FF10: The Donation Account

Financial FridayWelcome to another edition of Financial Friday.  A series of weekly posts where we share some of financial gold with you on our personal finances, savings, and investing.  Once again, these are just things we have done ourselves and might not work for you, but it doesn’t hurt to try a new way to pan for your own financial gold!

As the PFG family has grown, it has been important for Mrs. PFG and I to continue to give back to our communities through charitable giving.  This practice started for both of us with the Jewish tradition of giving tzedekah (charity).

When we first got married, we gave money pretty freely and didn’t map out what organizations we were going to give to each year.  As the years have gone by, we became more aware of the amount of money that we were giving and to what organizations we give to.  We now have three or four organizations that we give the majority of our charitable giving to and a handful of other organizations that receive other donations from us.

In addition to changing the amount of money that we give to charitable causes, we also decided that it would be better if the money didn’t come from our regular bank accounts.  About four years ago we decided that setting up a donation account would allow us to put aside the money we wanted to give, keep us on track, and limit our giving to the amount that was available in this new account.

How We Fund It
Each paycheck, we put aside a percentage of the total paycheck into this account.  We base this percentage on the amount of money that we already know is going to be given.  I serve on a board and give a certain amount each year.  We also give a certain amount to our synagogue.  After that we put aside additional money for extra giving each year.  Additionally, if we use cash, we put the change into this new fund to give to charity.

Why We Like this New Fund

In addition to keeping us on track, this new fund allows us to keep giving to charity without worrying about paying our other bills.  It also allows us to use this fund to teach PFG boy and PFG girl the power of giving.  As they get older, we will help them set up their own charitable accounts.  We will also set aside money from this account that we will as a family decide where the money should go.  This will be like our own little family foundation.

Do you have a separate fund for your charitable giving?  How does your family give to nonprofits?

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