your fellow man.” My parents never gave a dime to charity. They believed charity started at home…and never extended beyond it. Perhaps I donate as some sort of parental rebellion although I’m getting too old to say that with a straight face.

        • FullTimeFinance
          FullTimeFinance December 3, 2018

          I can’t really do much to help the cynic amongst us as I am not a philosopher. All I can tell you is that many, myself including, feel better about ourselves and our contributions by helping others.

          One can hope the blogs you feel are solely about money are only a projection of a tiny part of the writer’s life…

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