More Than Money
Issue #20

How Much to Give?

Table of Contents

“Experiments in Giving”

Generally, we advocate a systematic approach to making a giving plan, one that includes consideration of current and future financial needs. Such a thorough process takes time, and in the meantime, people need easy-to-implement frameworks that help them test out greater giving. Below are some of the strategies we have heard people use. We flesh out each option through the possible giving choices of a fictional character: Julia Harlow, single, age 29, an inheritor and freelance software consultant.

Income-based options

  1. Give a percentage of income . Julia's grandfather taught her the value of tithing 10% of her income to give away, saving 10%, and spending the rest. After she received an inheritance that took care of her future retirement needs, Julia started giving 20% away (her original 10% plus the 10% she had been stashing away).
  2. Give all investment income . As a consultant, Julia earns about $55,000 a year after taxes. Because this more than covers her current living expenses ($45,000/year), and because she enjoys the feeling of supporting herself through earnings, she gives away all her investment income.
  3. Give all earned income . Over several years, Julia's $1.2 million inheritance, which she conservatively invested in a balanced fund, has netted her $50,000 a year in income. Given that her earned income has fluctuated a lot over the last few years, she decides to live on the more dependable investment income and gives away all her earned income.
  4. Give "windfall" income . In addition to other giving, Julia has a special giving account into which she puts unexpected financial windfalls. Last year this included: $10,000 from her grandmother, $2,000 from a loan she had written off, $50 from being let off the hook for a speeding ticket, and $12,000 gained from changes in the tax law.

Asset-based options

  1. Give appreciation . This past year, Julia's portfolio gained $60,000 in appreciation. Judging her current assets as already ample, she adds this amount to her giving budget, first subtracting 3 percent for inflation.
  2. Give assets you feel comfortable giving . Julia's portfolio has grown by $400,000 since she inherited it. She decides, as first step, that she can comfortably give $100,000 into a donor-advised account without sacrificing her future goals of child-rearing or retirement.
  3. Give to the point of feeling uncomfortable . Julia decides she can afford to be more generous but doesn't know exactly how much. She tries out an experiment of giving a little more each year, until she feels just a bit uncomfortable- and then evaluates it the following year. In the first year she gave one percent of her assets, in the second two percent, in the third year five percent, in the fourth she went back down to three percent.
  4. Give future assets . Julia discovers her parents plan to leave her another $3 million. At Julia's encouragement her parents change their will to direct Julia's portion into a charitable fund which she and her siblings will disburse, thus saving the estate considerable taxes.

Of course, these are just a few approaches out of a much wider range of giving strategies. Some people who give compulsively (often out of guilt or the need to be liked) have experimented with not giving anything for a few years. Others (including a few we interviewed in the book We Gave Away A Fortune ) have chosen to give away all of their personal wealth and rejoin the working class. However, the options cited above may stimulate you to get clearer about how you might wish to design your own short-to medium-term experiments, while you map out your long- term plans more systematically.

As Caleb Loring observes in this issue, each person's philanthropy tends to be "an evolving, work-in-progress," a personal journey. The question of how much to give is just one consideration in your giving, of course, but it is an important one. Perhaps the best guidance we can offer people are these song lyrics written by our friend Si Kahn:

It's not just what you're born with
It's what you choose to bear
It's not how large your share is
But how much you can share
It's not the fights you dream of
But those you really fought
It's not just what you're given
But what you do with what you've got.

--Anne Slepian and Christopher Mogil, editors

© 1990-2005, More Than Money, All rights reserved