Can I give to charity if my funds are tight?
This time of year, I’m getting a lot of requests to donate money, but bills and debt payments are hanging over my head. I want to be generous. Can I give to charity anyway?
Congratulations: You have a heart. The desire to donate comes from a place of compassion and empathy, and it’s worth celebrating.
“We can’t avoid being human and wanting to help others,” says Derrick Feldmann, lead researcher on the Millennial Impact Project, which studies millennials’ philanthropic behavior.
Feldmann says millennials donate $200 to $300 a year on average, and closer to $400 in years when major natural disasters occur.
While you can’t give money you don’t have, it’s possible to do your part to save the world even with, say, thousands of dollars in student loan debt.
You’re financially ready to give if you are:
■ Earning more money than you spend
■ Paying at least the minimum on your debts, on time, every time
■ Saving regularly for the future in both emergency and retirement funds: That means setting aside at least $500 for unexpected expenses and contributing enough to get the company match on your 401(k) — or saving in an individual retirement account
Once you’ve determined you can spare some cash for charity, follow these tips on how to do it. And if donating isn’t possible this year, consider volunteering or participating in activism instead.
Build values into your budget
Your question is about spending money on what you value most, and that’s all budgeting really is. Figure out what you can spare by looking at how much is available for discretionary spending.
Using the 50/30/20 guideline, aim to spend no more than 30 percent of your aftertax income on wants (50 percent of your take-home pay goes to needs like housing, food and utilities; 20 percent goes to paying down debt and saving for the future). Decide how much of the 30 percent you want to give away. Maybe you’ll decide $20 a month can go to charity.
This approach makes it easy to set up automatic recurring donations, instead of giving lump sums at the end of the year, says Elise Murphy, a certified financial planner at Level Financial Advisors in Amherst, New York. You won’t feel crunched or drain your bank account in November and December, when you’re also buying holiday gifts and traveling to see family.
Donate strategically
Once you’ve earmarked your precious cash for charity, put it to good use.
■ Focus your full charitable giving budget on just one or two organizations, says Eileen Heisman, CEO of the National Philanthropic Trust. Sending $10 to 20 different organizations won’t make as big an impact, because it costs money to process every donation.
■ Ask if your workplace matches donations, which will make your money go further.
■ Keep records of your donations; you can deduct them from your taxable income if you itemize on your tax return and the organization qualifies under IRS rules.
■ Make sure you’re giving to reputable organizations. View nonprofits’ financial information by signing up for a free account on GuideStar.org, or check out the Better Business Bureau’s reports on individual charities on Give.org.
The millennial generation’s embrace of renting rather than owning has spread far beyond housing and ride-hailing, and even some traditional major retailers are taking notice.
Online rental subscription services for clothing and accessories are on the rise, which means consumers can now get dressed using a virtual, rotating closet through several startups. Le Tote, for instance, rents clothing for everyday wear, Gwynnie Bee caters to plus-size women and the Ms. Collection sends users surprise items based on personal style.
Typically these startups charge a monthly fee and allow users to wear the clothing for a month, or sometimes an unlimited amount of time. Customers return the clothing without paying shipping or dry-cleaning costs.
It’s a model spearheaded by Rent the Runway, which began in 2009 as an online service where users could rent high-end, designer items at a fraction of the retail price, usually for a special event. The Manhattan company has since added two cheaper tiers to its service — an unlimited designer wardrobe for $159 a month and a low-cost option for $89 a month.
By using subscription rental services, consumers have access to thousands of products, more than they would usually be able to afford, at a fixed monthly rate. It gives consumers more value and more choice for a lower price, said Rent the Runway CEO Jennifer Hyman.
Le Tote president Brett Northart said clothing rental has taken off because consumers want flexibility in their wardrobe. In addition, the recession made people less enamored with owning things, he said.
Retailers Ann Taylor and DSW Inc. have gotten similar customer feedback.
Ann Taylor polled clients to learn where, when and how they are shopping and found that people were interested in renting everyday clothing, said Julie Rosen, Ann Taylor’s senior vice president and general manager.
In response, the company launched Infinite Style in October, a service that allows women to rent three items for any period of time at $95 per month.
“We must innovate in order to compete,” she said. “We need to meet our client where she’s shopping, and she’s shopping in new and different ways.”
DSW’s customer research earlier this year prompted the shoe retailer to begin testing a rental service with a group of associates, said Amy Stevenson, DSW’s chief marketing officer, in an email statement.
The new mode of shopping particularly resonates with millennials. One in 10 online shoppers has rented a product online in the last year, according to UPS’ Pulse of the Online Shopper study, and millennials ages 18 to 36 are three times more likely to have rented a product online than non-millennials.
Ronald Friedman, a leader of the retail practice at Marcum, an accounting and advisory firm, said he isn’t surprised traditional merchants are trying rentals as a way to enhance customers’ shopping experience, the key to remaining competitive amid growing pressure on the retail market.
“Anyone who comes up with a new idea for retail stores is doing something they should be doing,” Friedman said.
Rent the Runway, by contrast, has opened several physical outposts in locations including Woodland Hills and San Francisco.
But these stores are far from traditional shops, instead acting more as showrooms that are an extension of subscribers’ closets, Hyman said. Some women come to Rent the Runway stores almost daily to get dressed for work, she said, and users are wearing 12 to 15 rented outfits per month, a complete change in behavior from traditional buying.
“People aren’t going into physical stores because of the growth and pervasiveness of their purchases with companies like Amazon and the efficiency of (that) shopping experience,” Hyman said.