Charity: What Should a Billionaire Give, and What Should You?

6813 Views 6 Replies 6 Participants Last post by Leading Edge Boomer, Jul 7, 2009

brad

Discussion Starter · Jul 3, 2009

The bioethicist Peter Singer had a thought-provoking article in the New York Times a couple of years ago, available for free here:

http://www.nytimes.com/2006/12/17/magazine/17charity.t.html

In it, he makes the case that most well-off people can afford to give generously to charity without affecting their lifestyle. Basically his formula (which is based on US demographics) is this:

If you're in the top 0.01 percent of earners (average income of $12 million/year) you can give away a third of your income each year and still live awfully large.
If you're in the top 0.1 percent (average income of $2 million), you can give away a quarter.
Those in the top 0.5 percent (average $623,000/year) can give away one-fifth.
Those in the top 1 percent (average $327K/year) can give away 15 percent.
Those in the remainder of the top 10 percent (average $132K with a minimum income of $92K/year) can give away 10 percent of their income annually.

What do people think of these targets? Do you set an annual goal for your charitable donations?

I came close to reaching the 10 percent mark a couple of years ago (and couldn't even deduct most of it from my taxes because my biggest donation went to a US-based charity), but then we bought a house and I have found it challenging to balance my desire to pay off the mortgage (and fund my retirement) with my desire to do my part to help the causes I believe in. Last year I only gave about 1% to charity; my goal this year is 5%, and I want to ramp up to 10%. But it's proving harder psychologically than I expected.

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canabiz

· #2 · Jul 4, 2009

I think we should also look at the other sides of the coins i.e. volunteering (to help charities or communities), donating used goods and clothing to local charities and general community activities instead of simply going over the dollars and cents, from a financial perspective.

I have not contributed to any charity financially because I am more of a hands-on type of guy, plus I don't like to see the money supposedly geared for charity going to miscellaneous expenses like administrative and project management. I get that nobody is doing any work for free but there are always rooms for improvements.

I prefer to volunteer a weekend at the local Food Bank. This may not be everyone's cup of tea and you don't get the tax benefits but that's just the way I like it.

Just my 2 cents.

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brad

Discussion Starter · #3 · Jul 4, 2009

canabiz said:
I have not contributed to any charity financially because I am more of a hands-on type of guy, plus I don't like to see the money supposedly geared for charity going to miscellaneous expenses like administrative and project management.

Good points. I've volunteered for local food banks myself in the past and it was a great experience.

I think Peter Singer's point is that even the poorest Canadians are rich compared with the truly poor people in the world, and there's no simple way to help those people directly; for most of us the best mechanism to reach those people is to donate to an organization. I donate to Oxfam, which runs a pretty tight ship and low overhead, but I also donate to UNICEF and UNHCR...I have mixed feelings about that because I know the UN has a bloated bureaucracy, but my years as a journalist covering UN meetings in Geneva and New York convinced me that the UN can accomplish things. I also learned that some UN agencies are a lot more efficient and effective than others.

I also donate to the Nature Conservancy of Canada, which buys and protects land. Despite considering myself an environmentalist I don't donate to any of the more activist environmental groups because I often disagree with their approaches. But the Nature Conservancy is focused on just one thing and they do it really well, so they get my money.

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CanadianCapitalist

· #4 · Jul 4, 2009

I give about 1% of my income to charities mainly during the annual charity drive at the office. We invite a few charities to come to our office and pitch their plans on what they'll do with the money raised, conduct a vote and pick one that will receive our dollars. And then we do car washes, bake sales etc. in addition to contributing cash (and the company kicks in a match). It is usually a huge success because everyone can see exactly what their dollars are helping to achieve.

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markievicz

· #5 · Jul 5, 2009

Hard to argue with those figures but then it's easy to on my salary

The blogger freemoneyfinance has posted a couple of times on how LITTLE some very wealthy politicians and celebs give which I always find a bit shocking. The husband and I used to work in a country club inhabited by m/billionaires (many of whose names you'd recognize) and those guys seemed to have a lot more fundraising parties for their favourite politicians than charities but who knows what sort of cheques they were writing a home.

As for me, right now I'm giving 1% +/- to my favourite charity every month on payday. That's my "goal". It's automatic monthly debits, no excuses and no hassle that way. I guess I probably give another more than 1% between random sponsorships of colleagues, participation in the CN Tower climbs, cash to guys on the street, Toronto Library's annual fundraising and gifts for my mum, who asks that we donate to her favourite cause. I also do the Habitat for Humanity thing from time to time (I work in construction) and have applied to volunteer at Animal Services, but they haven't accepted me yet

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MGL

· #6 · Jul 6, 2009

Brad, that's an interesting article. Singer makes a compelling argument.

My goal for this year is 10% of net pay, although I'm a little behind at this point. Last year, we gave about 4.6% of net. I find that automated payments can make this almost invisible, but unfortunately not many of the organizations I support offer this option.

For those who are committed to financial contributions, I'm curious about where these contributions fall on the priority list- are they the first line items to be cut when things are tight, or the last?

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Leading Edge Boomer

· #7 · Jul 7, 2009 (Edited)

The late and famous Mother Theresa once said, and I paraphrase:

If you want to impress me with how charitable a person is, don't tell me how much he gave; tell me how much he has left.

Or how about the New Testament phrase, also paraphrased

A rich man has as much chance of obtaining Heaven, as camel has of passing through the Eye of a Needle.

The Eye was a very narrow gate in the walls of Jerusalem. A camel could pass through it, but only after it was divested of its cargo of riches.

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