The average American gives 2.6% to charity every year. How much do you give?

Did you know that the average American gives 2.6% of their income to charity every year? Think about that for a minute, and think about how you compare!

I found this out back in 2012, and finally in 2016 will exceed the average (chart below). It has been a bit of a journey, and I wanted to share some recommendations, if you are interested in optimizing how you give to charities.

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  1. Set a dollar goal for your donations: a good place to start is 2.9% of your pre-tax income (which is the national average).
  2. Think about the causes that matter to you: define these at the beginning of the year, and try to distribute your donations according to these “investment principles”. This will prevent you from donating to causes that market to you but may not be aligned with your principles.
  3. Track your donations: it’s hard to understand how you are doing against your goal if you don’t have the data!
  4. Review your annual donations in December: see how much you have left to donate vs. your goal. Stick to the principles you laid out in the beginning of the year to make sure you stick to those!
  5. Think of your donations as a portfolio of investments: I like to diversify my donations, which you can see in the chart above. Part of this is because I have a broad set of interests (poverty in the USA and the developing world, environmental issues, the refugee crisis in the Middle East / Europe, etc.). I’ve also thought about the balance of high-impact charities with a scalable, cheap approach (which is what One for the World is all about) and other charities that may not have an economic study to prove their impact, but are still important to me.
  6. Do the research: Don’t just give because an organization seems legitimate, or because they have a stand outside the grocery store. Be diligent and make sure they stand up to scrutiny. Charity Navigatorcovers most traditional charities (though organizations must be operating for 7 years before they receive a rating); GiveWell does a great job with evaluating high-impact organizations. If you don’t want to do the research though, consider relying on an organization like One for the World to find the best charities for you!
  7. Think before you donate to “trendy” causes: Disaster relief efforts can raise a lot of money, but can also be very ineffective (most recently in the aftermath of the 2010 earthquake in Haiti). Make sure to do the research before you donate in this circumstance. GiveWell’s post on this has some great advice as well.

Why think about this now?

People typically don’t give a lot of thought to their charitable giving during the year, but then December rolls around and it is suddenly a huge focus! 30% of all donations in a given year are made in December.

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Note - this blog has been cross-posted from Medium.