How Much Can I Afford to Give?

How To | May 25, 2015

It’s a common question among people who want to contribute to causes they care about, but aren’t sure how best to do so.

Giving to charity is a great way to help others and solve problems in the world. But how much you should give is a very personal decision.

jon-legassie croppedAccording to Fort Langley-based financial advisor Jonathan Legassie, “It’s really a matter of choice. We’re all passionate about different things,” he said.

“If you’re acting on your values, that should determine how much importance you allocate to giving.”

“You want to plan for the person you want to be in 10 years.”
— Jonathan Legassie

What Canadians Give

According to Charitable Giving by Canadians, a 2012 report by Statistics Canada, Canadians give $10.6 billion annually to charity; an average of $446 per person.

Women are more likely than men to make at least one financial donation per year. And studies have shown that people with higher incomes are more often approached for donations, which also increases their opportunities to donate.

$114: Average amount per donation
3.8: Average number of annual donations per donor
$744: Average given by people with annual household income over $120,000
$427: Average given by people with annual household income from $80,000-$99,999
35 to 44 yrs: Demographic with the highest donor rate

Building a Giving Plan

Legassie works with clients to build a cashflow plan that can include giving. “If giving is a priority, then you need to prioritize your cashflow and build an organized plan,” he said.

He helps people work toward “creating a systematic and regular plan for a monthly contribution to your savings and to your giving plan. If you don’t have a plan,” he continues, “what happens is that there is usually nothing left for savings and nothing left for charity.”

Legassie considers a number of factors when helping clients determine how much they can give to charity, including their expenses and personal values. “With some of my clients, I will look at how they want their lives to change over time.”

Giving Calculators

If you’re looking for a quick and easy way to determine how much to give, you can start by trying a free online resource that calculates suggested giving amounts.

TriDelta Financial’s Donation Planner allows you to input variables like your income, investments, living expenses, age and planned retirement age, and gives you a suggested annual donation amount.

Charity Navigator’s Giving Calculator lets you input how much you’d like to give, along with your tax bracket (keep in mind that the tax brackets listed are American). It then tells you the net cost of the donation and the tax savings you’ll get.

Fixed Percentage Giving

There are also various groups and organizations that advocate for giving a fixed percentage of your income to charity.

Religious organizations, for example, typically suggest 10%. “I have a number of clients who have 10% giving in mind because it’s rooted in their faith,” said Legassie.

The Life You Can Save organization encourages people to pledge to give 1% of their income to charities doing effective work to save lives.

Meanwhile, Giving What We Can advocates for 10% giving, and offers a “How Rich Am I” calculator that positions your income by global percentile. It’s a perspective that certainly could influence greater giving.

“Giving away the first 10% of your income and living off the rest is not a bad approach,” said Legassie. “Consider that if you make $30,000 per year, you’re in the 89th percentile of wage earners globally. And if you give 10% of that away, then what’s left puts you in the 88th percentile. For comparison, the 50th percentile lives on $2.50/day.”

Ultimately, the amount you give depends on what you feel most comfortable with. “If you want to be the kind of person who gives, then build that into your plan today,” said Legassie. “My system isn’t prescriptive, though. It’s based on what’s most important to you.”

“Where your money is, your heart will also be.”
— Jonathan Legassie

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