Photo Credits: Jon C. Hancock / The New York Times
Of the $229 billion that Americans donated in 2009, about half went to religious institutions. Above, members tithe during services at the New First Missionary Baptist Church in Charleston, W.Va.
When the Obamas released their 2009 income tax returns a few weeks ago, the Times itemized their charitable contributions on its Bucks personal finance blog. Some readers praised their choices and some criticized them, which was predictable. But a few others got into a far more interesting debate.
Some people wondered whether the first couple should have given more money away than the 6 percent of their adjusted gross income that they did dole out, though people did credit the couple for redirecting to charity all of the $1.4 million the president was awarded for winning the Nobel Peace Prize. Others noted that George and Laura Bush gave away a much higher percentage of their income in 2007: 18 percent.
To my mind, though, looking solely at income misses the bigger picture. If we’re going to try to set standards that might offer guidance for us all, shouldn’t we look not just at what people earn but what they have? Once you do, it suggests a whole new way of thinking about what to give and a couple of ways to donate higher amounts more easily.
Americans gave away 2.2 percent of their personal disposable income to nonprofit groups of various sorts in 2008, according to Giving USA, an annual report on philanthropy. Of the $229 billion that individuals donated that year, about half went to religious institutions.
Given our support for houses of worship, it seems reasonable to ask how much the various holy books would have us give. Perhaps the best-known prescription for giving is the Mormon practice of tithing, where members give 10 percent of their income to the church each year.
The concept of tithing appears in several places in the Bible, including the book of Genesis, where Jacob promises to give a 10th of what he receives back to God. In Deuteronomy, meanwhile, there is the commandment to tithe “all the increase of thy seed, that the field bringeth forth year by year.” The year-by-year yield does indeed sound like an ancient agrarian version of what we now think of as annual income.
Muslims, however, take a different approach, according to Omid Safi, a professor of religion at the University of North Carolina. In Islam, there is a required charitable contribution known as Zakat, but instead of tapping income, the Koran specifies a donation of one-fortieth (2.5 percent) of one’s accumulated wealth each year.
I think the Koran has it right, and the financial planner Brent Kessel helps explain why in his book “It’s Not About the Money.” He offers the example of a person with $10 million in land that generates no income and $5,000 in monthly pensions and then cites a chef who earns $180,000, but has no savings. Shouldn’t the land baron be giving away more each year?
Mr. Kessel suggests a baseline standard of 10 percent of income or 1 percent of net worth, whatever is greater. Peter Singer, a bioethics professor at Princeton who argued forcefully for devoting more individual resources to ending global poverty in his book “The Life You Can Save,” raised concerns that some assets were illiquid or unavailable until later in life.
Instead, Mr. Singer proposes a progressive scale based on income. Once it hits six figures and beyond, he says you should give away higher and higher percentages of each incremental dollar earned.
What if your income is low and your assets are few? I’d try to value your time at an hourly rate, tally up any volunteer work you do and put that toward your quota.
If you find these figures somewhat arbitrary, you can try a qualitative approach as well. Gary Anderson, a professor of theology at the University of Notre Dame, suggests looking to the letters that Gerard Manley Hopkins, a Jesuit priest and poet, wrote in the 19th century to Robert Bridges, a fellow poet who was not a believer.
“He advised Hopkins that if he wanted to become familiar with the nature of Christian belief, to begin by giving alms and giving to the point of personal inconvenience, so that something that you wanted to do, you wouldn’t be able to do because you had given goods to the poor,” Mr. Anderson said. “It’s not giving to the point of utter impoverishment, but it’s not just giving pocket change either.”
That standard, however, can be tough to square with the national penchant for procrastination, waiting until the end of the year to make a bunch of donations in time for the tax deadline or because the holiday spirit has set in between Thanksgiving and the new year. Paying all at once could easily lead to feelings of personal inconvenience at levels far lower than people would feel if they instead gave in equal bits throughout the year.
So how would you go about doing that? Many nonprofit groups are happy to bill your credit card, in effect, every month. Or you can set up automatic bill payments through your online banking system. Network for Good is a service that can funnel recurring donations to a variety of recipients, though there’s generally a small fee involved.
To my mind, however, an even better way to give would be through payroll deduction. It boggles the mind, frankly, that we can opt in to financial self-preservation through 401(k) and similar contributions, but generally cannot commit to selflessness through the same system.
There are exceptions. Since 1978, I.B.M. employees have donated nearly $817 million through a custom-built payroll deduction system with 10,000 approved recipients. Employees can nominate new ones, and the company will add any registered nonprofit group to the list.
Most companies aren’t big enough to build something like that, though. That is why it would be nice if a company like Fidelity stepped in to offer a similar service to companies. Why Fidelity? It does a big business in administering employee benefits systems for companies and also has a separate entity, the Fidelity Charitable Gift Fund, that offers donor-advised funds where you can take an immediate tax deduction for deposits that you will give away later.
So why doesn’t it link the two lines of business? The company said employers haven’t asked for it. That said, the gift fund operation has already set up individual employee charitable giving accounts at a few companies that deposit corporate funds for workers to give away as they wish.
United Way, however, has run campaigns through payroll deduction for years, which suggests that there are plenty of employers with at least some interest in making it easier for their employees to give money away..
Given how close we are to making this a widespread reality, I plan to knock on the door of my human resources department first thing Monday morning and ask that it find a way to let me and my colleagues give away money to whomever we choose through payroll deductions. I hope many of you will make the same request.