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Do You Cede Control When You Give Money?

This article was written by in Charity. 8 comments.

If a friend or relative comes to you and asks to borrow money, it’s rarely a good idea to offer a loan. If the person in question does need financial help and you’re in a position to offer them a gift, without any strings attached, without the gift interrupting your own financial goals, it might be worth considering just offering the money without any expectations of repayment.

Once you do this, you’re relying on the recipient’s ability to use your money wisely. When you offer a gift, you don’t want to see that gift wasted, but you’re giving up some control. If the person in need came to you because they needed to afford food for their children, you want to see those children fed with the money you provide. When you give money, and you see the money spent in a way you don’t approve, your only recourse is not to offer a gift again. It’s no longer your money, so you have no say regarding its use.

Giving money to a charitable organization or an educational institution is a little different. I might have first understood this while in high school. My high school had a pretty sophisticated television studio for a high school, in my opinion at the time. There was one of those large satellite dishes outside the building. This is before satellite television became a popular alternative to cable television, so this is not one of the dishes that a homeowner would attach to his roof. This was a large, white dish that looks like it should be used in the Search for Extra-Terrestrial Intelligence array of radio receivers.

Asking around, the word is the school had this massive satellite dish, and probably the rest of the television production studio, because the school district received a gift from a donor that specifically required the school put the money to use for this specific purpose.

From the organization’s perspective, in many cases they’d prefer to receive general donations. Management can then decide how best to use the received funds across the neediest programs. In high school, the performing arts department could have used those grants to better effect than the television production department, but if the donor indicated the funds would be earmarked specifically for a satellite dish, there is nothing the school district could have done differently.

When you make a charitable contribution, you can designate how you’d like your contribution to be spent. Most donation forms provide a few standard options, but they also allow you to provide a written description. With instructions, you can ensure that the money you provide is used in the way you believe is most appropriate, even if the organization’s management might have other needs. Who knows more about an organizations needs, the donor or the management?

Sometimes, this may not matter, as the donor wants the gift to be personally relevant. I offer a donation to my undergraduate university every year, and I designate a specific group on campus to receive the funds, but I don’t offer any instructions beyond that. It’s a relatively small amount for the organization on campus, so I figure that those in charge will be able to best decide how the funds are spent, whether as a scholarship, new materials for students, for travel, professional stipends, or general expenses — once those funds get to the organization within the university I want to support.

For two years in a row, I matched Consumerism Commentary readers’ donations to their own choice of charities with a donation on behalf of the website to an organization that was looking for support for a specific project. In November of both years, I announced the intended charitable organization and we collected information on readers’ donations through Thanksgiving.

In 2009, we donated $3,584 — matching readers’ contributions — to the World Food Programme; in 2010, we donated a total of more than 14,000 to Médecins Sans Frontières. The following November, I no longer owned Consumerism Commentary, so the series ended, but the two years of this project, I donated the matching funds to each of the two organizations without any further instruction.

If you don’t agree with an organization’s overall use of money — for example, if you believe a university’s full professorships and administrative positions are overpaid while the university takes advantage of its adjunct staff — you can use designations to make sure your gift doesn’t fall into the same trap. You can, for instance, try to direct your funds in such a way they help students directly. The same is true when you provide a gift to a non-educational charity; you can direct your grant to the program that would use the cash to the biggest effect while supporting the organization’s mission.

You can’t necessarily do this when you give money to a friend or relative, but when you remain close and you see the funds misused, it can be frustrating.

Don’t give money to friends or family if you are concerned about whether the funds will be put to the same use you would like to see. If you aren’t willing to let an adult decide how to use your gift, it might be better if they seek help from someone else. You could find other ways to help than by giving money. For example, if your needy friend is coming to you because their old car is totaled and need a replacement to get to work each day, you can assist them with buying a replacement rather than giving the money to do so on their own.

If you can’t let go of the need to control — or even the need to see someone make what you believe are the correct choices — don’t give your money away.

Photo: Flickr/Gerard Eviston

Published or updated November 1, 2013.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 8 comments… read them below or add one }

avatar 1 Anonymous

I think you’ve touched a rather difficult topic here. When a friend approaches you for some money to lessen his or her financial hardship, you suddenly find yourself between a rock and a hard place. Seeing them misuse the funds causes frustration and if they come back for a second loan, saying no would be the first instinct but that could tarnish your relationship. On the other hand, if you go ahead and lend then the money again, you’re just giving yourself more stress. The idea of converting it to a gift seems better but that’s not always an option if your own budget is tight. Of course, the friend could always pay you back, but it’s an awkward thing to ask them to return the money, especially if you have to do it a few times before they open their wallet and hand you your dues. The last option kid that the friend promptly pays you back and you can thank your stars.

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avatar 2 Anonymous

I like your idea of kidding about the loan repayment, as it opens up the door to see if they would consider this option. Depending on the amount that they friend is asking for, repayment may not be a huge deal. In most cases, loaning money to a friend or family, even if you call it a gift, can result in a fracture to the relationship, at least that’s what I’ve found in my experience.

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avatar 3 Anonymous

I’m reading this and I come to “I no longer owned Consumerism Commentary” and I do not remember it being sold. Who owns it now?

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avatar 4 Luke Landes

A company called QuinStreet own the site, and they own several personal finance blogs. I’ve mentioned the sale occasionally, and there was a press release about it two years ago.

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avatar 5 Anonymous

Hello! Kristyn from Quizzle here. I like the way you suggest alternatives for people who want to help out friends, but aren’t positive that their money is going to be spent in the right way. Putting money toward the direct problem your friend or family member is having, guarentees you to help them out AND make sure that the problem is being taken care of! Great advice :)

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avatar 6 Donna Freedman

Gift cards are a good way to help family/friends in financial straits. If you can see someone is struggling, a $50 card could help that person buy shoes for a kid or food for the week. Tailor the card to individual needs either current or upcoming (those darned kids keep growing out of their shoes!), and make this a present vs. a loan. (lf you buy the cards on the secondary market you’ll get more bang for your buck.)
And if the person decides to sell the card and use the money for something less necessary? As you say, it’s up to you whether you decide to help that person again.
A few other ideas: Make a payment against someone’s overdue utilities or medical bills, pay for a monthly transit pass, cover a week’s worth of child care, pick up a few things from the warehouse club, fill up a gas tank, take that kid shopping for school shoes yourself. Whatever works.

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avatar 7 Donna Freedman

I forgot to add this one: Schedule a regular delivery of items you know the person needs and/or items that could boost any sagging budget.
For example, you could have toilet paper, tissues, paper towels, soap and laundry items sent every few months. If there’s a baby in the family, sign up for diaper delivery through Amazon; if there’s a dog or cat, have pet supplies shipped through
Or just pick out a giant batch of staple groceries from a warehouse club or supermarket and have them delivered (obviously you’d have to clear this with the recipient first).

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avatar 8 Anonymous

I have a mother who is constantly in the need of money. I used to give her my credit card with no questions asked. Now, I pay for what she needs when she absolutely needs it. She does not get to touch my contributions.

I also only give to charities when I know exactly what the money goes to and if it has low administrative costs. Same goes to entering races with a charity recipient.

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