Teach Kids About Giving to Charity
Piggybank on It
If the dollar amount that's appropriate for your child to spend seems too little to buy what he might consider to be a decent present, suggest that your child pool his funds with a sibling (when it's a gift for you) or a friend (when it's a gift for another friend). Just make sure that the joint gift-givers agree on what the present should be.
Philanthropy is a fancy word for giving. A philanthropist is someone who gives to charity.
Andrew Carnegie spent the first half of his life making a fortune and the second half giving it away. He set up libraries across the country and benefited numerous charitable organizations. But your child doesn't have to be a Carnegie, a Ford, or a Rockefeller, to become a philanthropist.
However modest her donations, getting into the giving habit is a sound financial management principal for your child. She'll get into the positive habit of giving and will learn to build it into her spending plans. When she gets older, she'll be rewarded for her giving by being able to claim a tax deduction for her contributions. For now, though, she'll be rewarded in other ways—satisfaction in helping others and learning to put off her own needs in favor of someone else.
Guidelines for Donations
How much should your child give to charity? There's no magic percentage or dollar amount. Obviously, he can't give it all because then he wouldn't have money for the things he needs. But in just about every person's budget, there's room for some charitable giving.
Financial Building Blocks
If your child can't give the kind of cash he'd like, he can give of himself. He can volunteer his time to local charities, or elementary school kids can collect for UNICEF when going door to door on Halloween. Many high schools are now requiring volunteerism as a condition for graduation. Local volunteer ambulance corps and fire companies also are always looking for new recruits—usually 16 and older—to lend a hand. For more information about volunteering and making a match with the right organization, your child should check with his school.
Adults can get some idea of what people in their income bracket are giving by looking at annual IRS statistics on charitable contribution deductions that are published in the IRS Statistics of Income Bulletin. For example, taxpayers with incomes between $15,000 and $30,000 gave on average in 1996 (the latest year for which statistics are available) of $1,337 to charities. These statistics don't dictate what they should give, but they do show adults what others are doing. Obviously, kids don't make contributions with tax write-offs in mind, so they need to be guided by their generous nature and the size of their pocketbook.
Religious precepts may be useful in guiding your child on what to set aside for donations. For example, in Judaism, “tzedakah” (the Hebrew word for “charitable giving”) to the poor is an obligation. According to Jewish law, Jews should give one-tenth of their income to help the poor. But it's also part of Jewish law that those without the means aren't required to give that amount. Tithing (giving one-tenth of one's income to charity) is part of many Christian faiths as well. By this thinking, if a child gets $10 a week as an allowance, he should be giving $1 to charity. Still, he may be able to give more (or might only afford less) based on individual circumstances.
Some experts advise that the amount given to charity shouldn't be limited to a percentage of income. Rather, it should be based on excess income. In other words, wealthy people have more excess (or discretionary) income after meeting their housing, food, and other basic requirements. Wealthy people should be giving to charity more generously than moderate income people as well. The same might be said of kids: Those with generous allowances and parents who pay for almost everything are in a position to do so more than kids, who have to use their money to meet their basic needs.
Watch Your Step
Tax deductions for charitable contributions can be claimed only by someone who itemizes her deductions. Because the standard deduction in 1999 for a dependent child with earned income is $4,300, even a working child probably won't be itemizing deductions and won't get any tax benefit from her charitable contributions.
Watch Your Step
Make sure that the organization your child wants to support is a legitimate one whose funds are used for charitable purposes (rather than mostly for staff and other administrative expenses).
Ideas on Where to Give Money
From the time your child is in elementary school, she's probably already involved in charity work, even if she doesn't know it. She may be selling candy bars for the school baseball team, or she may be selling cookies for Girl Scouts. At Halloween, your child may collect money for UNICEF. These are all charities that your child's efforts are supporting.
If your child decides she wants to donate a portion of her allowance, earnings, or money she has received as a gift to charity, you'll have to help her identify the one or two places where she'll give her money. No matter how big her heart may be, it's not practical for her to give to everyone. She'll have to decide what's important to her and find the charities that address her objective.
- Discuss your child's concerns about the world. Does he want to help cure disease (and which particular one)? Support the arts? Support education? Feed the hungry? House the homeless? Support your church or other religious organization? This type of discussion will help your child identify the area or areas that he'd like to help.
- Find the charity that's trying to fix the problems your child is concerned about. Maybe a well-known charity comes to mind. For example, a child whose grandfather died of heart disease may want to give to the American Heart Association. Or, maybe your child wants to help kids with terminal or life-threatening illnesses have a special experience. He can give to the Make-A-Wish Foundation of America or The Wishing Star Foundation. Or, maybe he wants to help an inner-city kid attend summer camp by giving to the Fresh Air Fund.
If you're not sure which organization is best, the two of you can do a little digging. Your community may have various programs that might fit your child's charitable goals. Just by looking around, you may see local organizations asking for help. For a listing of more than 600,000 organizations nationwide, click on www.guidestar.org or check out resources available at your local library on charitable organizations.
How your child actually makes a contribution depends a little on age. Older kids can save up their contribution dollars for some time (maybe even year by year). If they have their own checking accounts, they then can write out a check and send it off to their favorite charity.
Piggybank on It
With your okay, your child can make a charitable contribution or pledge of a contribution online to his favorite charity—he'll need the use of a credit card to do so.
Younger kids don't necessarily see that same direct connection of their money going to charity, unless they actually place their cash in the church collection plate each week or in the Salvation Army kettle at Christmas time. Instead, they can save up their money in a special jar dedicated for this purpose. Label the jar “My contribution money” or something else to reinforce the idea that the money in the jar is for a special purpose. When the money reaches a certain amount (say, $10 or $25 dollars) or when you reach a set time interval (such as the end of each school year), the money can be sent to the charity your child has selected. You will probably have to change her money into the form of a check to send the contribution through the mail.
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Excerpted from The Complete Idiot's Guide to Money-Smart Kids © 1999 by Barbara Weltman. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.
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