On Giving (Episode 3) — Employee Match, Disposable Income and Charity Ratings

Many companies have foundations that generously match employees contributions. My employer matches up to $5,000 dollars of my contributions. Until last year, that meant I could have made an impact of $10,000 with a tax adjusted donation of $4,250-$3,750 based on whether I was in the 15% or 28% tax bracket. A no-brainer you would think, and yet when I studied my donation patterns over the past ten years, I realized, I had not met the targeted $5,000 dollar match even one year in the last decade. I intended to, but timing of my donations impacted my ability to realize the full match. If you work for a company that matches your contribution generously like my employer, you should seriously consider whether you want to take advantage of your employer match and make a bigger contribution to society to your favorite cause or not. Instead of waiting till the last two weeks of the year to make your contributions, start early so you have enough time to submit the paper work for a full match. I hope you are checking your credit card bills every month before you pay the bill, similarly I urge you to consider checking your employee matches if your employer offers you that benefit and ensure that you are taking full advantage of it. For a company with 74,000 employees that translates to $ 370 million dollars of employer contributions. Imagine if each of us makes a contribution, we could make a collective impact of $ 740 million dollars. That would truly be an amazing result.

Let’s have a dialogue on the subject of donations. Not all of us are financially secure. We all have our long wish lists which only keeps growing. Data from Move Hub shows that average disposable income in the US is $3,258 per month ( Click on this link to see data by state or data for other countries ). That’s approximately $40,000 per year. Based on whether you fall above or below this average you can see that your $5,000 donation could be above or below 12.5% of your disposable income. If you are from a different country you can come up with your own targets based on your disposable income. Clearly you don’t want to donate what you don’t have but it’s quite doable if you make up your mind. Go look at your last years tax statement and look at your income after taxes and factor out your debt payments and major expenses, that should help you to figure how close to the $ 5,000 you can get to. Surely donate more if you can but at least get close to that employee match target.

Now that you understand why and you have figured out how much you can donate your next task is to figure out whom to donate to. If you are like me I am sure you want to maximize your impact. You actually have resources that can help you with that. I stumbled on this great article on today.com that is quite enlightening. Give it a read. If you want to check the ratings of whom you are donating to, you can go so at GuideStar.org, charitynavigator.org, or charitywatch.org. Pay particular attention to how much of your money goes to the cause and how much for Admin, Communications and Salaries.