Author Topic: Stage of life to donate to a good cause  (Read 4912 times)

dougules

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Stage of life to donate to a good cause
« on: May 03, 2016, 10:36:33 AM »
A philosophical question, at what point in life do you think it's best to donate to a good cause?  I'm talking is it better to give right now for people that haven't hit FIRE, or is it better to wait until your stash has grown to the point to support both you and the donations?  Or is it better to just wait and donate from your estate like Andrew Carnegie?  Or maybe some combination of the three?

The question came up in my mind as a tangent from the "Topic: Without Getting To Political:What is your opinion about giving money to homeless" thread.

chasingthegoodlife

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Re: Stage of life to donate to a good cause
« Reply #1 on: May 11, 2016, 02:41:05 PM »
Good question, interested to hear others answers! I give a small amount regularly now, and often a little extra when I have a big windfall. I plan to leave a bigger amount in my will, but that could be a long time away yet.


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lbmustache

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Re: Stage of life to donate to a good cause
« Reply #2 on: May 11, 2016, 06:13:31 PM »
Same as above, a little bit here and there - basically as much as I can without affecting my finances too much. I donate a couple hundred during the holidays to animal rescues, and some stuff here and there (especially food/groceries) to those in need throughout the year. I can't imagine that I am doing more than $500 a year, but every little bit helps someone.

If I ever won the lotto I would donate a lot. If I RE, I would do more than I currently do and save the rest for when I die.

tobitonic

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Re: Stage of life to donate to a good cause
« Reply #3 on: May 11, 2016, 07:04:50 PM »
We're firmly in the camp of continuous giving, rather than waiting for FI or death. This year we're aiming for ~11% after taxes, and plan on keeping at least that much in contributions from now on.

Sailor Sam

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Re: Stage of life to donate to a good cause
« Reply #4 on: May 11, 2016, 09:19:48 PM »
I'm also someone who gives continuously. I started donating ~10% of my net pay as soon as I was solvent enough to cover all my bills and stashed away a small e-fund. I reached that stage about 1.5 years out of college, when I donated $2,500 per year. I've worked my way up to donating almost $9,000 per year, and in the spirit of honesty, I have to admit giving away that much has recently started to bother me.

One frequent argument is to donate time, instead of money. Unfortunately I can't go that route, because I'm deployed on a ship. I suppose I could donate time by 'educating' my shipmates, but I suspect they might try and pitch me overboard. No one likes a bossypants in tight quarters.

My stash will reach FI proportions well before I'm ready to retire, so my angst isn't based on wanting to FIRE as quickly as possible. I just gradually started resenting the fact that I only get 90% of the pie. I'm not sure how I'm going to resolve my dilemma.   

PhysicianOnFIRE

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Re: Stage of life to donate to a good cause
« Reply #5 on: May 11, 2016, 09:40:59 PM »
It's good to donate continuously, and great to start a donor advised fund while you are still working.

Build it up as big as you can afford, taking the tax deduction, then give in perpetuity as an early retiree.

Cheers,
-PoF


mbl

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Re: Stage of life to donate to a good cause
« Reply #6 on: May 12, 2016, 06:21:08 AM »
Charity, giving, hopefully would being in childhood.
Something that becomes familiar and a part of your mind set.
Whether it is a firm 10% or whatever you're led to do.

It can be time, money, possessions, encouragement.......there are many ways to go about it.
In the end it's a personal and often private thing.
Just as any other emotional, spiritual or psychological element of the individual.

What is interesting and enlightening is that each of us has something that resonates for us.
And if we all take a small piece of the very many ways to help,  it creates some measure of balance I would guess.

Thoughts?

Daley

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Re: Stage of life to donate to a good cause
« Reply #7 on: May 12, 2016, 07:23:35 AM »
A philosophical question, at what point in life do you think it's best to donate to a good cause?

Here's a philosophical answer:

What are you on autopilot but the collection of the very habits you practice day in and day out? If you want to be generous and try to do good in the world, you need to always practice doing so. If you practice turning logical cartwheels to justify keeping every cent you earn for years until you can "afford" to be altruistic, no matter the intended theoretical outcome, what sort of practical life experiences and habits does that create?

The less charitable you are in the accumulation phase, the less charitable you'll be when you reach FIRE. Nobody is ever too poor or too busy to make a positive difference in the world.

We are but caretakers in this life. Embrace your creator, recognize that all that you have in life is not yours to keep forever, cleave to His ethical framework, and always strive to be a good steward. Do not do good works for the sake of good works, do so as an undeniable expression of grace and love.

retiringearly

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Re: Stage of life to donate to a good cause
« Reply #8 on: May 12, 2016, 07:31:32 AM »
I have donated every year since I got out of school.  I have a set % of my gross income that I donate.  This year I am planning on reducing that % as I am trying to buckle down on my expenses a bit more.  I haven't decided if I will either 1) eliminate the donations to certain charities, or 2) just donate a smaller amount to all of the charities I have supported in the past. 

I was sort of startled at the dollar amount I was donating every year when I did my taxes.  I like being generous with charitable giving but there are limits.

dougules

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Re: Stage of life to donate to a good cause
« Reply #9 on: May 12, 2016, 11:07:40 AM »
Hmm... honestly I was expecting most people to go the other way and say wait to donate more after the money has grown.  I guess I should start giving at least a little bit now to strengthen my generosity muscle. 

I.P. Daley, I like the perspective of looking at it like a skill.  I've really become a believer that a lot of apparently simple things in life actually involve a learning curve and habit formation like other more difficult things.   

The donor advised fund is also an interesting idea.  I'd never heard of that. 
« Last Edit: May 12, 2016, 11:12:12 AM by dougules »

PhysicianOnFIRE

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Re: Stage of life to donate to a good cause
« Reply #10 on: May 12, 2016, 12:01:44 PM »
Hmm... honestly I was expecting most people to go the other way and say wait to donate more after the money has grown.  I guess I should start giving at least a little bit now to strengthen my generosity muscle. 

I.P. Daley, I like the perspective of looking at it like a skill.  I've really become a believer that a lot of apparently simple things in life actually involve a learning curve and habit formation like other more difficult things.   

The donor advised fund is also an interesting idea.  I'd never heard of that.

I wrote a bit more about my donor advised fund strategy and how it relates to OMY syndrome today.

Excerpt:

"If you plan to do a fair amount of charitable giving in retirement, itís best to plan for it several years before retiring. Iím an advocate of using a donor advised fund (DAF) to build up a large reserve from which you can give.

My OMY giving plan is this: use my last several years of paid employment to build up a sizable DAF, giving up to 30% of adjusted gross income (AGI) each year until the DAF is equal to 10% of my own invested assets.

Why 30% over several years? I will intelligently donate mutual funds with significant capital gains. The cost basis becomes irrelevant when received by the DAF, and nobody pays capital gains taxes. When giving appreciated assets, the IRS limits donations to 30% of AGI. When donating cash, the limit is raised to 50%, but I want to give in the most tax-efficient manner, so Iím not donating cash.

Also, I want to give now while Iím in a high tax bracket, to benefit from a larger tax deduction. Waiting until Iím retired to build up a DAF would represent a missed opportunity. It will take more than three years to stuff a yearís salary into the DAF, so I plan to ramp up my giving soon."

I do give from the fund currently; the money doesn't just sit there, but I try not to give more than about 5%. Kind of like a safe withdrawal rate, but I can afford to be a bit looser with the DAF withdrawal rate compared to my own SWR when I retire.

Best,
-PoF

Sailor Sam

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Re: Stage of life to donate to a good cause
« Reply #11 on: May 12, 2016, 12:13:03 PM »
Hey Dougules, if you want to delve further into how MMM philosophy meets charitable donations, use google to search this phrase site:http://forum.mrmoneymustache.com/ charity. You'll see a wide variety of responses on display.

seattlecyclone

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Re: Stage of life to donate to a good cause
« Reply #12 on: May 12, 2016, 12:14:40 PM »
What I personally do is donate every year up to the maximum my employer will match. I view employer matching funds for charitable giving in the same category as matching funds for 401(k) saving: free money that should be claimed if at all possible.

After FIRE, I'll probably cut back some on financial giving early on, while increasing the amount of time I spend volunteering. Under the 4% rule there's a small probability my stash will provide just enough money to live on, but a much larger probability that I'll become quite wealthy. As retirement progresses I'll see which of those buckets I'm falling into and set my giving accordingly.

MrsDinero

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Re: Stage of life to donate to a good cause
« Reply #13 on: May 12, 2016, 12:21:33 PM »
A philosophical question, at what point in life do you think it's best to donate to a good cause?

When you find a cause you feel is worth your time/money and you can afford to give whatever amount you can give.

I'm not on an automatic deduction like some others on here, but I have certain organizations that I give to every year.  Usually in a lump sum. 

I also still donate certain "items".  I make baby hats for the local hospital, drop off bags of dog/cat food at the local animal shelter, etc.

Scandium

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Re: Stage of life to donate to a good cause
« Reply #14 on: May 12, 2016, 12:28:12 PM »
What do people hope to achieve with giving to charity? Maybe I'm cynical, but it just seems a bit  futile. What's the point of donating to feed to someone in Africa when it will probably get stolen, or they'll get killed in some war anyway? Or save endangered species when global warming or nuclear war will likely destroy the planet at some point? Or spend it on the less fortunate here and they'll use it on drugs, or have it taken from them by some scammer or other ill fortune.

Charity just seems like a black hole does ends up doing little. I mean we've had end hunger charities for millennia, and there are still hungry people..  Not to mention a large number of them are borderline, or outright, scams or celebrity tax shelters. Or maybe this is an american cultural thing I don't understand, a way to pay penance?
« Last Edit: May 12, 2016, 12:34:20 PM by Scandium »

Cassie

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Re: Stage of life to donate to a good cause
« Reply #15 on: May 12, 2016, 12:30:12 PM »
WE have always donated time, $ and items.  It is not that hard to find a worthy local, ethical charity.  I also knit scarves for the homeless and women and kids in shelters. 

retiringearly

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Re: Stage of life to donate to a good cause
« Reply #16 on: May 12, 2016, 12:38:25 PM »
What do people hope to achieve with giving to charity? Maybe I'm cynical, but it just seems a bit  futile. What's the point of donating to feed to someone in Africa when it will probably get stolen, or they'll get killed in some war anyway? Or save endangered species when global warming or nuclear war will likely destroy the planet at some point? Or spend it on the less fortunate here and they'll use it on drugs, or have it taken from them by some scammer or other ill fortune.

Charity just seems like a black hole does ends up doing little. I mean we've had end hunger charities for millennia, and there are still hungry people..  Not to mention a large number of them are borderline, or outright, scams or celebrity tax shelters. Or maybe this is an american cultural thing I don't understand, a way to pay penance?
I donate to charities that i have a personal tie to.  The charities have directly benefited someone that I know.  I know the charities well enough that I know that my donation is not being wasted or stolen.  Getting to know a charity takes some effort, and that is something some people won't do.

asiljoy

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Re: Stage of life to donate to a good cause
« Reply #17 on: May 12, 2016, 01:33:09 PM »
We donate a small amount now, plan to donate more later, BUT I also volunteer regularly. Time can be as important as cash.

Kaybee

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Re: Stage of life to donate to a good cause
« Reply #18 on: May 12, 2016, 02:16:07 PM »
What do people hope to achieve with giving to charity? Maybe I'm cynical, but it just seems a bit  futile. What's the point of donating to feed to someone in Africa when it will probably get stolen, or they'll get killed in some war anyway? Or save endangered species when global warming or nuclear war will likely destroy the planet at some point? Or spend it on the less fortunate here and they'll use it on drugs, or have it taken from them by some scammer or other ill fortune.

Charity just seems like a black hole does ends up doing little. I mean we've had end hunger charities for millennia, and there are still hungry people..  Not to mention a large number of them are borderline, or outright, scams or celebrity tax shelters. Or maybe this is an american cultural thing I don't understand, a way to pay penance?

I fully respect your opinion but I generally think of the starfish parable or the story of the hummingbird when people ask "why bother?".  Throughout my life, either myself or friends have been on the receiving end of various forms of help from charitable organizations so I know that its not always a scam and it sometimes is that little bit of help that makes a huge difference in someone's life. 

dougules

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Re: Stage of life to donate to a good cause
« Reply #19 on: May 12, 2016, 02:40:42 PM »
What do people hope to achieve with giving to charity? Maybe I'm cynical, but it just seems a bit  futile. What's the point of donating to feed to someone in Africa when it will probably get stolen, or they'll get killed in some war anyway? Or save endangered species when global warming or nuclear war will likely destroy the planet at some point? Or spend it on the less fortunate here and they'll use it on drugs, or have it taken from them by some scammer or other ill fortune.

Charity just seems like a black hole does ends up doing little. I mean we've had end hunger charities for millennia, and there are still hungry people..  Not to mention a large number of them are borderline, or outright, scams or celebrity tax shelters. Or maybe this is an american cultural thing I don't understand, a way to pay penance?

Well, donating to charity is a risk just like saving up for FIRE has risk.  For either the resources might disappear into a black hole.  You have to assess the risk of your charity either being diverted or not making a difference, then donate accordingly. 

Also, if you believe professor Michael Norton, there's a selfish component to donating to charity.  Apparently the one way that money can actually buy happiness is if you voluntarily spend it on other people. 

El Marinero

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Re: Stage of life to donate to a good cause
« Reply #20 on: May 12, 2016, 04:59:54 PM »
One approach that I am considering for later in life is  a Charitable Gift Annuity.  It would allow me to give away a big chunk of the stash, while still providing a reliable income stream for the rest of my life.

http://www.forbes.com/sites/baldwin/2012/06/06/does-a-charitable-gift-annuity-make-tax-sense-for-you/2/#12d183334ab9

MrsTuxedocat

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Re: Stage of life to donate to a good cause
« Reply #21 on: May 12, 2016, 06:47:21 PM »
I think donating time/money is important at almost any stage of life. When I have kids, I want to teach them the importance of caring for people/animals/environment that aren't directly related to you.