Saturday, February 6, 2010

I ain't no fortunate one

A simple Google search on how much to invest will overload you with advice--for 401(k)s, IRAs, stocks, bonds, commodities, beanie babies, whatever. But a similar search on giving offers up meager results at best (including some links about rat poison).

There is a lot of talk about smart giving, but not a lot of advice on how much money individuals should fork over after vetting their organization. The do-gooder answer is simple: more, more, more, but that doesn't hold much weight in a country with high-unemployment, tight budgets and normal people wanting to make a difference.

For those who live a life of excess, like the demon bankers of Wall Street, the mantra of more can be a good financial guide (or shame tactic). But for those of us debating between donating $100 and $200, or even $25 or $50, it would be good to know the optimal levels of giving.

Luckily, Peter Singer, a philosopher whose most famous work is The Life You Can Save, created a giving calculator for this specific purpose. Just type in your income and boom! there's your charitable donation for the year. I entered in mine, $12,000, and it spit out $120.

Now, I like to think of my self as generous, but, based on my stipended-volunteer budget, my expected donation is 120% of my monthly personal spending, which covers everything but room and board. I looked into the rational behind these figures and found this explanation. The levels for giving Singer devised seem a little arbitrary.

And I think that's what the answer to the question "how much should I give?" will always be: arbitrary. Asking that question assumes many things: First, that your donation (investment) will be used effectively and efficiently. Second, your donation (investment) will be used with similar amounts of effectiveness and efficiency across all causes and across all organizations. Third, you will be able to measure a return on that donation (investment) that will justify the amount of money you put in.

As it stands now, only the first of those assumptions holds, and only in certain cases. Until all those assumptions are reality, any guide on how much to give won't hold a lot of weight. One day, social impact measurements may be able to make the other two assumptions true, but I doubt we will ever (or even should) posses the tools to accurately measure social change in quantifiable amounts. (More on that later, but until then, read this.)

So, my answer to the "how much?" question is a modification, but as equally a cop-out, on the do-gooder answer. You should give what you think you can. Pushing your limits is never discouraged, but ultimately, because the return on social investments is unquantifiable social change, you are the only one who can decide what you can afford.

Unless you are one of those people living a life of excess. Then, you don't really have an excuse.


  1. Very interesting post--I actually had the opposite reaction to reading the book (and the calculator, which I didn't know about until I saw your post)--I felt that it didn't push me to give as much as I feel that I should, because I'm not wealthy. But, really, both our experiences prove your point, that finding the answer to 'how much' is a much more personal process.

  2. What about tithing? While it's mostly thought of as a religious concept, it appears in many religions and I seem to recall reading a John Grisham book where a lawyer used a 10% tithe argument to win a whole bunch of money in a lawsuit (the fine would be used toward some good cause, so it relates at least a little, right?).

    Another thing to ponder:
    You seem to assume that the $120 should come from your current income, but might you also use it as motivation to raise $120 that you wouldn't otherwise have?

  3. Interesting point, Mark. I didn't think about raising that amount of money if I didn't feel comfortable donating it from my own income.

    But I think that brings up the question of how much time we should give, which is essentially the same question of how much money we should give. Again, while it may be a cop-out, I think the answer to that question can only be decided by the individual, as all other guiding suggestions (including tithing) would be arbitrary.

    That being said, I feel like a generally accepted "ball-park" percentage for giving isn't a bad idea. It may be a way to get a better sense of what individuals should be giving--ie, giving around 1% versus around 10%. I don't know which number would be more accurate, but a universally-accepted ball-park number might be helpful, as long as it isn't accepted rigidly.