Author Topic: Charity and OMY Syndrome  (Read 4778 times)

2lazy2retire

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Charity and OMY Syndrome
« on: March 02, 2015, 11:29:04 AM »
So I'm a couple of years out from FIRE. Already I'm thinking about OMY but for a different reason and that is to give to charity any income I make for that year. As I see it I'm fortunate to be in a high earning position and feel that the money I could give for that year would far outweigh anything I could do by pottering about some charity thinking I'm adding value when most likely just getting in the way :)
Anyone else consider this, if not for a year say a month or two?

jmusic

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Re: Charity and OMY Syndrome
« Reply #1 on: March 02, 2015, 11:51:46 AM »
If it's for a charity that you value then by all means! 

I'm a bit jaded myself, since a sizeable portion of many charities' donations go to pay the executive salaries.  I can't recall any, but there are some websites that provide information on actual benefit efficiency from contributed dollars.

I'm thinking of donating my time to organizations that could also benefit me through learning new skills.  Habitat for Humanity comes to mind...

jmusic

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Re: Charity and OMY Syndrome
« Reply #2 on: March 02, 2015, 01:26:00 PM »
Another thing to note is that there is a limit on how much you can deduct (You can GIVE more, you just won't see a tax benefit).

http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Charitable-Contribution-Deductions

Quote
Generally, you may deduct up to 50 percent of your adjusted gross income, but 20 percent and 30 percent limitations apply in some cases.

Sid Hoffman

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Re: Charity and OMY Syndrome
« Reply #3 on: March 02, 2015, 02:04:03 PM »
What kind of charities do you give to?  I ask because generally local charities are the most beneficial to your local community and often times those charities can benefit from getting the time of an unpaid volunteer as much or more than they can benefit from you sending them money.  If you volunteer 500 hours, that might be the equivalent of them not having to hire or contract labor worth $10,000, for example.  If a national charity, then yeah, often times 30% pays payroll, 20% goes to marketing/overhead, and 50% goes to the recipient.  That's still not bad, and in many cases it's more efficient than government programs.  Still, it's only a portion that makes it to the recipients.

If you're donating to an overseas charity, assuming it's well managed, then the money may go extremely far.  Look at World Vision, the Bill & Melinda Gates foundation, Blood:Water, or many others that operate outside the US.  A lot of them have only a very small management team in the US and then the rest of "payroll" is basically people paid at the peanuts rate that labor costs in developing nations.  Need a paid, full-time worker?  That could be $36k/year + taxes & benefits cost in the US or $1100 in Uganda.  I didn't make that up either, that's the actual average wage in Uganda.

I know a few people that look at charity that way; for their local community they volunteer their time and expertise and a limited amount of money.  For the rest of the money they send it to respected overseas charities where they cannot physically volunteer but the money could have 30x the impact it does in an expensive country like the USA or Canada.  I'm not saying it's right for you, but it's something to consider.  If you're retired young, you'll likely still have a lot of energy to go with all your new found time, and signing up as unpaid labor at a charity or two could be a great way to share your abilities with others.

Retired To Win

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Re: Charity and OMY Syndrome
« Reply #4 on: March 02, 2015, 06:16:21 PM »
So I'm a couple of years out from FIRE. Already I'm thinking about OMY but for a different reason and that is to give to charity any income I make for that year. As I see it I'm fortunate to be in a high earning position and feel that the money I could give for that year would far outweigh anything I could do by pottering about some charity thinking I'm adding value when most likely just getting in the way :)...


If you are proposing to basically give a charity a whole year of your job life (and who's to say you wouldn't decide to go even longer), you might want to consider using the money to  either (1) establish an invested trust/endowment at the charity of your choice that then can provide income from the trust to the charity indefinitely, or (2) set up a private foundation with the money and use the income from investments to fund grants to particular groups that either you favor a priori or that send you proposals that you think have merit.

I know from personal experience that there are many worthy small groups to whom a $5000 or $10,000 grant would be of tremendous benefit and have tremendous impact.  Ditto for a $100,000 endowment trust.

sol

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Re: Charity and OMY Syndrome
« Reply #5 on: March 10, 2015, 11:45:11 PM »
OP: thanks for the reminder.  I asked a very similar question not too long ago in this thread: http://forum.mrmoneymustache.com/welcome-to-the-forum/'one-more-year'-strikes-the-rich-the-hardest/

And seeing your thoughts on the matter has helped encourage me to take this up as a challenge.