As we proceed on our journey towards financial independence, the thought of giving back to the community and helping others is on most people's minds. In addition to the warm feeling it provides, giving back signals to the world that we're all in it together. In this article, we'll explore some ways of "smart giving" — giving in such a way that the effects last for a longer time.

The familiar saying "teaching someone to fish instead of buying them fish everyday" is very apt here. While "buying them fish" may be the right thing to do in some cases — especially when it is for a short time or when it frees up time in their lives to allow them to tackle bigger problems — we want to explore how our giving can best help others.

We'll first look at some areas in which organizations help people. Then, we'll look at ways to evaluate and select the ones where our giving can make the maximum impact.

Areas

Here are some examples of types of organizations where our giving can have a lasting impact. This is definitely not an exhaustive list.

Health

• Organizations that provide cataract eye surgery to help people regain their sight. This literally provides a new lease on life for the helped.
• Similarly, paying for someone to have prosthetics installed can open new doors for them.
• Organizations that provide free hospitalization for those that can't afford it. This takes away the fear of hospital costs, especially for illnesses that require longer hospital stays.

Education

As knowledge becomes more specialized and diversified (especially with technologies advancing at a rapid rate), giving to organizations that help with education is almost a no-brainer. The ways we can help are also unlimited.

Here are some examples:

• Organizations that are making education democratic and removing the shackles of exorbitant college fees.
• Organizations that provide scholarships for deserving low-income kids.
• At an individual level, paying the school/college fees for a deserving kid in our own neighborhood.
• Supporting an organization that provides free books for school kids.

New Start in Life

• Organizations that help someone start a home-/small- business. For example, this could be a villager starting with a few hens to sell eggs and later growing the business to raising chicken and perhaps even other farm animals.
• Organizations that help build homes for those that can't simply go out and buy one.

Recovery

Sometimes people get hit by bad luck and need a temporary resting spot where they can focus their energy on recovery. Several organizations help those in such need:

• Homeless shelters provide temporary housing and rehabilitation for those that have lost their homes for various reasons.
• Women's shelters provide a safe place for women that feel vulnerable. Reducing the stress and anxiety of keeping a roof over one's head lets them focus on planning their future.
• Soup kitchens take the anxiety of finding the next meal for anyone.

Others

Here are more examples of organizations/causes to consider:

• Some organizations provide free hotel stay for family members who are taking care of a hospitalized child.
• Several organizations receive and sell donated goods (as is or refurbished, wholly or just for parts), and then use the money to do good things.
• Organizations that conduct research or build technologies to solve big problems that have been plaguing humanity for years.
• Events that provide a cash infusion to charities. For example: walking/running races, concerts, or charity dinners where the profits are earmarked for a specific cause or organization.
• Organizations that provide information/news. To remain impartial, some of these choose to be publicly-funded by charitable donations from people.
• For-profit organizations that regularly donate a small percent of their profits to a specific cause or organization. When we have a choice of buying something from two companies and one of them supports a cause that we feel strongly about, it makes sense to buy from such a company, all else being equal.

Evaluating Charities

Organizations that help others are just like other organizations. Some are more efficient than others. As we want our giving to have maximum impact, it makes sense to research a bit into the organizations that we intend to give to.

Remember that charities and other non-profit organizations are businesses too. This means that they have expenses. Some of the money we give to them goes towards meeting those expenses — employees' salaries, marketing and infrastructure expenses, and so on. This is perfectly okay. What we want to see, when evaluating organizations, is that their actions reflect efficiency, transparency, and sincerity.

The main difference between non-profit and for-profit businesses is that the former are required to reinvest all their revenue back into their organization (i.e., not show any profit). Some of them do it the right way — by increasing the scope of what they do. Some take a lazier approach, by increasing their expenses — higher salaries for the management team, spending more on marketing without checking to see if the increased spending is efficient, etc.

Here are a few things to look for when researching charity organizations:

• Salaries, especially those for the management team.
• Percentage of the total revenue that is actually spent on the actual cause.
• Marketing expenses: how much of the total money is spent on marketing, and how efficient it is.
• Transparency: how open the organization is about sharing their financial information.
• Ethics: the number of complaints against them. Most organizations may have a few people that are unhappy with some aspect of the organization — we're not talking about those. If there is a large number of sustained complaints about the organization, that could be a red flag.

A few ways to research charities:

• Web sites such as Charity Navigator, Charity Watch: both of these allow us to search or browse charities and provide a lot of information about each charity.
• By word of mouth: not all charities are listed in charity directories, especially if the charity is small or if they don't have the resources to provide the paperwork to qualify them to be listed. If we consistently hear of good work being done by a charity, it might be worth checking out.
• The FTC Consumer Information website provides useful tips on donating wisely. It also has links to other useful articles.

Scheduled Giving

One of the ways to allocate money for giving is to use a targeted savings account to save for a while and then donate the lump sum money. An alternative is to give small amounts on a regular basis periodically (every pay period, quarterly, etc.). Select the one that makes most sense for you.

Summary

Most people prefer to be financially independent. Smart giving gives them a leg up when they most need it so that they "get their groove back" as quickly as possible.

Most of us cannot probably solve world hunger on our own. But, if we join hands, we humans have shown that we can definitely address problems that are too big for any individual to solve.