Giving as an Investment

Aaron M. Puckett, MBA, CFP®

When it comes to our money, we are emotional beings. No matter what we do with our hard earned dollars, whether we decide to save them, spend them, invest them or give them away, each decision is often layered with feelings and emotion. Most come to me for deeper insight into how much to save, and where to invest, because they have come to understand that saving and investing based purely on emotion is haphazard and usually does not yield the results we want. As a financial advisor, I apply a process to help my clients remove the impact of emotional financial decision making. When you apply a process, the focus shifts to progress. But what about when it comes to charitable donations? Are your decisions on where and when to give based on emotion and made in the moment, or is your giving focused on progress?

When you change your perspective on giving, and view it as you would saving or investing, there is a shift. The shift moves from giving haphazardly and based purely on emotion, to identifying a need and wanting to realize progress for that need. You follow a process for giving that includes analyzing the current situation, defining the goal, reviewing the options to help pursue the goal, and monitoring your progress ongoing. Giving becomes a long-term investment.

This is not to say that you don’t continue to donate $5 at the grocery store when asked to make a contribution, or that you don’t purchase those raffle tickets to raise money for a cause. However, that money is best compared to spending than giving. More often than not, you don’t know how it will be used, where it’s going, and the overall impact, if any, of your contribution. Like buying a new golf club, or a pair of shoes, giving money in this manner makes you feel good in the moment. It is worthwhile but fleeting.

To change your view on giving there are obstacles to overcome, so keep these tips in mind:

  1. Set a realistic dollar amount. Decide how much to give based on an analysis of your budget and not emotion. Just like saving, if you give too much you’re at risk for stopping all together.
  2. Use reliable tools to evaluate the charitable organization. A study by SEI Private Wealth Management found that the third largest reason the wealthy don’t give more is that they need to “find something they could be more passionate about.” To overcome this obstacle I recommend Charity Navigator. Charity Navigator helps “donors make informed giving decisions and enables well-run charities to demonstrate their commitment to proper stewardship of donor dollars.” It’s easy to find, just go to to get started.
  3. Have a long-term view. Change doesn’t happen overnight and your contributions will likely not make any real progress in the short-term. Be prepared to align yourself with a charity for the long-term to work toward seeing your goals realized.
  4. Don’t diversify too much. When it comes to charitable giving, it’s typically best to give more to less. This allows you to thoroughly get to know the charity you are aligned with and helps the charity too. Larger donations from less people is more cost efficient for a charity than receiving smaller donations from more individuals.

I am thankful for the opportunity to have been involved with several charities during my career, and have enjoyed watching the amazing difference they can make in the lives of people in need. Please consider evaluating your own charitable intentions. As the saying goes, “you can’t take it with you.”