Make charity part of your overall financial plan

The New Year provides a good opportunity to take stock of your personal finances and reassess your goals and objectives for the year ahead. Donating more to charity is a resolution that many of us take, although we often resolve to do so on a sporadic rather than a regular basis. In fact, charitable contributions are something that should be considered as part of an overall financial plan and accounted for proactively and carefully.

There are lots of things to consider when thinking about donating to charity, including how much to contribute, when to contribute and to whom. Here are some of our top suggestions for how to get your donations off to a running start this year.

1. Consider your goals

Start your charitable efforts by taking a close look at your finances. How are your monthly outgoings looking generally? Are you on track with your debt reduction targets?

Do you have a retirement plan in place? With the basics accounted for and taken care of, think about your disposable income and how much of it you could give away to one or more worthy causes. Don't worry about setting overly ambitious targets! Every dirham donated can go a long way.

2. Research your options

The number of local, regional and international charities is ever increasing — from humanitarian relief to orphanages and animal funds; the list of potential causes is huge. Pick an area that resonates with you or your family personally and research the organisations that support that cause.

Be sure to ask about the specific projects and areas that they are supporting. It's also worthwhile understanding how the charity works as an organisation to ensure that the majority of your contribution goes to the cause itself and not to administrative costs.

3. Do put your eggs in one basket!

Unlike your savings or investment portfolio, there is benefit to be gained from concentrating rather than diversifying your charity portfolio. Focusing on a small number of charitable organisations or causes means that you can concentrate your efforts and this will help your money to go further. Many charities prefer more regular donations rather than the ad-hoc ones, even if only a small sum, as it allows them to better plan for their spending and allocation.

4. Consider alternative ways to help

Making monetary contributions is often the most common way of supporting charities and worthwhile causes. However there are plenty of other ways to show your support and during tougher times it is quite alright to put the financial contributions on hold and help in a number of different ways. Donating food, unwanted clothes and old household items can be just as effective a source of help. Volunteering your time as an individual or as part of a corporate initiative can also be invaluable help to many charities who rely on outside support.

Seeking sponsorship to complete a run or other task can also be a great way of raising money by tapping into your network of friends and colleagues.

5. Simplify your donations

Make donating to charity easier and automate as much of the process as possible. Make the most of direct debits and online banking to make contributions easily and quickly. You could also look at setting up a standing order to allow for regular transfers directly into a charity ‘pot' once your monthly salary is paid into your main account.

Of course there are no hard and fast rules for how to donate to charity; it is very much an individual decision which can alter over the course of not only the year but your entire life. There are plenty of ways to help and an infinite number of causes to support. Think about how you approach charity at your next financial review.

The writer is Head of Personal Banking for Lloyds TSB in the Middle East.