David Bakke is a financial expert at MoneyCrashers.com and author of “Don’t Be a Mule: A Down-To-Earth, Common-Sense Approach to Saving More, Spending Less, and Generating Extra Money in Your Everyday Life.” He worked in corporate restaurant management and the financial services realm before branching out on his own. With fundraising in high gear this fall, SignUpGenius asked Bakke for tips on personal giving.
SUG: What advice do you have for people trying to choose nonprofit organizations to support financially?
Bakke: Take a few moments and think about the causes you truly believe in. Try to narrow it down to two or three and then begin your Internet research to identify organizations that serve those causes. But the process doesn’t stop there.
Next, you should determine the percentage, roughly, of the total amount of contributions that actually go to the cause. A good benchmark is 85% or higher. You can usually find this number somewhere in the financials of the charity.
You might also want to look at the organization’s unrestricted or available net assets. If that figure is higher than triple the amount of the previous year’s expenses or the current year budget, that could be a red flag. it shows that the charity is not actively distributing its cash.
SUG: What are smart ways people can give, while also balancing their budget between saving, investing and spending?
Bakke: Your contributions don’t always have to be of a monetary nature, and more importantly, they still count. This includes giving for tax purposes in certain instances. So, you might volunteer your time or expertise to the charitable organization you wish to support. Also, if giving on a consistent basis, plenty of organizations will allow you to automate your contributions over the course of a year. This can be particularly helpful for those on a tight budget or who simply want to spread out their giving.
SUG: How would you recommend parents teach their kids about smart and generous giving habits?
Bakke: One great way to teach kids about smart and generous giving habits is to encourage them to adopt a system with how to handle their own cash or money. Here’s a good rule of thumb: they should be saving 50%, setting aside 25% for charitable giving, and the rest can be spent as they wish. You can also show them the good work that the organizations you support are doing to encourage them even more.
SUG: How should you evaluate the effectiveness of your charitable giving?
Bakke: One way to evaluate the effectiveness of your financial contributions is to look at the goals of any particular charity you land on and then see how they did at the end of the year. You could also look at the organization mid-year to see where they stand in terms of reaching their goals (financially speaking) and if it looks like they'll be able to finish where they had planned on.
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