5 Best Ways for Young People to Give Back

Joining forces with friends, asking questions, and starting a nonprofit help guarantee your money is spent wisely.

By + More

Even when young people are strapped for cash, most of them still find a way to give: On average, people under the age of 40 donate about $1,200 a year, according to the Center on Philanthropy at Indiana University. But they don’t give in the same way that their parents do.

[In Pictures: Top 10 Cities with the Most Debt]

Instead of donating to large, established nonprofits, young people often prefer to start their own charities. They usually want to be hands-on and donate their time along with their money. They also want to make sure their cash is being used as efficiently as possible, and often choose to pool their resources in giving circles and other groups to leverage their dollars.

Here are five smart ways for young people to give back, adapted from the new book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back.

Join forces with friends. By forming a giving circle, a group of friends can pool their money for a good cause. The number of giving circles has doubled to at least eight hundred over the past four years, and the trend is partly frugality-driven. Combining money and time makes it easier to research charities more extensively, check up on how the funds are being used, and garner enough power as donors that charities make an effort to reach out to you. A representative might visit your donor circle one night to explain the programs, or invite you to participate in some of the charity’s activities. To find a giving circle that already exists in your area, visit givingcircles.org.

Shop selectively. Over the last several years, “shopping for a good cause” has become about as ubiquitous as those yellow “Live Strong” bracelets were in 2004. But is buying a pink ribbon or Save Darfur pin really going to make a difference? While the impact of your money depends on the organization receiving it, there are some basic rules of thumb to follow. Steer clear of sellers that make only vague claims. When a company promises that a “portion” of proceeds will go toward charity, you have no way of knowing how much, or how that money will be used. A better bet is when the product lists a specific percentage along with the name of the charity on the receiving end.

If you still want to support a cause with your shopping habits, visit your charity of choice online and see if they have a store, which many do. Susan G. Komen for the Cure sells running gear directly on its site, and it specifies that 25 percent of the purchase price goes directly to the organization. As for those Live Strong bracelets, if you buy them from Lance Armstrong’s official site, 100 percent of the proceeds go to the Lance Armstrong Foundation, which is dedicated to preventing and educating people about cancer. Other sellers, such as eBay, make no such promises.

Ask questions. Of course, you also want to make sure your money isn’t going to waste—or into keeping the air-conditioning running at some giant nonprofit’s headquarters—and that it is going toward actually helping the cause that you’ve chosen. Charitynavigator.org makes this easy; just type in the name of the group and you can get a report on their operations, including how much they spend on programs versus administration and fundraising.

[For more money-saving tips, visit the U.S. News Alpha Consumer blog.]

Write down your charitable mission. No matter how much money you have, write down your giving priorities. Even if you give away just $200 a year, don’t let it slip away at each request from a coworker or acquaintance running in the annual 10K. Instead, decide which causes are important to you and set aside the amount of money you want to give to them. If you get requests that don’t reflect your goals, then decline them. (Of course, if your best friend is raising money for a cure for leukemia, you might want to consider writing her a check of support regardless of whether that’s one of your own passions.)

Start a nonprofit. Many young professionals, who have been brought up in the era of personalized Facebook pages, individualized iTunes playlists, and customized college courses, don’t want to toe an existing organization’s line. They also have fresh ideas and new approaches to old problems that don’t fit into existing models. According to figures from the Urban Institute’s National Center for Charitable Statistics, the number of nonprofits has grown 30 percent over the last decade, which averages out to about one hundred new nonprofits each day.

Childhood friends Judd Schneider, Tony MacDonald, and Mike Richton, all in their early thirties, started StopLeukemia.org after each had had firsthand experience with the disease: Schneider’s father and MacDonald's friend died from it, and Richton’s mother, diagnosed at age fifty, is a survivor.

[Visit the U.S. News Personal Finance site for more insight and money management tips.]

After years of participating in charity events to raise money for research and big organizations such as the Dana-Farber Cancer Institute, they decided to start their own group to focus on helping families. “We came together and said, ‘If we put all of our energy and resources into one place, we’ll be much more successful,’” says Richton, who works in sales. They also wanted to make sure the majority of the donations—at least 95 percent—were going toward families. At their first event, a fundraiser at a bar, they raised $10,000.

This article is adapted with permission from Kimberly Palmer’s new book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back (Ten Speed Press).