Philanthropy is neatly defined by the Princetown University website as being the 'voluntary promotion of human welfare'.
In a financial sense we often link philanthropy to giving money.
In this short article I only want to make two brief comments about philanthropy, and then suggest a possible alternate option for people who want to approach their giving in a different way. To start with I want to put forward the idea that donating money may assist in building a balanced approach to money, and that a business like approach to donating money may be the most useful for both you and the donor.
I would suggest that if you are unsure of whether people really need your generosity, go to the World Health Organisation website (http://www.who.int/) and look up the summary statistics for countries like the Democratic Republic of the Congo, Malawi, Timor-Leste or Zimbabwe. The statistics include the gross domestic product per capita, the infant mortality rate and details of life expectancy for the population.
A Balanced Approach to Money
One of the realities of modern life is that we are bombarded with messages promoting consumption. I have a marketing major from a business degree, and am aware of the amount of research that is done to encourage us to part with our money. Taking the time to donate to others, to be empathetic to their needs, seems to me to be a way of building some perspective. Acknowledging that others are less fortunate than ourselves may provide us with a sense of balance that means we will be less likely to confuse our 'wants' with our 'needs'.
A Business Like Approach
Finding an organisation, or organisations, that you feel inclined to support, and then supporting them in a substantial way seems to have benefits to both the donor and the organisation. To the donor there is less paperwork with supporting a small number of organisations, so it will be easier to keep track of the receipts from donations and be able to claim the tax deductions you are entitled to. Furthermore, by donating to a small number of organisations you will be able to get to know them, and will understand the projects they are involved in and how well your donations are employed by the organisation. For an organisation there seems to be a benefit in receiving larger donations, as less effort is needed for collecting money and more focus can be put on their charitable work
An alternate option to simply providing donations each year may be the establishment of or participation in a charitable trust, or prescribed private fund. Up to prescribed limits, the donations to such a fund are tax deductible. The fund is then makes investments, and the income from the investments has to be distributed each year to ATO registered charities.
This way, rather than giving away your capital each year you are donating that capital to the fund. You can still claim the tax deduction for the donation. And each year you distribute the income from the fund to registered charities. Over time you could hope to build up a growing income stream that you use to benefit charity. Keep in mind that once you make a donation to a prescribed private fund you can no longer access that money.