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Charitable donations pre- and post-FI/RE
Old 09-12-2005, 09:58 AM   #1
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Charitable donations pre- and post-FI/RE

I wanted to get a feel for how different people handle the matter of helping others with charitable donations of money (or time).

Warren Buffett feels it is better to compound his wealth so that he can donate the most upon his death. Other uber-wealthy people believe it is better to give as you go, such as Bill & Melinda Gates, who have donated tens of billions by setting up a charitable foundation that helps with problems of Malaria and AIDS in Africa.

For those with somewhat less money - either accumulating or financially independent - what are the options?

Volunteering is certain one way to contribute. In terms of financial donations, the matter is a little trickier.

In theory, it would be nice to donate on a yearly basis towards causes that need help desperately. In practice, one never truly knows that one has enough invested because:

a) Future investment returns are unknown
b) Future volatility & sequence of returns are unknown & can cause a portfolio to "break";
c) Lifespan is unknown;
d) One could get married late (or meet a woman who doesn't earn much and one is expected to support her later years rather than raise your hands and say: "Not my problem", have children late or need to support elderly parents;
e) For those living in cheaper countries like Thailand, one could face substantially increased living expenses if foreign exchange moves against you and there isn't a good or desirable alternative location to relocate to;
f) Health care insurance could not fully cover an illness or rise much faster than expected.

In light of this, one could decide to donate something every year during the accumulation phase. This would slow down wealth building, possibly pushing you past your desired FIRE age (if lesser investment returns combine with this, perhaps much past your desired FIRE age). Others might prefer to not donate but instead save an additional sum that could later provide the ability to fund yearly donations (almost like a charitable endowment of your own). A $10,000 allocation allowing for yearly $400 donations during FIRE is one example.

It is also difficult to conclude what level of donation actually makes sense. Christians tithe 10% of gross/net pay. I've never been happy with this idea. For one, considering the low level of personal saving this does seem a large chunk to donate when set against what the same person/family probably manages to save. Dave Ramsey who I agree with on most issues even suggests donating financially even whilst in debt as scripture makes no exclusion for debt with donations. True or not, I think that is just plain wrong. I think perhaps on percentage terms one should consider what one can save & invest for ones future and then decide to donate a percentage of that. This seems more relevant. A halfway house might be net wage after covering fixed overheads but non-essentials.

From a more spiritual perspective, giving feels good, and it is said that one receives back as much if not more in return either through happiness or additional income. I've found that when I've donated time I actually got back more than I gave. I've also donated books to Oxfam bookstore chain in the UK (most recently this past week in response to the crisis in New Orleans & surrounding environs). N.B. Oxfam's primary role includes providing drinking water, hygiene & basic shelter in crisis situations worldwide.

I've noticed that going through the trouble of selling books for small net gain via Amazon or Ebay, after the fees & all the hassle, often the price received per book is not much more than a dollar or two. I note that Suze Orman has suggested before to sell online reminds you of the purchase (sometimes not a happy reminder) and it is better to pass the books on as a gift & move on. I don't disagree with this line of thinking. From my perspective, Oxfam sells a book for $4.50 and I usually don't net as much. If I'm going to donate something anyway during that year, it makes sense to donate books directly and receive the benefits of reducing clutter, simplifying asset disposals & saves time. Classic win-win.

I'm hoping this is an interesting issue to many posters at the ER Forums. I have not seen any recent threads about regular charitable support. On a personal level I know that I would like to be able to contribute financially in some way. I'm not sure to what level will be practical. I do have some concerns that I might be giving away something I'll find I need later (almost like someone spending what they need later). However, I don't want to let that deter me from doing something. When one can afford little luxuries for oneself, I think it fair to treat someone in need to something nice too. Trite-sounding perhaps, but that is what I feel. I'm very new to supporting causes.

Best,
Petey
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 10:19 AM   #2
 
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Re: Charitable donations pre- and post-FI/RE

Hi Petey,

Well put. I've had a lot of these same thoughts over the years.

One thing I've found is that with the arrival of big college bills, and full retirement around the corner, I've cut way back on charity contributions. Now that we've gone into tightwad high gear, working to save 50 cents on peanut butter, not going out to movies at all, etc., it's just too hard to write a check for $1,000 to a charity. Rightly or wrongly that's what's happened.
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 10:56 AM   #3
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Re: Charitable donations pre- and post-FI/RE

I give a fair amount of time to various organizations and will do more as I work less. I find it the most satisfying. I especially want to work more on lobbying on the health care front. Right now I only have done that in my state, I would like to do something on a national level. We shall see.

Charitable giving tends to go up and down. In the past couple of years it has been lower because of needs of relatives who have had some really bad breaks in the last couple of years. This is where we struggle. Once we lose my income from work and are on a more "fixed" income, what do we do about extended family needs? This is not easy to balance and impossible to budget. If someone dies, and you are the only one who can pay for the burial costs, you pay and screw the budget.



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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 11:47 AM   #4
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Re: Charitable donations pre- and post-FI/RE

I'd like to do Peace Corp or something similar after I ER. Currently, I'm pretty stingy with donations. I'm cynical of where the money is being spent, and from a budgetary standpoint, I don't have that much left at the end of the month as it is now (after the Pay yourself First thing). One day, I hope to contribute more by volunteering mostly.
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 12:25 PM   #5
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Re: Charitable donations pre- and post-FI/RE

Being the control freak that I am, I tend to want to donate my time more than my money.

When I write a check to the Red Cross, I wonder what will become of that money. Will it be spent in the most efficient way, or will it go to pay for an overcharged expense?

When I donate a couple of hours of my time to cleaning up some local parks, or selling Christmas trees for the Boys and Girls club, or driving my elderly neighbors to doctor visits, I know that my efforts are getting something done.

In retirement, I see myself giving more of my time rather than dollars to local charities.
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 12:30 PM   #6
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Re: Charitable donations pre- and post-FI/RE

I started on the road to FIRE by reading "Your Money or Your Life" and saving every penny, nickle, and dime that came my way. *After a while I got pretty stingy with myself and with others.

But I also read Suze Orman and came to realize that I didn't own the money so long as I had that attitude -- that the money owned me. *The prospect of FIRE was controlling my actions more than I wanted it to.

So I follow Suze's advice -- let go of some of it in order to be free of it. *So long as I'm making a great salary, I give generously. * I expect I'll stick to the same percentage when I am making less. *

And its worked -- I feel better about myself, my power over money, my ability to make change in the world, however small...

Caroline
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 12:42 PM   #7
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Re: Charitable donations pre- and post-FI/RE

We've cut back very little on charitable donations in retirement. Pre-RE we gave because we could afford to. Post-RE we give because we just don't need as much as before. It all works out in the end.
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 01:21 PM   #8
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Re: Charitable donations pre- and post-FI/RE

Since I'm newly retired (BTW, how long after retirement are you no longer "newly retired"... a year?) and the Katrina disaster hit, I've given the contribution thing some thought. When I was getting a monthly salary, it was simple to have funds automatically sent to the local United Way. Now I need to figure out another way to give and need to adjust the amount to fit our new circumstances.

- Will probably give the same percentage of our income to charity, but that will reduce the dollar amount by approximately 50% to reflect our drop in income.

- Rather than funnel all contributions through the United Way we will probably give more targeted donations based on individual need, such as a recent donation to the ARC for hurricane relief. This should not be viewed as a negative for the local United Way organization which is very well run here...I served on a United Way financial review panel for 3 years and we looked under a lot of rocks to be sure donations were well spent.

This change is a little risky on a personal basis as my youngest daughter works for United Way. Don't think I'll bring up the subject with her... :

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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 02:04 PM   #9
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Re: Charitable donations pre- and post-FI/RE

I've also had similar thoughts, Petey.

Though I've given time, I haven't given much money yet, for reasons in OP.

I do plan to leave much or all of my taxable retirement accounts to charities, especially if I never have children. Most or all Roth money I plan to leave to family.

I haven't chosen which charities/causes yet. I want to make sure a lot is had for my dollar. Not as easy to compare "purchases" with charity as it is with other things.
I've read that some younger philanthropers like Bill Gates have done a good job with this.

For example, I might give to a human rights organization like Amnesty International or Human Rights Watch, but would first need to have some idea of how much suffering they are able to prevent per dollar donated. If it takes a million dollars to stop one person from being tortured, I'd rather give to another cause where my money could stop more suffering. Perhaps child immunizations, or curing diseases like malaria (as Al mentioned) which affect huge numbers of people but are underfunded because a cure is unprofitable.
I'm also concerned about helping to solve one problem but causing or worsening another--like providing bags of food to a hungry but overpopulated country.

Researching this has been on my to-do list for some time. Been hoping a foundation or other organaztn will show up with the values, integrity, and efficiency I'm looking for, and I can name it as beneficiary of a taxable IRA.
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 03:39 PM   #10
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Re: Charitable donations pre- and post-FI/RE

My wife and I give to charity every April the 15.* I understand the Federal Government is going to be giving a significant amount of money to help out the Katrinia victims.* *

So i guess you're inquiring about charitable contributions made over and above those paid by the Federal Government which is funded by the taxpayer.* From the getgo, i'm already "giving" 28% of what i make.

This is to say nothing of the state taxes i pay too, a portion of which also supports charitable programs.
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 05:30 PM   #11
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Re: Charitable donations pre- and post-FI/RE

Quote:
Originally Posted by azanon
My wife and I give to charity every April the 15.* I understand the Federal Government is going to be giving a significant amount of money to help out the Katrinia victims.* *

So i guess you're inquiring about charitable contributions made over and above those paid by the Federal Government which is funded by the taxpayer.* From the getgo, i'm already "giving" 28% of what i make.

This is to say nothing of the state taxes i pay too, a portion of which also supports charitable programs.
I have a similar opinion. The government takes your money and
wastes it. Why contribute more on top of what is extorted?
OTOH, I do contribute to some organizations (NRA for example)
but they mostly try to counter dopey laws and regulations, so I think
I might be getting my money's worth.

JG
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 06:12 PM   #12
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Re: Charitable donations pre- and post-FI/RE

Quote:
My wife and I give to charity every April the 15.
Quote:
The government takes your money and wastes it. Why contribute more on top of what is extorted?
Whatever lets you guys sleep at night. Go for it. But don't try and convince me that I should admire your principled stand, because I don't. I'm sure the folks who lost everything, some including their loved ones, appreciate the "charity" you've already shown.

Give or don't give. I don't give a d*#n, but spare us the self righteousness.

BTW, I am from New Orleans. My dad lives there and rode out the storm and managed to get on a relief flight plane while New Orleans was still under water. I have about a dozen relatives who have varying degrees of loss from a bit of water and wind damage to complete and total submersion.
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 06:24 PM   #13
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Re: Charitable donations pre- and post-FI/RE

Quote:
My wife and I give to charity every April the 15. I understand the Federal Government is going to be giving a significant amount of money to help out the Katrinia victims.

So i guess you're inquiring about charitable contributions made over and above those paid by the Federal Government which is funded by the taxpayer. From the getgo, i'm already "giving" 28% of what i make.

This is to say nothing of the state taxes i pay too, a portion of which also supports charitable programs
Geez Az...seem a bit disgruntled as of late

There are good charitable orgs out there. You have to do some research to find the "good" ones, i.e. the ones that put the most of your $ to the actual cause. But the info is out there. Find one that fits what you believe in.

If you don't have the extra dough or live on a tight budget you can always donate some time. Doesn't appeal to everyone.

And donations do not have to be big.
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 07:12 PM   #14
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Re: Charitable donations pre- and post-FI/RE

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Originally Posted by Austin_Explorer
Whatever lets you guys sleep at night.* Go for it.* But don't try and convince me that I should admire your principled stand, because I don't.* I'm sure the folks who lost everything, some including their loved ones, appreciate the "charity" you've already shown.

Give or don't give.* I don't give a d*#n, but spare us the self righteousness.

BTW, I am from New Orleans.* My dad lives there and rode out the storm and managed to get on a relief flight plane while New Orleans was still under water.* I have about a dozen relatives who have varying degrees of loss from a bit of water and wind damage to complete and total submersion.
Hey, I agree it's a horrible disaster, but with the government
throwing money at every real and imagined problem in sight,
it's hard for me to get worked up to write a check. I see most of
these pleas for funds as feel-good posturing. I am sorry for the
suffering which I know is considerable, just calling 'em like I see
'em.

JG
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 07:38 PM   #15
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Re: Charitable donations pre- and post-FI/RE

Yep

New Orleans, Slidell, Bay Saint Louis - property gone - but everyone safe.

Still have a few neighbors/acquantices to run down - cell phones still pretty jammed.

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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 08:21 PM   #16
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Re: Charitable donations pre- and post-FI/RE

Quote:
Originally Posted by wildcat
If you don't have the extra dough or live on a tight budget you can always donate some time.
Yep. Here's an example:

My son-in-law in San Antonio is currently "between employment opportunities" and doing duties as Mr. Mom for three boys under the age of 7. He sees thousands of evacuees from Katrina, has no money he can donate, but wants to "do something". Spent the week calling and emailing everyone he knows and a bunch of people he doesn't. Talked dozens of people into a barbeque cookout for a shelter next weekend. Got the Red Cross, city inspector, fire department to approve, plus enough people to donate their time and the food to cook and serve 1,000 evacuees and shelter volunteers.

His FIL even agreed to help buy some briskets for him...

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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 08:48 PM   #17
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Re: Charitable donations pre- and post-FI/RE

Quote:
Originally Posted by peteyperson
I wanted to get a feel for how different people handle the matter of helping others with charitable donations of money (or time).

Warren Buffett feels it is better to compound his wealth so that he can donate the most upon his death.

For those with somewhat less money - either accumulating or financially independent - what are the options?

Volunteering is certain one way to contribute. In terms of financial donations, the matter is a little trickier.

In theory, it would be nice to donate on a yearly basis towards causes that need help desperately. In practice, one never truly knows that one has enough invested.

I'm hoping this is an interesting issue to many posters at the ER Forums. I have not seen any recent threads about regular charitable support. On a personal level I know that I would like to be able to contribute financially in some way. I'm not sure to what level will be practical. I do have some concerns that I might be giving away something I'll find I need later (almost like someone spending what they need later). However, I don't want to let that deter me from doing something. When one can afford little luxuries for oneself, I think it fair to treat someone in need to something nice too. Trite-sounding perhaps, but that is what I feel. I'm very new to supporting causes.
Right now I'm in the Buffett school of charitable giving... or the PeteyPerson school of "Don't give it away now if I might unexpectedly need it later."

We donate our time when we want, and our time seems to be a much better value to us than our checks. Besides it feels better to be a part of the donation than to just write out a check & drop it in the mail. Our kid used to be a volunteer dog-walker for the Humane Society (age 7) and that made a big impact on her. If time hangs heavy on my hands someday (hasn't happened yet) then I'd volunteer with Habitat for Humanity.

In Cut-Throat's "What are you saving it for?" philosophy of loosening the purse strings on the small stuff, any kid with the guts to ring our doorbell and solicit a charity donation gets our money. I'm reluctant to give to a fundraiser to send the softball team to the tournament (unless it's Zippy's chili) but I'm happy to support a halfway house.

There are times when I see a student whose light shines so brightly that I want to buy their college textbooks for them. However so far they also seem to figure out how to fund their own way and they'd feel we were wasting our charity on them. Perhaps we'll figure out how to do this anonymously through an organization that can help us figure out when to step in.

Our kid wants to give some of her savings to Katrina relief, perhaps the ARC. We're happy to match her example from our pockets.

If a 4% SWR provides more money than expenses, should the "leftover" be donated to charity? Or should that leftover be put in the long-term healthcare fund? I wish there was a "Four Pillars" on this subject! Anyone else have a system or a book to recommend? I'll read just about anything as long as it isn't Kiyosaki or Orman...
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Re: Charitable donations pre- and post-FI/RE
Old 09-12-2005, 09:52 PM   #18
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Re: Charitable donations pre- and post-FI/RE

We do some of both, donate time and money. Always feel a little guilty that we could be doing more. I am sure that we are doing more than some and way less than others! It is hard to figure it out!

Dreamer
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Re: Charitable donations pre- and post-FI/RE
Old 09-13-2005, 06:10 AM   #19
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Re: Charitable donations pre- and post-FI/RE

Quote:
Originally Posted by Dreamer
We do some of both, donate time and money.* Always feel a little guilty that we could be doing more.* I am sure that we are doing more than some and way less than others!* It is hard to figure it out!

Dreamer
Not for me. I don't spend 5 minutes in a year on this. Guilt free too.
We do make some donations. It is just not something that absorbs
much time or resources. Of course, everyone could "do more".
That's obvious. I choose not too.

JG
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Re: Charitable donations pre- and post-FI/RE
Old 09-13-2005, 06:12 AM   #20
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Re: Charitable donations pre- and post-FI/RE

Before retirement we would write a large check for various chariatble causes - now that we are retired we don't have the same monetary resources but compensate by volunteering a significant amount of time volunteering., ie instead of writing a check to the Heart Association, I'm now the person on the block who collects from the neighbors, instead of contributing money to fund a senior citizens monthly luncheon at our church, I work at the luncheon cooking, serving cleaning up - also Habitat for Humunity once or twice a week plus many volunteer opportunties throughout the church. *Even with some of our elderly relatives - we can't provide them momey but we can go cut their grass and do repairs around their homes, drive them to the doctor etc. *Frankly we find it more personally satisfying to actually "do" rather than write that large check.
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