Are you Philanthropic?

Suze Orman has a philosophy that I have heard many times from her.  If you are clenching so tight to the money that you have now, your hands are not open to receive the money that you should have in the future.  I was skeptical when I first heard it.  Let's face it, it's a very touchy feely, new age sort of thinking.  After all, money is simple math, right?  Bring in more than what goes out, and all is good.  Well, I'm not so sure.

Last night I caught part of an ABC 20/20 report called, "Cheap in America" presented by John Stossel, who always interests me, but I don't believe I am a big fan.  The gist of it is that Americans give philanthropically in very disproportionate amounts.  The results were only somewhat surprising, but certainly interesting.  And a bit humbling.

Billionaires, of course, give the most money.  But not the biggest percentage of their wealth.  The "working poor" impressively take those honors.  The middle class, sadly gives the least.  I say sadly for two reasons.  First, I, and most people I know, are probably considered middle class.  Second, the middle class probably controls a massive amount of wealth, mostly due to the sheer number of middle class versus the wealthy.

Another variant included political affiliation, or probably more accurately, political lean.  As in liberal or conservative, regardless of specific party.  Conservatives gave more than liberals.  When you think about each side's view of government, this makes sense.  Liberals are characterized as being pro-government, wanting more social programs, and more taxes on the wealthy.  With respect to the role of government, an extreme liberal would be a socialist.  On the other hand, conservatives are characterized as being anti-government, wanting fewer social programs, and fewer taxes.  With respect to the role of government, an extreme conservative would be a libertarian.

It makes sense, then that liberals are less likely to donate charitably.  They are expecting the government to accomplish the things that many charities are created to do.  Feed the poor, house the abused, educate the youth, rescue the endangered.  Meals on Wheels, Habitat for Humanity, abuse shelters, private schools, the Red Cross.  Conservatives have a lower expectation of government, thus are more likely to contribute to these causes.  Do liberals donate more of their time rather than money?  Perhaps, but I don't know the answer to that.

Religion was another dividing factor.  Religious persons are far more likely to give to charity.  Perhaps it is the spirit and the will of the church extending beyong the walls of the cathedral, temple or synagogue.  Perhaps it is the simple habit of giving.  Regardless of political views or level of wealth, the religious are far more likely to give charitably, and not only to the church.  And the same question as above.  Do the non-religious donate more of their time rather than money?  Again, I don't know the answer, but I highly doubt this to be the case.

As I said, most of this is not surprising.  The most surprising was the high giving rates for the "working poor."  They were distinguished from the non-working poor, those who receive welfare, or other such entitlements.  The working poor are those who work for low wage jobs, washing dishes, picking fruit, mopping floors, operating a factory machine.

20/20 went to a factory somewhere in the midwest or the east.  I'm not sure where.  But the average annual salary there was $35k.  Not minimum wage, but hard work for about double minimum wage.  The average worker in that factory donated $500 per year to charity.  They interviewed one man who gives $500 per year to the United Way.  "It's not that much when you think about it," he says, "it's what?  Ten bucks a week?"  Yea, ten bucks a week.

Do you make more than this guy?  I do. 

Do you give more to charity than he does?  I don't.

Comments

[Jen]

Orman's philosophy is not so much New Age as it is New Testament (or possibly older). Remember Jesus pointing out the woman down to her (relatively speaking) last dime and giving it to the temple. Obviously, the money in the story is a bit of a cipher, but it's still relevant.

I commented in 2million's post on the same topic. I do give a fair bit, but I'm a professional fundraiser. My giving is partly professional karma.

[moneysmartlife]

One thing about being philanthropic that frustrates me is where to start. There are so many worthy causes that could use money, which should I contribute to?

I feel a little overwhelmed sometimes, I want to help but there are so many that need help and my measly annual contribution is only a drop in the bucket.

Of course this is no excuse not to donate but it makes the process much more difficult for me.

[Jen]

If you want your contribution to make more of an impact, pick something close to home. All organizations appreciate the pennies people send in, but smaller places - say, your neighborhood arts center - appreciate it a helluva lot more.

[Wanda]

I read one great way to donate with your time is to get on the board of directors for a local non-profit. you get to make a big difference for a local organization and they can take advantage of your expertise while you're also building your leadership skills. LA Money - maybe you can be the finance guy? :)

[bluntmoney]

The bit about the working poor doesn't surprise me at all. The working poor are the same people that will also lend you their last dollar, because they know what it's like to really need it, and what a difference even a little bit can make. (I say "they" as if I've never been "the working poor" myself...) And yes, I don't think $10 a week is a lot to donate. I usually donate more than that annually, but more in lump sums here and there than in weekly amounts.

[lamoneyguy]

Good points all. It's a tough topic, and one that I have not given enough thought. bm, you're right $10/week really isn't that much. I should be donating more. Wanda, I have been involved on a few non-profit boards, and yes, usually as the finance guy. Currently, I am not active in any organizations. Also, something that I should pursue more actively.

[S/100/30]

Also, there's been a lot of criticism of the methodology of the report that claims liberals give less than conservatives, so take that with a teaspoon of salt (if that didn't go without saying when it comes via Stossel).

[Prince of Thrift]

I've heard Davr Ramsey use the same analogy,

[Roro-says]

I use charity for several levels of my health (financial health, spiritual health, karmaic health).

KARMA: The first 20 years of my life would be considered living in "poverty." So, I personally know how helpful a few dollars can be to a person in need. You have no idea how many times the help of another (whether it is a $1.00 or 5 minutes of time) has stopped someone from doing a "desperate deed" that would be harmful to others and have reprecussions down-the-line (drugs, jail or death).

Because I saw what a different a dollar makes first hand, I make sure to give as many dollars and as much time as I can manage.

SPIRITUAL HEALTH: The Bible says give and you shall receive 10-fold (not in those exact words but it's implied that you get more if you give). God asks that one gives with a generous and happy heart. I give and when I see the difference that my giving of money or time or effort brings . . . it makes me feel that more powerful. Like I've effected something. Like I matter. Like the world is a little better because I stood in it. It keeps depression, and helplessness away. It makes you a little stronger in a world that just loves to tear you down.

And yeah, your money is limited and it doesn't feel like you can make much of a difference, but it reminds me of the this story:

There was a big storm by the shore. After the storm was done the beach was littered with tens of thousands (if not hundreds of thousands) of star-fish that were slowly dying in the hot sun.

I man watched a little girl, walking down the shore, pick up star fish and fling it out to the tides. She kept doing that as she walked down the shore. The man was walking in the opposite direction toward the girl, and he watched her do this a few minutes as he walked toward her. When the girl and the man met, he said, "What are you doing?"

She said, "Saving star fish."

He said, "What's the point? You can't possibly save them all, there are thousands here, so what does it matter?"

The little girl threw a star fish out to sea and turn to him and said, "It mattered to that one."

Maybe, we're not here to matter to the whole problem. Maybe we're just here to make one little difference and then others can build on that. Don't worry about the rest . . . do your part . . . do what you can and feel good about that.

FINANCIAL HEALTH: If you read about the "truly rich" you will find that part of their financial strategy includes "giving." I have found that a healthy formula for gaining wealth is . . . Give 10% of your income, Save 10% of your income and live on 80% of your income. A very simple formula, but it works.

I found that if I GIVE 10% of my money, it gives me incentive to save and invest 10% of my money. I think to myself . . . well damn, if I can GIVE this much away, I can damn well put that much away for myself! Charity begins at home . . . so I'm a fool if I don't save and invest 10% of my money but give away that much!

So, when I give away 10%, I gain incentive to SAVE 10% (and invest it wisely) and strive to live off of 80% of my take home pay. It has really worked for me over the last 10 years.

By using this simple formula, I make a difference in the world around me (causing my environment to be a much better place to live in); each month I gain a little bit more wealth and I live pretty comfortably (no debt except my mortgage).

Yeah, I would say being "philanthropic" is a very, very good thing.

[lamoneyguy]

Wow! What a comment by Roro. I agree, it is a very good thing. Thank you for sharing all of that.