Recently, a PoP reader named Marilyn commented on a post that’s almost a month old – the PoP October Income Statement. Marilyn asked some very pointed questions about the PoP charitable giving habits, and I found the conversation that followed between Marilyn and myself (Mrs PoP) very insightful. I’m sharing our conversation here in the hopes of sparking a continued discussion on other people’s charitable giving philosophies and priorities.
Without further adieu, here it is:
I commend your blog commitments, and particularly your courage in publishing such private details as your personal financial statements. But there is one thing that baffles me with your expenditures. From June thru Oct, your giving has amounted to just $150 for the single month of Oct. Correct me, if my observation is wrong, but your household is so blessed with such a high income, yet I can’t figure out why your giving is so low.
You’re not wrong, but it’s not quite the whole picture. Other giving that we take part in generally just gets lumped into the “Shopping” line item on the Income Statements. At the start of this post, I mentioned how I struggled with whether or not to categorize this NPR donation as charity or as media spending.
In general, the reasons behind putting charity spending under “Shopping” in income statements are largely because the charities may not be 501c3 registered (like donations to cover a hospital or funeral bill), or the giving also provides us with some benefit – like a donation to run a race in support of a homeless shelter, purchasing a wreath to support a school group, or sponsoring some gifts for needy families at the holidays. The tax deductions on most of these are negligible, so we account for them as “shopping” rather than giving.
That said, even when you add that all in our giving is still probably no more than 3x the $150 you found on our income statement. Which – you’re right – is still relatively low in relation to our income. [After our conversation, I remembered that I also donated my hair worth $1,000+ to Locks of Love earlier this year, too!]
Mr. PoP and I have talked about this a fair amount, and while we do donate some time in addition to some money to causes currently, one of the goals of reaching financial independence early is that it would enable us to have more time to share with causes we care about. Our thinking on it goes something like this:
- Even at our relatively high pay, our employers still profit off of our knowledge, experience, and efforts.
- If we no longer had to sell them 40+ hours/week of our time – it would allow us to donate time whereby non-profits could “profit” from us in the same way our employers did – but even more so, since they wouldn’t have to pay us.
- In short, we think the time we can donate in the future is worth much more than money we could give today.
We see many of our retired friends donate their time in retirement, and for many of those organizations the donation of their time and knowledge is invaluable. We look forward to being able to start giving that kind of time 20-30 years sooner than the typical retiree.
That might not square with everyone’s thinking – I know many people follow strict tithing requirements as ascribed in their religions. But giving back over the long term is definitely a priority for us, and we think our current mode is more likely to provide more value to our donations over the long term rather than worrying about it all squaring as a percentage of our income in the short term.
Thanks for explaining your giving priorities. This PoP blog is among several I have consulted since the summer, as I turnover a new leaf in managing my personal finance. And what I tend to do is look for the similarities in good PF trends, and look even closely at the trends that are either omitted from mainstream PF advice, or that are just very unique. Your giving priority jumped out at me, and that is why I commented on it.
If I may comment further on your response, it seems that you are making a major sacrifice in the short term, that of delaying for yourself the highest gratification to obtain from one’s labour/sweat, i.e. selfless giving. Plus, like everyone else, you have no guarantee of being alive, nor knowing what your station in life will be in 20 years, or even 20 days. The saying goes “Today you’re here, and tonight you might be gone”.
Therefore, why risk losing (i) an opportunity to create positive change for the less fortunate or for your favorite causes today, while (ii) gaining the reward of knowing that today while you have the means, you did your part to make a difference. It seems that your giving plan, a “long term” one as you describe, is heavily dependent on “tomorrow”; but remember, tomorrow is promised to no man.
Back to me, and my renewed PF managing track, I am grateful to finally reach the point of positive cashflow in my finances. Its only been 3 months, but what I find most rewarding is not the growing amount of income, but the growing portion of that net income that is not mine, that which will fund some needy individual, or worthwhile cause or entity.
I think I did myself a disservice by delaying this form of gratification for so long. Not any more though!!!
Thanks for your thoughts on giving and how rewarding you’ve found it as you’ve worked at managing your finances.
You’re right, one or both of us may die tomorrow. In which case, we do have enough life insurance on either of us that pretty much all debts would be paid off and the remaining person would be pretty close to financial independence. So it wouldn’t change that timeline for the remaining person dramatically. The remaining PoP would still have much time to give in a few years.
If we both die, we have beneficiaries set up on the accounts that understand our values and who we believe would act accordingly… but maybe we need to revisit this and be more specific in our desires to those beneficiaries. =/
Like many other people, we don’t really relish the thought of imagining ourselves dead – but you’ve given us some food for thought on this that we’ll definitely keep in mind as our needs and priorities change.
Thanks again for the thoughts and comments.
And you have given me some food for thought too as, until now, I had largely looked at giving of my substance to be the principal thing. With the PoPs’ emphasis on giving of your time & expertise I see a new perspective that I hadn’t tapped into as yet, and one that I really want to discover. I’ll resolve to add this dimension of giving to my planning for the new year. Thanks for taking the time to share your thoughts with me.
Thank you, too! These are the kinds of discussions we were really hoping for when we started this blog, so you really made my day with this one.
Thanks again to Marilyn for the great discussion on charitable giving philosophies.
Readers – How do you incorporate plans for charitable giving into your finances? Are you focused on giving today, or giving more in the future? Or perhaps some other method? I’d love to get a further discussion going as to how other readers incorporate giving into their lives!