Sunday, December 20, 2009

Budgeting for Change

As we approach the end of the year, we're reaching the deadline to make charitable donations which can be deducted from this year's taxes.  This can be problematic, because we're also at that time of year when many of us have spent lots of money on gifts for the holiday season.  Tack on complications like high unemployment, and an increasing trend towards jobs being cut to part-time without benefits, and many of us are thinking twice about making charitable contributions.  In many cases it's just not financially viable.

One solution is to integrate charity into our monthly budgets.  Instead of trying to come up with unwieldy lump sums at the end of the year, why not spread your donations through the year by enrolling in the monthly pre-authorized giving programs most organizations now offer?  The organization will appreciate a steady donation stream rather than relying on an uncertain once-a-year donation, and integrating $5-20 per month into your budget is probably a lot easier than trying to come up with an extra $200 at Christmas time.  You may even be able to painlessly increase your donations by 20%... if you donate $50/year to an organization, for instance, converting that to $5/month increases your donation to $60.00.

Another option is to donate to a political party.  There are two good reasons to consider this: first, political party contributions receive very favourable tax treatment; you'll get 75% of your donation back.  Secondly, a political party that's successful (and success in politics is measured by more than how many seats are won in a legislature) has the power to influence the movement of huge sums of money and resources.  When you empower an organization that actually has the power to make or influence change, it's like exponentially multiplying your donation.

For instance, if you believe in environmental issues, you can donate to environmental groups who will lobby for legislative changes, perhaps buy land for conservation, and so forth.  Or, you can help a political party that shares your environmental values become successful.  That party can actually introduce the legislation to make the changes you want, they can set aside vast swathes of land as protected parks space... even if they're not the party in power, they'll be able to get the message out, influence the final versions of legislation, introduce new legislation on their own, (hopefully) have their ideas stolen by those in power... all told, supporting a political party that shares your values is a pretty good strategy.  Politics is all about the allocation of scarce resources, and it's always more effective to be working for change from the inside.  Of course, this strategy works much better if you also make the effort to go out and vote for your chosen political party during an election!

So if you're feeling like you're stretched too thin financially to donate to causes you believe in at this time of year, consider a more structured approach to giving.  Monthly contributions split the donation into easily manageable chunks, and converting some of your giving into a donation to a political party is more tax effective and potentially has a multiplier effect in the effectiveness of reaching the goals you support.

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