I’ve been giving some thought lately on how to give back effectively, how to contribute a relatively small amount and make a large difference for someone.
There are a lot of great charities out there, many of which have very little in the way of operating costs that eat up your donations. The operating costs aren’t what I’m worried about. What I want is highly localized charities that make a difference.
My thought over the past few weeks was to start contributing money into an account over time with the interest from the account going toward annual scholarships for my hometown high school. While I can’t contribute a lot, $1000 a year would be $10000 in ten years, meaning it would throw off $400/year in interest to help a needy kid pay for books or a portion of tuition. Unfortunately, I realize that the cost of tuition will likely increase more than the 4% a year that the fund would grow (at a fairly optimistic CD rate of 4% or so).
This got me thinking on a much larger scale. I made a pittance last year in interest on my savings account. Even if I efficiently moved all of my money out of my checking and into my savings to optimize interest, I’d be looking at a paltry return of a percent or so per year. Maybe $100-$200/year at the most. This concept really needs scale. What if local bank branches offered members the option to contribute the interest on their accounts to a charity, to be chosen by the account holder? $50/year from me wouldn’t make much of a difference at all, but $50/year from the 200 people I graduated with would be $10000 which would go a long way to get an under-privileged kid in the community through 4 years of college at an in-state university. The banks would get great PR and maybe even the benefit of holding all that interest in an account until it was dispersed, I wouldn’t miss my $50/year and I could write it off my taxes and a local kid in the community would have a life-changing gift. Seems like a great idea to me.
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