Authentically Generous: Year End Giving Can Be More Personal

Let me begin this article by saying that I am not a naturally generous person. As a finance professor, it may not be surprising to learn that saving is what comes most natural to me. Ever since I was a child, I have always focused on conserving everything, not year end giving. This pattern has held true even until now. For example, if you give me a bottle of sunscreen, I will “annuitize it” immediately and figure out what the least amount of sunscreen I can use so that I can stretch it out over the longest period.

Unnatural Year End Giving

Giving is not conserving. It is giving. It is the loss of your personal property. For many of us, including myself, it feels unnatural. But it doesn’t have to be this way.

In one study, Americans were asked across the country: “if you gave a charitable deduction this year, why did you give it?”

Do you know what was the primary response? “Because I was asked.”

Unfortunately, if all your giving is only in response to being asked, your giving will likely be defensive and outside of your natural motivations (i.e., extrinsic). Giving is fundamentally a relational act, and if you are only giving to solicitors where you have little, to no relationship, you will often experience emotions of shame, guilt, or regret as you give.

This is how I understood giving, and so, quite naturally, I felt like it was unnatural.

But, giving does not have to be this way. And, even if you are not a naturally generous person, you can make giving fun by matching how you give to your personality. For most people, their system of giving has only two possibilities: proportional or fixed. Over the years, I have observed six more “giving systems” for a total of eight different ways to give. As you learn about these different giving systems, pay attention to which one naturally stands out to you. The giving system that engages your curiosity and interest is likely the one that most matches your personality. If you engage in that giving system, you will be more authentically giving, which will lead to you becoming a more generous person.

Eight Year End Giving Systems

(1) Fixed Amount Giving

For fixed amount giving, you decide ahead of time how much you want to give each month. This is your giving budget. You set this aside each month and give to the organizations you care about using this fixed dollar amount. Setting aside money to give as you are paid is best done using a budget app. See my article, Make Your Budget Fun Again, for more information.

(2) Fixed Proportional Giving

For proportional giving, you decide ahead of time what percentage of your income you want to give each month. Once you are paid, you set aside the giving amount into a giving digital envelope and give to the organization you care about the most.

(3) Graduated Proportional Giving

For graduated proportional giving, you begin at a certain percentage of giving (e.g., 3%) and then decide to increase this amount over time (e.g., increase by +1% each year until the total percentage is 20%). You can also choose to benchmark your graduated schedule to your salary increases so that you increase your giving by 1% every time your salary increases.

(4) Giving Goal

For giving goals, you decide on a cumulative giving goal and go about meeting that goal. For example, you could decide to cumulatively give $1,000,000 by the time you retire. Or you can decide to make a goal to cumulatively give double your income over a decade. This particular giving system strongly matches my personality since I am naturally competitive and I love trying to accomplish hard goals. One easy way to track your cumulative giving would be to set up a Donor Advised Fund (DAF). See my earlier article, Gamify Your Giving, for information about setting up a DAF.

(5) Giving Circle

The giving circle giving system has been around for centuries but has more recently becoming popular. For giving circle, you find an existing social group or form a new social group around a common passion to create cultural change. This group will pool their money together and decide together where the money should go. group will meet regularly for due diligence. They will also more actively contribute their time and talents towards the organization that they are contributing to financially. In many ways, this may be the most natural way to give – together – since giving itself is, by definition, a social act. See Sara Lomelin’s TED talk for more information on the Giving Circle giving system.

(6) Median Household Income Giving

Another social way to give would be to engage in median household income giving. For this giving system, you decide that you want to abide “with the people.” Put another way, to borrow a military analogy provided by Alan Barnhardt, you want to “be a military cook that does not eat better than the troops.” This giving system would research what the median household income was for your community and only spend up to that amount. Any excess amount that you make more than the median household income is given away. For example, in my hometown of Los Angeles, the median household income is roughly $76,000. For this giving system, if I earned $80,000 during a given year, I would then give $4,000 and spend the rest.

(7) Financial Finish Line

The financial finish line giving system is very similar to the median household income giving system except the amount you fix your spending to is not paired to a local statistic, and, instead, is paired to what you believe is your life’s “finish line.” Your finish line is the amount that you believe is “enough” to sustain the type of lifestyle that you feel called to live. If you were to spend more than your finish line, you would be living be

(8) Residual Giving

The residual giving system determines how much is needed to sustain your current lifestyle, including saving for financial goals, and, if there is any extra in any given month, a percentage of the excess is given away. For example, if I determine that $80,000 a year is what is needed for me to sustain my lifestyle, including saving for retirement and to replace my car when it wears down, then if I made $100,000 during the year, I would give a certain percentage of the $20,000 excess.

Year End Giving System(s)

Please note that most of these giving systems are not mutually exclusive. Your household could adopt more than one of them. My household currently practices three of these: Graduated Proportional Giving, Giving Goal, and Residual Giving. The goal in practicing these giving systems awaken a generosity that wants to come out when I consider just how much has been given to me.

In summary, giving is meant to be highly personal and relational. If you find a giving system(s) that match your personality, you will give more authentically, which, will likely lead towards an adventurous, life of generosity.