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How to build and manage your charitable portfolio

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22/05/2014
People who give to charity should treat their donations in the same way as any savings or investment portfolio, writes Lucinda Beeman.
How to build and manage your charitable portfolio

According to the World Giving Index for 2013, the UK is the sixth most charitable country in the world, with 76 per cent of Britons donating money to charity.

Charitable donations by Britons even remained resilient during the financial crisis, despite the squeeze on spending.

A poll last year of 2,000 people by Halifax found that more than half had managed to maintain the amount they donated and one in ten had actually increased the amount they gave.

Whether you give to charity sporadically or on a more regular basis, keeping on top of your donations is crucial.

Kate Stewart of the UK Community Foundations goes as far as saying donations should be managed in the same way as any savings or investment portfolio.

Just as your investment portfolio reflects your priorities and attitude to risk, your charitable portfolio should be a reflection of your interests, your budget and the causes you support, she says.

Here, we look at how to build and manage your charitable portfolio:

How much should you give?

As with most things money-related, building a charitable portfolio should begin with a budget.

Working out how much you can comfortably set aside every month will help you make giving a long-term commitment. You’ll also be able to prioritise causes more effectively.

While one-time lavish donations by wealthy philanthropists may grab the headlines, no amount of money is too small to put toward a good cause. It all adds up, Stewart says.

“It doesn’t matter how much you have to give. Just like savings, anything you can put aside helps,” she says.

If money is particularly tight one month, swap your cash donation for a bit of your time. While the UK is ranked sixth in the world for overall charitable efforts only 29 per cent of Britons volunteer their time to causes they care about.

According to Stewart, volunteering is a great way to get a feel for how a charity operates and whether you want to invest in its work.

Diversifying your portfolio

Don’t be afraid to spread your contribution across multiple charities of all sizes and sectors.

Stewart says: “Just as you would diversity your investments, you can diversify your charitable giving. Explore different themes, issues and beneficiaries.”

When you’re thinking about where to put your money, consider how much of the impact you want to see. International charities do amazing work, but it’s unlikely you’ll meet the tigers you’ve helped to save. Local charities will deliver change you can see, though their reach will be limited.

Stewart also encourages people to experiment. “Have fun with it,” she says.
She recommends looking into crowd funding and social enterprises, which can turn charitable gifts into a viable investment.

But as with investing, she warns, it’s always important to feel comfortable with where you’re putting your money.

Maximise your contribution

Regardless of whether you have £10 to give or £10,000, making sure that you maximise your contribution is just good business.

To make your money go further, investigate matching schemes.

Community First, for example, is a £80 million government-funded initiative that runs until March 2015. Its Endowment Match Challenge is looking to raise £100 million in donations through individual and corporate philanthropy. Whatever you donate, the government will match by 50 per cent.

Ultimately the government hopes to raise £150 million, £100 million in donations topped up by the government’s £50 million match.

To learn more about participating in Community First, visit their website.

If you have less to spend but still want to make a splash, Stewart recommends looking at smaller or local charities.

She says: “Small charities are conscious of what they need and much of the work is done by volunteers, so their overheads are low. £10 can have a huge impact on a small charity.”

The annual review

Just like with an investment portfolio, it is important to review your charitable portfolio at least once a year.

Stewart recommends reviewing how much you’re giving and whether you’re getting the kind of feedback you need to feel confident that your money is being put to good use.

Also don’t be afraid to swap around the causes you support as your interests and priorities change.

How to find a cause

If you’re keen to start giving but don’t know where to start, Stewart recommends looking on the Charity Commission website

The Charity Commission is an independent Government department responsible for the registration and regulation of charities. Any charity listed on the site will be legitimate and vouched for.

But just because a charity isn’t listed on the Charity Commission site doesn’t mean it’s not worth donating to. Small or new charities may be excluded, so head over to your local community foundation to see what organisations close to home might need your help.

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