Building a donation machine

Please note that this is by no means a recommendation that you take this approach. It’s a method I have chosen to donate money.

While reading a part of American Psycho by Brett Ellis I took a break due to how grim it is. During that break, I started looking into homeless statistics and came across the Crisis website which is a charity that directly helps homeless people find a home and also campaigns for changes needed to solve homelessness altogether.

After browsing through the site and learning more, I spotted the Crisis investor page which discusses Social Return on Investment (SROI). This is a completely new to me but my understanding of it is that by donating money you are making an investment in society that yields dividends and/or savings. They have conducted research and are able to provide estimates on the savings a donation makes. It boils down to – for each £1 you invest, there is around £3.30 SROI.

This return on investment comes from the result of helping people find homes and providing them with support they need which makes it more likely that they will start paying taxes.

Conceiving the machine

This got me thinking of stocks and shares investments in relation to charities and after some thinking the idea of a set of shares that are dedicated to perpetually creating money for charity came to mind and is something I found very appealing.

How do shares generate money?

When you buy shares you are buying a piece of a business. Some companies distribute money to shareholders in the form of something called ‘dividends’. Dividends are usually paid out periodically (usually a few times a year). Although not all companies give dividends, many do and the dividend payout can fluctuate (just like the stock price) .

Building the core of the machine

Getting this off the ground with the basics involved:

  1. Opening a low cost brokerage account (just for charity donations)
  2. Deposit cash in the account
  3. Purchase some shares (UK Vanguard ETF’s)
  4. Set dividends to pay out to bank immediately
  5. Bank transfer them over to the charity once they arrive

I’m currently on step 4 so I’m just waiting for some dividends to be paid at the moment.

Why make this ‘machine’

It perpetually generates money

So the key benefit is that in theory it should perpetually generate money. Share prices go up and down but British companies are pretty good at paying out dividends and by buying an ETF (an ETF is like buying a share of a group of companies. So if you bought a FTSE 100 ETF, you would be buying a slice of every company in the FTSE 100. For more on ETF’s please read this) you are not relying on a single company continually dishes out dividends.

You can build on it

This simply means adding more cash to it. So by periodically buying more shares, the dividend payout should on average increase meaning there is more cash to donate.

You have a lump sum

There is a lump sum in the account that you can call upon if things go really really bad and you need cash. However, lets stay positive and go with the plan of never needing to touch it and letting it continue generating the cash for donation.

It should grow by itself

In addition to this share prices have historically increased over time so we should find that this machine generates more cash as time goes on.

Automating the machine

What I have so far is a good starting point, it gets the ball rolling and it is now only a matter of time before some dividends are paid, ready to be donated.

However, the end goal is to completely automate this whole process so that in a sense it is a truly automated machine that regularly makes and dispenses money to charitable causes with little if any involvement from me. So it behaves just like a direct debit but instead of a set amount each month, dividends are checked are paid out as soon as they arrive.

More on this next time.

Getting started with CharitiesNeed

This is a step by step guide to adding your charity to CharitiesNeed. It’s a nice and simple process and shouldn’t take more than a few minutes.

Registering

1. Go to charitiesneed.co.uk and click on “add charity” at the top right of the screen.

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2. Fill in the details you see on  the registration form and then click ‘Register’.

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3. You should receive an email shortly with a link to activate your account. Once you receive and click on the link you will be able to log in.

Your charity details and needs

1.  After logging in, you will see your charity listed and the first step is to click on ‘location’ and fill out the details there. There is also a section at the bottom which allows you to give a description about your charity or any thing else (e.g. opening times). Once you are happy, click save.

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2. The next step is to add the type of items your charity needs. You can also set a ‘need rating’ next to the item categories. So for instance if you really needed books, you could select ‘5’ indicating to donors that you really need books.

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The section at the bottom allows you to write any further details about your needs.  Once you are happy, click save.

4. Adding a charity logo or image relating to your charity can be done by clicking on ‘logo’. Try to pick an image that’s not too big. Again, click save.

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5. Done! That’s all that is required, your charity is now on CharitiesNeed. Try putting in a postcode near to your charity on the search page. You should find your charity in the results.

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The profile donors will see with all the information you have entered.

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Charities with more than one donation point and/or managing multiple charities.

You can add additional charities or donation points in the ‘Donation points’ section.

This is particularly useful if you manage multiple different charities and/or your charity has multiple donation points (e.g. clothes banks, shops, drop off points).

This is a quick run through so If you have any questions or suggestions, please feel free to email [email protected] or comment. Thanks for reading and I hope CharitiesNeed can help your charity receive more donations, raise awareness of your charity and help donors find out where they can donate their unwanted items.

 

CharitiesNeed – A brief overview for Donors

CharitiesNeed is one of our recent projects and the main goal behind it is to make donating items to charities easier and quicker. In essence, it’s an app where you (the donor) specify your post code and the category (e.g. Clothes, Bric a brac, Food, Books) of the item or items you wish to donate and CharitiesNeed shows the charities listed in the database ordered by distance. With this, the plan is that you can pick up any item and by using CharitiesNeed, find the nearest Charity which would be happy to take the item.

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For more information sign up to the mailing list. We’ll also notify you as soon as it’s released. Charities interested in registering can email [email protected] for more info.