Ladies and Gentlemen, it's Friday! Here at SprinkleBit, we have a little tradition we like to call Financial Tip Friday
where our writers give you tips and suggestions on how to save money. This week, I'm giving you a tip that might not save you money, but rather will reallocate money you'd otherwise pay in taxes to causes and charities of your choosing
This week's tip: Donate Money to Charity!
Let's start with the problem. It is a well known fact that there are many poor people in the world. In fact, around 1 billion people in the world live off less than $1.25 a day
(this figure is presented in terms of what $1.25 can buy you in the USA and not the respective countries where the people live). Have you ever tried living off so little in the USA? It's practically impossible when factoring in the costs of transportation, food, utilities, rent/mortgage etc. That being said, many people feel as if the United States government gives a lot of money to poor countries and ultimately, these poor people. Unfortunately, compared to the rest of the majority of the other industrialized countries, this is not exactly the case. In fact, Peter Singer, a bioethicist at Princeton University points out in his book Saving a Child
“In 2006, the United States fell behind Portugal and Italy, leaving Greece as the only industrialized country to give a smaller percentage of its national income in foreign aid. The average nation’s effort in that year came to 46 cents of every $100 of gross national income, while the United States gave only 18 cents of every $100 earned[…] Adding U.S NGO aid, of 7 cents per $100 earned, to U.S. government aid leaves America’s total aid contribution at no more than 25 cents of every $100 earned, still near the bottom of the international aid league”.
Peter Singer himself.
Clearly, we as a population have some work to do and I'm here to tell you how you can help alleviate poverty without breaking the bank.
Do you pay taxes?
That was a rhetorical question (for most of you anyway), everyone pays taxes! It's a fact of life. However, did you know that if you donate money to a charity, you can deduct this money from your taxes as long as the donation was made before December 31st of that calendar year? For the most of us, we've always had a faint idea of this reality, however, according to the statistics given to us by Peter Singer, not a lot of us actually take advantage of this opportunity to direct where our money goes so precisely, opting instead to just pay taxes when the time comes. There are many complicated rules and other regulations that govern how much you can actually deduct based on your income, but for some clarifications, check here
. However, when you do give, assuming the tax status of the organization in question is correct, you will be able to deduct this donation off your taxes and receive a refund from the IRS. This means that you spend no extra dollar in donating, rather you are spending money that you would otherwise give to the IRS, hence alleviating poverty without breaking the bank.
Where Should I donate?
There are many reputable charities you can donate to that work to alleviate poverty around the world. In fact, Peter Singer has compiled a list of charities he thinks spend their money the most effectively here
. Among them are Global Giving
, Oxfam International
, and the International Planned Parenthood Federation
Do you already give money every year? If so, where? Join the discussion here
! Also be sure to check out 5 Investment Rules Every Beginner Needs to Follow
to find out how to save more money!