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2021 money challenge: How to donate and spend with impact

How to plan your 2021 spending so you can align your dollars with your values.

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To ring in the New Year, CNBC Select is posting a new money challenge each day for the first week of 2021. Think of these tasks as your financial deep clean, based on expert advice, to help you align your money choices with what you care about most. These are simple tasks, but they do require a commitment. Are you in?

This is day six of seven.

Day Six: Plan your 2021 charitable gifts

If you've been following our 2021 money challenge since day one, you should have already calculated your net worth, planned your budget and mapped out your emergency savings. If you have discretionary income left over after meeting all of your needs, you could be ready to invest. But you might also want to start thinking about your 2021 charitable donations and how to align your everyday spending with your values.

While November and December are the most popular months for charitable giving, it's not too early to think about how much you want to donate this year to causes and organizations.

According to Mint, more consumers created savings goals for charitable donations in 2020 than in years past, peaking in May and June amid Black Lives Matter protests and increased national conversation about racism and inequality.

Individuals are finding ways to prioritize spending on causes they care about. Ahead, CNBC Select spoke with Mint financial planner Brittney Castro, CFP on how to make sure you can financially support the issues you care about this year.

Ways to prioritize charitable giving

If you want your money to make an impact this year, simply making a New Year's resolution to save more for charity "just won't cut it," says Castro, especially if you want to prioritize lasting change.

Consider these methods and decide which one works best for your budget:

Recurring donations

"Set specific goals to support causes important to you," says Castro. That could include "setting up recurring donations to a food pantry, community organization or bail funds."

Even $5 or $10 per month will make a difference. Many organizations allow you to set up recurring donations online — simply input your credit card or debit card info and check the box to automate a monthly charge. (Keep in mind that credit card processing fees may apply.)

Take advantage of company matches

Many big employers offer donation matching as part of the company's benefit package.

Gift matching is one of the easiest ways to double your donation. And you can almost think of this match as part of your annual compensation package.

Ask your HR representative if your company offers this perk and what you need to do to have your donations matched. If they match up to a certain amount each year (say $500), see if you can reasonably meet that match (or at least a portion of it).

Donate with credit card points

Select card issuers will let you redeem rewards as donations to partner charities and nonprofit organizations. Log in to your card's online rewards account and navigate to 'charity redemptions' or a similar link.

Currently, Amex, Citi and Discover let you redeem rewards for donations:

Amex

If you have a card that earns Membership Rewards® points, like the American Express® Gold Card, you can donate to more than 1.5 million registered U.S. nonprofit organizations thanks to Amex’s partnership with JustGiving.

Citi

Cardholders who have a card that earns ThankYou® Points, like the Citi Premier® Card and Citi Rewards+℠ Card, can redeem points to American Red Cross, No Kid Hungry and other charities.

Discover

With Discover's charitable giving program, cardmembers can donate their Cashback Bonus® rewards to a variety of organizations including the American Red Cross. To donate, call 1-800-DISCOVER or donate online through your Discover Card Account Center. If you have the Discover it® chrome, for example, you could donate to coronavirus relief efforts.

Airline miles and hotel points

At least 12 airline and/or hotel credit cards also provide ways to donate rewards. Check out our guide to donating credit card rewards to learn how.

Volunteer

If money is tight, but you've got time to spare, consider volunteering for an organization you care about. Your interactions might be virtual to comply with coronavirus precautions, but organizations still need people to assist. Remote work might involve helping with newsletters and communication, coordinating donation drop-offs, tutoring, mentoring, card-making, reading books to patients and even sewing. Inventory your skills and decide on a realistic time commitment.

Beyond donations: How to spend with impact

"Prioritize spending with greater impact," Castro advises, noting that where you shop is just as important as where you donate.

"Whether it's a focus on shopping local or purchasing from companies with missions you believe in, this past year reaffirmed how valuable the dollar is." 

To stay motivated, look at your spending from step two. Add up how much you spent at big stores in 2020, and consider the benefit of investing those dollars in small and local businesses instead.

Buy local

Consider shopping at your local mom-and-pop store before you click "buy now" on Amazon. That goes for clothes, electronics, beauty products and more. Check your local Facebook community groups to learn which businesses are still open and how they are operating now that more commerce is online.

Buy from small businesses

It may take a little Googling, but you can most likely find a small-biz alternative to Amazon and/or mega retailers for most products.

You can buy handmade jewelry, home décor, skincare and more at Etsy. If you're a book lover, use Bookstore.org which gives a percentage of its sales back to small bookstores.

Don't try to be perfect; starting with (and sticking to) a few household purchases is enough to put you on track. Keep going once the habit is ingrained.

Spend with the environment in mind

If you're environmentally conscious, shop for clothing and other vintage and second-hand goods on eBay and other resale sites.

For household products like pantry and cleaning supplies, check out Thrive Market's $5-per-month memberships that grant access to over 6,000 sustainable and organic products at a reduced cost.

For makeup and skincare, consider BLK + GRN, an all-natural self-care marketplace by all Black artisans.

Bottom line

The year ahead is bound to bring more change, but we can all chip in to help. Don't forget to plan your charitable gifts for 2021 and consider ways to align your dollars and your values.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.