We need to change how we give

August 2018 | Justin Hooper

The surge in support for drought affected NSW farmers is a great example of the community coming together. It’s worth noting that charitable giving isn’t just for times of disaster — families can form a plan that makes charitable giving possible on a regular basis, which has a great many benefits, for the family, and the community.

The drought in NSW is terrible and I can’t imagine how difficult it must be for the farmers who are exposed. There is a groundswell of people and charities collecting money and other essentials to help. Australia is a generous society and we help people in need, especially when the afflicted are innocent, and the cause is nature.

The idea of charitable giving though isn’t just for when disaster strikes, and there are always people and services that are in desperate need of financial support. The world is changing, and it’s time to change the way we give.

This is the beginning of cyclone season in the USA. Remember last year, when they were hit with three or four in quick succession? Americans are actually more generous than we are, but even they eventually suffered from ‘donor fatigue’. Ask those poor people in Puerto Rico who were the last — and hardest — hit.

With the potential for more and more natural disasters as well as the associated financial stress, there may be a greater need for the public to help in the future. But the world is changing, and charitable giving with it.

The wealthiest people are dominating charitable giving. In the USA, charitable giving by the top 1% (people earning more than USD 500,000) has increased by 57% in the 10 years to 2013, and by 104% for those earning more than USD10m or more.

During the same period, the low- and middle-income group have reduced their charitable giving by 25%.

In future, charitable giving will become more precise. Donors will be more selective about whom they give their money to, and charitable giving policies are likely to become more important.

Making a donation is usually a spur of the moment decision and depends on a number of factors: whether the cause resonates at a personal level, the information provided, the extent of peer pressure, and even mood. For many, the unexpected request for a donation can create a conflict with their personal beliefs and circumstances, and result in an uncomfortable situation.  This can be avoided with a plan.

One effective approach is to develop a family policy on ‘helping others’. If done well, it can not only alleviate stress but also assist the donor family to have a greater impact, give more and have closer relationships with each other. At a minimum, it makes providing financial help less stressful, and more effective.

It’s a simple process and needs to cover the why, who, what and how. Why are we doing it, who we will help and who not, how will we deliver our help, what will we give, and how much. This is a policy for proactive giving.

If this approach isn’t right for you and your family, then you can create a ‘decision-tree’ that is designed to filter requests. Some of the filters that could be used include, is the request from an important person in your life? Is it for their survival or for an opportunity, and if it’s for survival have all other options been exhausted? What are the potential long-term implications for the recipient? Please email me if you’d like further examples.

Giving to others is a great way to include the younger generations. Some families create a system where each member is part of the decision, but they need to show commitment by doing research and presenting their findings, and actually making a pitch for the money on behalf of their chosen recipient. It’s a good way to demonstrate the family’s values.

Let’s hope it rains soon. In the meantime, we should be preparing for those times when private citizens need to step up.  Approaching it as a family has multiple benefits, and may result in more people being helped when they need it most.