Why I use pre-loaded debit cards to anonymously donate thousands to the needy

After becoming disillusioned with big corporate charities, I had to rethink my approach to charity

Charitable giving has always been part of my lifestyle, especially around the holidays. I own my business, and the hard work I've put into it has paid off. My company is thriving, and I'm fortunate enough to enjoy a comfortable salary.

But there are a lot of people out there who are nowhere near as lucky.

So the way I look at it is that if I'm in a position to help others, then that's exactly what I should do. But after becoming disillusioned with big corporate charities, I had to rethink my approach to charitable giving.

That's why, every holiday season, I anonymously give away thousands in pre-loaded debit cards to needy people in my community.

Why I gave up on giving to big charities

My passion for helping others started at home. It was my father, a self-made prosperous entrepreneur, who taught me the importance of looking out for my fellow man — a virtue he truly lived by.

When I was 25, I remember one of my dad's employees became sick with cancer. The man had exhausted his life savings paying for treatment, and was on the verge of losing his house. Instead of watching from the sidelines, my father walked into the bank and bought the man's mortgage.

These were the kinds of things that really left an impression on me as I grew older and found my own way in the world. And it's why I had no problem making donations to big, nationally-recognized charity organizations. I wanted to make a difference in people's lives, and believed this was a powerful way of doing it.

But about 10 years ago, I gradually became disenchanted with these large charities. For one thing, I learned that a particularly well-known organization I had given heavily to actually kept 40 cents of every dollar donated to cover its administrative budget.

The group's executive management team was earning six-figure salaries, while the needy people they were supposed to be helping only got 60 percent of the funds donated.

This just didn't sit right with me, and I couldn't help but wonder: Was there a better way to make an impact with my money?

My secret life as a "card-carrying" charitable giver

I decided to explore the idea of using my business as a vehicle for helping those in need. My company is a prepaid debt and credit card issuer that also provides reward cards, gift cards, and the like.

About five years ago, I got an idea: What if I used my own money to buy a bunch of preloaded debit cards, and then put them directly into the hands of people who needed them?

I got to work figuring out the logistics. While I felt compelled to help others, I didn't want to be taken advantage of, either. For instance, how could I be sure a recipient wouldn't use the card to buy alcohol or cash it in to buy drugs?

So I decided to be smart about the way I'd give. You know that magnetic stripe on the back of debit cards? My company owns encoding machines that give me the ability to include purchasing restrictions on every card I want to donate.

Before giving out the cards, I restricted things like alcohol, cigarettes, and fast food — I wasn't keen on the idea of donating my own money for people to buy junk food. So if someone tried to purchase these things, the card would be declined.

An added perk? My company allowed me to track how the cards were being used, so if I came across, say, multiple declines at liquor stores, I could simply shut down the card. I also made it so that there would be no cash surrender value from the cards. In other words, you wouldn't be able to go to an A.T.M. and get the like amount in cash.

With these safeguards in place, I loaded the cards with values ranging from $250 to $2,500. They also came with instructions that explained the ground rules, allowing me to encourage recipients to use them for things like healthy food, medicine, and extended-stay hotels.

From there, my C.F.O. and I got our hands on some Santa suits and started attending holiday events at a number of charity organizations, large and small. This is where I had the opportunity to anonymously give out the cards to people in need.

The reactions were life-changing.

There were tears, gratitude, and hugs. Putting these cards directly into the hands of those who were struggling was gratifying in a way no previous giving ever was — I was seeing the power of each gift with my own eyes.

It's been about five years since I started doing this. To date, I've spent roughly $750,000 of my own money on these debit cards. The best part? Every so often, I get to see how they've benefited recipients in the long run.

My six-figure, feel-good giving plan

Two years ago, I was at an event handing out cards in the Santa suit when I came across a family I learned was living in their car. The husband and wife were both out of work, and had lost their home as a result. The worst part was that they had three children with them.

So I made the decision to give them about $5,000 in debit cards, encouraging the man to check his family into an affordable, extended-stay hotel. Once he could take a hot shower and buy some new clothes, he could start applying for jobs.

A year later, I was at another holiday event sponsored by the same local charity, which works hard to help the homeless. As fate would have it, the man and his family were there.

Some people in my circle know what I do with the debit cards, and I suspect someone might have tipped the man off that it was me who'd gifted him the cards the previous year. Or maybe he recognized me somehow: I'm 6 feet 5 inches and pretty hard to miss — even without my Santa suit.

Either way, he came up to me and gave me a huge hug. There were tears as he told me how that $5,000 helped him pull his life together. Since then, he'd found work, and his kids were thriving in school.

Seeing the impact I'd made felt incredible, but the truth is that we shouldn't do this sort of thing for recognition. We should do it out of the desire to help our fellow man.

When people see the homeless, some want to call them bums, or scurry away out of fear of being harassed or robbed. The way I see it, the homeless are just like anybody else — they've got blood running through their veins just like I do. For me, it's been about looking past the stereotypes and seeing them as regular people.

While my experience giving anonymously has had a profound effect on me, it also comes with some other advantages. I've found that when the recipient doesn't know who you are, they're less likely to feel looked down upon for accepting a donation.

In a lot of ways, anonymous giving also protects my family and me. We live in the Miami area, where some neighborhoods are more dangerous than others. Part of me fears that if people knew I had this much to give, I might become a target.

But I do love to give openly, as well. On Thanksgiving, my family and I dish out meals to those in need. My daughters, who are in their 20s now, always understood the importance of helping others.

Just as my dad mentored me from an early age, I wanted to guide my girls into a life of gratitude and service. When they were kids, my wife and I would make them donate a bit of their allowance money to organizations that benefitted children.

This holiday season, I have no intention of slowing down. I plan on giving priority to the V.A. hospital, so I can help as many returning veterans as possible. Some of these people are coming home paralyzed, and their families are left to pick up the pieces.

So I'll be giving out over 2,000 cards, ranging from $250 to $2,500. The total value of this year's efforts will land in the six figures — all out of my own personal money. There's no revenue sharing between these efforts and my company, so I don't profit from them.

While my company has allowed me to put a creative spin on my charitable giving, it isn't difficult for others to do the same. The next time you want to help someone in need, go to your local supermarket and pick up a gift card for them. I've seen firsthand how life changing such a simple act of kindness can be.

*Name has been changed.

This story was originally published on LearnVest. LearnVest is a program for your money. Read their stories and use their tools at LearnVest.com.

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