The best piece of advice I can give here is to help your child choose a cause she cares about. Even if you might not be personally invested in saving the pandas, your child might be really excited about it. Pay attention to observations they make about the world. For example, if she expresses concern about the local homeless population, stray cats, or the pollution in your local park, help her explore the ways she can make an impact. If your child is concerned about homelessness, perhaps you can help her identify local soup kitchens. Help her first donate the giving portion of her allowance to the kitchen and then donate her time by volunteering. When you show up for the volunteering shift, explain to your child that their financial donation helped purchase some of the food for the meal or pay for the venue. Connect their monetary contribution with the physical place and work being done to help give it context and meaning.
If your child’s interests lay in something broader and less local, help them research their cause. What is the review process you personally go through when choosing a charity? Help them use the Internet to research the causes they care about; you can even teach them how to request financial information from charities so they can see how their donations will be used. Alternatively, find ways to use your community (religious or otherwise) to help connect your child to the causes they care about. You’re teaching them about more than money—you’re showing them how to find the resources they need to be self-directed in applying their passion.
Make sure your child understands that there are many ways to be charitable. Joline Godfrey does a wonderful job laying out the options in Raising Financially Fit Kids. She introduces charitable categories: volunteering, philanthropy, social enterprise, faith-based social services, social activism and advocacy, and research—along with a helpful glossary of terms. The idea is to educate your child about the diversity of options so they can find a cause they truly support.
Educate your child about why you chose the charities or service groups you belong to. Tell them about the factors you considered. Was it important to you that the charity was local? What kind of transparency were you looking for (and what does transparency even mean)? How often do you give? Where does your money go once the charity receives it? Do you believe in being heavily invested in one charity or giving to multiple causes?
I happen to be a big proponent of Kiva, a nonprofit that allows people to make loans to low-income entrepreneurs and students around the world, even though the lender makes no money on interest. I strongly connect with empowering entrepreneurs in their home environments, and I like the sense of personal connection this organization offers (rather than my money just shooting down a black hole). I also like that Kiva is its own lesson in investing. There is no upside to the investment, but if you choose someone who is successful, you get your money back—and just like any kind of investing, it helps to diversify.
If you have a teenager you would like to expose to both philanthropy and investing, a Kiva gift card might be a great tool. You give them a set number of loans but do not prescribe where they have to give—the goal is that they pick what matters to them. It’s a good exercise for them, as long as you step back and give them the freedom to administer the money as they see fit.