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What Is the Importance of Charity?

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By Sarah PetersonApril 26, 2021

What’s ahead:

What is the importance of charity? What IS charity? We all asked these questions before. Donating your time and money to causes doesn’t just do good for others, it does good for you too.

In 2019, individuals in the U.S. gave $309.66 billion to charities, which was 69% of the country’s total charitable giving. The rest of the $449.64 billion came from corporate and nonprofit giving that year. 

This is encouraging news! These donations were able to reach hungry children around the world, local food banks, animal shelters in need in our communities, local outreach programs for people in need, efforts focused on policy and important education, etc.

However, we can’t let our foot off the gas pedal. 

The figures are from 2019 and we don’t have a holistic picture of what 2020 looked like. We do know that unemployment spiked, many neighborhoods saw dramatic increases in poverty, and both health and mental health crises peaked throughout the year.

More than ever, our targeted financial support and volunteer hours and efforts can directly impact the global community.

The poverty rate is over 12%, according to the U.S. Census Bureau. The homeless population in America continues to rise. Many people are unable to meet their basic needs, especially since the start of the pandemic.

This doesn’t even factor in all of the other nonprofits and programs that exist to help with other issues and problems across the world. 

While it may feel as though a small contribution may not make a difference, even $1 can help a struggling program provide basic needs for your community. These are just a few ways we realize the importance of giving to others.

Benefits of charity

While the tax write-off you get from donating to a non-profit organization is nice, the other benefits of generosity are far more important. We want to take a quick look at why people give to others.

Studies have found that charitable giving can:

1. Make you feel wealthier, healthier, and happier

Even if you’re just giving small amounts (Start with $1!), you will “feel wealthier, healthier, and happier.” According to Forbes article, “individuals that spent $4 on someone else reported being happier than those that spent up to $20 on themselves.”

2. Make you feel less stressed

According to a study by the Queensland University of Technology, people who keep others in mind while making financial decisions feel less stress than those who don’t. 

3. Make our brains respond positively

Research from the University of Oregon looked at brain imaging of people who decided to voluntarily donate the money participants made from the study. “People experience even more brain activation when they give voluntarily.

The higher brain response to voluntary giving might correspond to the ‘warm glow’ people reportedly experience when they’ve donated money to a good cause,” the study concluded.

4. Encourage those around us to donate

When it comes to charitable giving, peer pressure sometimes does help! When you are generous with your time and money, those around you will mirror your behavior.

Talk about your favorite charities. Share the good work they are doing within your family and friend groups. According to a study by The Guardian, “gentle encouragement from a prominent person in your life can make also make a big difference to your donation decisions – more than quadrupling them in our recent study.”

Donating resources: Funding

What is the importance of charity?
Photo by Medium

Money can always be used for good. Assisting charities with your financial resources will always be a way to align your personal values with your pocketbook. 

Did you know that $10 can directly provide a mosquito net and installation to help with malaria prevention in Africa? If you don’t have the resources to be a “mega” donor, microdonations can be extremely impactful for every charity.

Even a few dollars is a few dollars the charity didn’t have before. 

Starting is always the hardest part. It can be hard to conceptualize a very big donation or a larger monthly, recurring one.

This older campaign from Love 146 (a nonprofit organization working to end human trafficking and care for those who have survived) provided a helpful way to visualize smaller donations. 

What Is the Importance of Charity?
Photo by Love 146

Well, when you put it that way, I guess I COULD hold off on a Bombas order this month!

If everyone above the poverty line in America donated just $1, we’d be able to increase annual giving by nearly $300 million per year! We can’t forget the power of small donations.  

Donating resources: Volunteering

What Is the Importance of Charity?
Photo by Adobe Stock

Supporting charity doesn’t need to be limited to the financial benefits. Acting through volunteering is allowing your time to act as money. Both help the community. Many programs, especially smaller, localized nonprofits, rely exclusively on volunteers to execute their programs. 

Without the funding to hire staff, nonprofits struggle to find people like you to help the communities.

If you have a few free hours every week, helping local animal shelters clean out cages and walk the dogs. 

Assist with food distribution and packing trucks at a local food bank. Help teach local children how to farm at a local community garden/urban farm.

There are so many options! If you aren’t physically able to participate at a specific location, many nonprofits are looking for volunteers to help phonebank, write articles, research topics, and help create marketing materials to reach their audience.

Any and all skills you have will be able to be utilized by nonprofits!

So many of the nonprofits we have worked with are adjusting their volunteering practices to be safe and accessible with today’s circumstances. If you’re uncomfortable with socially-distanced in-person programs, these organizations still need your help.

What we’ve found is that, even with a few dollars and a few hours, those who can donate any amount of their physical and financial time can increase both the well-being of their communities and themselves.

Here are a few sites that match volunteers to charities in need of help:

  1. VolunteerMatch. “With more volunteers and more volunteer opportunities than any other service, VolunteerMatch is how good people and good causes get connected.”
  2. AARP’s Create the Good. “Create the good connects you with volunteer opportunities to share your life experiences, skills and passions in your community.”
  3. Idealist. “Find ways to volunteer, donate, and lend a hand in your community and beyond.”

What are the most important charities?

This is a subjective question! The most important charities are the ones that you feel contribute the most to your local and global communities.

Is donating local more important to you than charities working more internationally? Then adjust your focus in that way.

Is feeding the hungry a higher priority than other issues? Limit your search to those organizations. 

If you need help exploring and deciding which charities are the best to donate to, we created an article that might just help you on deciding.

1. Decide what topics are most important to you

Spiral, new ethical banking¹ service, enables donors to give effortlessly to 1 million+ charities².  These programs all have different focuses and aims.

Find a quiet spot to think about where you believe your resources would be the most impactful. 

A few questions that might help get your brainstorming started: Did a relative in your family have a charity that they supported throughout their lives?

Have you been helped out by any nonprofit organizations in your life?

Have you given to or volunteered with any organizations in the past?

Do your friends or family members speak highly of the work of any nonprofits?

By starting with a basic list of the nonprofit organizations with a similar focus and any that you’re familiar with, you’ll be able to then use some of the resources below to do a more thorough vetting.

2. Use nonprofit rating agencies to learn more about their program costs

Once you have a list of organizations and topics, you can learn more about how charities spend their money.

Any nonprofit registered with the IRS is required to file tax information about how they spend their money. A few helpful websites:

  • Charity Navigator. “Charity Navigator’s rating system examines two broad areas of a charity’s performance; their Financial Health and their Accountability & Transparency.

    Our ratings show givers how efficiently we believe a charity will use their support today, how well it has sustained its programs and services over time and their level of commitment to good governance, best practices and openness with information.”
  • Charity Watch. “CharityWatch does not merely repeat what a charity reports using simplistic or automated formulas.

    We dive deep to let you know how efficiently a charity will use your donation to fund the programs you want to support. CharityWatch exposes nonprofit abuses and advocates for your interests as a donor.” 
  • Give.org. “BBB Wise Giving Alliance is committed to helping donors make wise giving decisions Visit the For Donors page to: Access evaluation reports that show if a charity meets the BBB Charity Standards, learn about wise giving and issues addressed by BBB Charity Standards and find out how BBB Wise Giving Alliance completes reports on charities.”

3. Make sure that it’s still tax-exempt

For your donation to be tax-deductible, the IRS must still consider the organization to be tax-exempt. To meet these requirements, the IRS outlines that “the organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization’s net earnings may inure to the benefit of any private shareholder or individual. 

If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.”

This seems like something you’d want to ensure that any organization receiving your support would be doing, regardless of the tax break!

You can search for an organization’s tax status here.

How can Spiral help with your giving? 

  1. Effortless giving to 1 million+ charities² and nonprofits: You won’t need to track down how to give and record your financial contributions. We help with that!
  2. Donation matching of up to $150 per year³: Make your donations go further.
  3. Track donations for tax returns: The Spiral mobile app tracks all your donations so you can easily see who you’ve given to, and how much.
  4. Earn up to 15x more⁴ on savings than the average interest rates. By earning more on your money, you’ll have the ability to increase support for your favorite charities.
  5. No minimum balance required.
  6. No monthly fees⁶ and no fees for transferring money.
  7. Peace of mind—All Spiral bank accounts are issued by nbkc bank, Member FDIC and insurance of accounts of up to $5,000,000 is available.⁷

That’s our promise for Ethical Banking.

Key takeaways

The importance of charity is more than just tax-exemptions and getting that “I did good” feeling. As a global community, we have both the responsibility and the ability to put our money and time to work for good. There are so many ways to find the organizations and charities that align with your values and to properly vet them. 

Even just a few bucks every year can assist programs you care about. With Spiral’s new ethical banking¹ service, you can increase the reach that your funds have. 

Sign-up here for early access

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Spiral is a financial technology company, not a bank. Banking products and services provided by nbkc bank. Member FDIC.

FDIC-insured up to $5,000,0007