Financial Samurai

“Anything more than 0% is good in my eyes.”

Same.

I dunno, it depends on the month. Maybe 3-5% of net?

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Financial Samurai Reply:
March 15th, 2012 at 9:31 am

3-5% of net seems good… or gross. I donno either. It’s whatever anybody feels comfortable giving.

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I think as you get richer and older you can up the income you give to charity. Some people start off by giving 10% and living off and investing the rest and when they get older they donate 90% and live off the other 10%. It’s not common, but it’s a nice model.

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Financial Samurai Reply:
March 29th, 2011 at 9:20 pm

As the chart above indicates.. not necessarily as you get richer b/c of the tax burden one experiences. Giving dipped when you reached $75,000-$100,000. I truly wonder what happens at $200,000+ and so, the target level where the US gov’t wants to really put on the tax screws.

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Sunil from The Extra Money Blog Reply:
April 1st, 2011 at 6:00 am

Great point Max and I agree. The stats may show otherwise, but as Sam mentioned we don’t know what happens post 200k. Aside from the financial mechanics, there is a huge psychological component that goes into giving more as you make more. I can tell you that is true from my own personal experiences

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Financial Samurai Reply:
March 15th, 2012 at 9:32 am

When you make more than $200,000, and definitely more than $380,000.. you start thinking “what the hell, I am paying more in taxes than I am saving! the government should use my tax dollars, and is using my tax dollars to redistribute the wealth and help others. Why am I going to give more.”

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I don’t have a set percentage, nor have I kept track – but if the cause hits home, I donate.

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Paula @ AffordAnything.org Reply:
March 29th, 2011 at 8:25 pm

Me too! I donate when I’m moved to do so, when emotion grips me. Perhaps I see a sad documentary, or watch a disabled person on the street, and I feel an urge to DO something.

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Financial Samurai Reply:
March 29th, 2011 at 9:21 pm

If you do your own taxes, you’ll be interested to find what percentage of gross or AGI you’ve given. It opens your eyes, and makes you want to learn and read about articles like this one to see if you are in the ball bark!

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We tend to give in spurts, like annually at an event we attend for American Cancer Society, or when we’re moved by a documentary or something. Not the most methodical or steady giving, but better than nothing.

The higher Republican giving can be attributed to higher religious component. I don’t know that it’s a party methodology so much as you have more hard-core religious in the right than the left. Churches are huge charity organizations.

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Financial Samurai Reply:
March 29th, 2011 at 9:21 pm

You’re right about the religious component. That’s what a lot of the studies seem to show. But, if you look at the presidents giving past records, it sure seems like Democrats give way less.

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junebug Reply:
March 31st, 2012 at 9:55 pm

True, but according to an article I read recently (A Nation of Givers), those who are religious are also more likely to donate to secular causes than non-religious. So the money isn’t all going to the church, although all of the churches I have attended do quite a bit of chritable work (run homeless shelters, provide meals to low-income families & seniors, run children’s programs, etc.) The religious are also more likely to volunteer and donate blood and give food to friends, family and homeless people (according to the article).

Republicans are also more likely to donate than liberals because they don’t see charity as the responsibility of the goverment. Liberals are more likely to want to raise taxes and have the money used for those causes.

Personally, I like to check out where the money I donate is going and how much the charity spends on administration, marketing, etc. I don’t see the goverment being that efficient about it. Plus giving is good for the soul. It reminds me that I am a steward of the money and need to spend it wisely and think about others rather than focusing on myself all the time.

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Financial Samurai Reply:
April 1st, 2012 at 9:44 pm

Makes sense. You’ll want to read my latest post on April 2nd then… It’s entitled, “Is Paying Taxes A Form Of Charity?”

I want to donate about 5% of my pretax income, but if I did that every year, I’d never get to itemize my deductions. So I donate 0% in one year, and then 10% the next. I’m in one of the 10% years, so my budget is strained, but I know I’ll save a little on taxes when I do them for 2011.

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Financial Samurai Reply:
March 29th, 2011 at 9:22 pm

I see.. b/c 5% doesn’t meet the threshold to allow you to itemize? It’s good you’re cognizant of that level in the first place b/c I don’t think I was then.

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We give about 10% of gross to charities/ and our church (total). I figured if I can learn to live on less when I’m making less, it might be easier to give when I make more in the future

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Financial Samurai Reply:
March 15th, 2012 at 9:33 am

Sounds good Tim. Stay on the righteous path!

My fear is that it becomes more difficult to give more if you are making much more due to how much you get taxed.

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We give about 5 to 7%. I hope to increase that amount as our income increases.

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Financial Samurai Reply:
March 15th, 2012 at 9:34 am

Good stuff Melissa. Sounds like a good amount!

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Hey!
I am a cheerful giver, especially when it about giving in church.

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Great Read. My family donates 3% of our income our children’s school.

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Financial Samurai Reply:
March 15th, 2012 at 9:34 am

Hey Kevin, you changed your picture. Thanks for sharing.

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I don’t have any set % and don’t give on a continuous basis (although I’m only about 8 months into my career). I generally give for random things throughout the year when I or others are fundraising. Eventually I’d like to give more, but right now I’m just not at that point in my life/finances. I realize that people who make less than I do probably donate more, but that’s just the way it’s going to be for now until I achiever some of my other goals.

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Financial Samurai Reply:
March 15th, 2012 at 9:34 am

I don’t have a set percentage either. It’s just interesting to calculate the percentage after the year is done while doing my taxes.

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If your not going to donate your money you better donate your time or your blood!

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I’d say my donations range between 8-12% (if I include non-cash donations to Goodwill/Salvation Army). My totals vary depending on how my income is doing for the year and what kind of events are going on. If I had double my current income I’d definitely donate more. There are so many great organizations out there that I’ve always wanted to support but didn’t have the means to. I think that’s great Warren is donating such a high percentage of his wealth too.

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Financial Samurai Reply:
March 29th, 2011 at 9:26 pm

The non-cash donations is an important part that I wonder whether many of these studies consider. One person’s clutter is another person’s treasure!

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Sam, I donate 10% to charity, and have done so since I was a young boy. Nowadays, it isn’t easy sometimes. I feel your pain in the sense of being stuck in the middle. I make enough money to live comfortably, so long as I am a careful spender, contribute to retirement, and keep my family taken care of.

Wouldn’t it be great to be in Mr. Buffet’s position? Even so, any giving is better than nothing, and it’s certainly helped me become a better person, giving away of my earnings to a good cause.

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Financial Samurai Reply:
March 29th, 2011 at 9:25 pm

10% is pretty good and sounds like you’ve got everything balanced! Good one.

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My parents donated almost 20 percent of their net worth when they retired. Because they wanted control over how the money was spent, they formed a foundation, invested the money in dividend-yielding ETFs, and each year, they keep the principal amount intact and use the dividend payouts to pay boarding school tuition for orphaned children in a developing country.

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Financial Samurai Reply:
March 29th, 2011 at 9:24 pm

That’s pretty good of them! Are your parents in a pretty high bracket/group for wealth?

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Paula @ AffordAnything.org Reply:
March 30th, 2011 at 6:54 am

Nope; if they had to rely solely on their retirement savings, they’d be in trouble. They have only a few hundred thousand saved for retirement (they’re 70) and they live in a townhouse. Fortunately, they’re also from a generation that receives a nice pension from their employer. Their pension is $60,000 a year, which they live on … meaning they don’t really need to touch their retirement savings unless there’s an unexpected financial emergency.

Part of the benefit of supporting kids in developing nations is that the U.S. dollar stretches a lot further there; one year of boarding school tuition in Kathmandu is $1,200. (We negotiated the rate down from its sticker price by a couple hundred). Currently we sponsor 3 children.

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Financial Samurai Reply:
March 15th, 2012 at 9:35 am

Ahhh, the pension. I so wish I had a pension! If you capitalize the pension, it’s worth millions the longer they live.

$1,200 for boarding school tuition sounds like a bargain!

8% of gross income cash donation to various charities in 2010, I think anything over 15% will be looking fishy to the IRS.

Maybe it depends how easy it is to check out and then try and collect more taxes…

-Mike

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Financial Samurai Reply:
March 29th, 2011 at 9:25 pm

15% seems like a pretty low threshold. I think there is a rule that says you can’t give more than 50% legally.

I would think anything over 25% would start being suspect.

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Mike Hunt Reply:
March 30th, 2011 at 1:33 am

This article seems to think than anything more than 3% could be suspect as that is what the average person gives. Seems a bit low to me:

http://www.getrichslowly.org/blog/2011/03/28/getting-the-most-from-your-charitable-deductions/

The part about 3% is towards the end of the article.

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Financial Samurai Reply:
March 30th, 2011 at 5:53 am

Seems consistent with the findings in my chart above of 3.1%. That’s the thing though, GRS is targeted towards the middle to lower income reader given JD’s background. It would be interesting to see the giving figures in the $200,000, $500,000 and $1million+ ranges.

I wonder if JD’s readers knows he makes a lot of money now?

Powerful article. Its percentage of people who donate with less than $20,000 in income amazes me. I donate monthly, but always feel I could do much much more.

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Financial Samurai Reply:
March 15th, 2012 at 9:36 am

I’m inspired too. My friends who make less money and still give through time and money alway inspire!

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Currently we are more adhoc donators. We do multiple one time donations throughout the year. One of our goals though is to get us more set up on monthly donation programs. We just need to pick the charities we believe in.

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Financial Samurai Reply:
March 15th, 2012 at 9:37 am

That is the tricky part, finding good charities to really believe in.

I’m pumped about our upcoming Yakezie Writing Contest/Scholarship for 2Q2012!

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Call me a prude, but I’m not much for donating. I donate irregularly, often spontaneously, and I’ve donated only to organizations that I know a lot about, or ones that I think actually do good work with the money they bring in.

One of my favorite charities, by far, is http://www.heifer.org/# Heifer International. They’ve got an approach that I wish other charities would follow in giving things to people that keep giving. You can, for a very low donation, provide people in impoverished countries not with food, but with animals that produce food.

For $500, you can donate a milk cow to a family. The site says, “A good dairy cow can produce four gallons of milk a day – enough for a family to drink and share with neighbors. Milk protein transforms sick, malnourished children into healthy boys and girls. The sale of surplus milk earns money for school fees, medicine, clothing and home improvements.”

I like Buffett’s approach in paying it forward once you’ve accumulated all that you could. Sure, he could have donated a billion 30 years ago, but I guarantee his portfolio did better than any charity organization on the planet.

That said, eventually I want to be able to donate in larger sums, but I’ll definitely be paying myself first until then. As for now, spontaneous and small donations still work their way in.

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Financial Samurai Reply:
March 15th, 2012 at 9:38 am

It’s cool. As a student, I don’t think anybody would expect you to give much of anything at all! Instead, it’s really just time and maybe knowledge eg blogging and sharing your knowledge.

Just wait until you make lots of money and pay lots of taxes! You’ll certainly feel like it’s giving!

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Anna Reply:
April 19th, 2012 at 1:35 pm

I always think it’s a good idea to do a lot of research on a charity before giving. I’m very skeptical of this charity, as I think providing milk to malnourished children is not a huge help – once humans stop breastfeeding, our bodies naturally stop producing lactate, which is required to break milk down. In our western society, we continue drinking animal milk, which ‘tricks’ our bodies to continue producing lactate. However, most children in the poor parts of the world who don’t have access to milk as children are lactose intolerant, and won’t be able to drink or benefit from milk. Also, animals require a LOT of food for sustenance – think about how much grain/grass a cow would eat in an average week. In countries where famine and drought are the way of life, producing enough crops for the humans is hard enough, let alone having another HUGE appetite to fill. The milk a malnourished cow would produce is not ‘gallons a day’, and without access to large amounts of clean water, the animal will most likely perish from disease or malnutrition. I’d like to see some evidence that this type of giving is actually helping communities…

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Why would anyone compare the percentage they are giving to charity with what anyone else is giving? Because they care too much what other people think and aren’t giving for the right reasons. Also, I do not think giving tithe to a church should be considered giving to a “charity” and should not be deductible for tax purposes. For the most part the money stays with the church to build new buildings, pay for the best preachers and song artists, etc, etc, etc. Yes, some churches reach out to the poor but it is a very small percentage of what they take in. Oh, by the way, when the non-working rich pay the same percentage tax on their dividend income that I pay on my wages, we can talk about income redistribution.

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Financial Samurai Reply:
March 30th, 2011 at 3:08 pm

Because everything is relative and people are curious.

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I think in order to make it a complete comparison we should try to factor in the time and expertise some people donate to charity as well. As a student I know I donated hundreds of hours to charities. I may not have a lot of extra money (although I had very little income, so as a percentage, I might have been on the low end of your average) but the time I donated would have definitely been worth a lot more than most people give. If someone donates their unique skills as a professional or tradesman, this is obviously even more valuable.

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Financial Samurai Reply:
March 30th, 2011 at 9:09 pm

Time definitely is valuable, no doubt about it. In fact, often I argue that time spent is more valuable than money spent b/c it helps put perspective in each of us.

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My University Money Reply:
April 1st, 2011 at 5:32 am

Good point Sam!

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Are you suggesting the stingiest group of givers are rich Democrats, ha ha!

Seriously though I am not surprised by the poor people giving the most %, many poor people are more likely to have been in a position to know someone who needs or have needed charity so it;s more known how helpful it is.

I guess the democrat ideology is that no one would need charity if the gov could provide for everyone whereas Repubs believe that giving should be done out of choice so. I can see good and bad to both sides.

I don’t have a % that I give, just give what I can, when I can. It’s likely when the debt is zapped that I will get my contributions up higher again.

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Financial Samurai Reply:
April 3rd, 2011 at 7:14 am

Ha! Not suggesting anything at all mate. I was curious to know, so after some research, this is what I found.

I guess the Democrats vs. Republicans giving debate is a whole other topic! A lot of it is tied to religious reasons.

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From the very first job I had out of college, I have set aside 10% of all base / bonus to charity. That has increased through the years as I have made more money. I still give a fixed percentage today, though I do not track it. In addition, there are several instances of one offs, i.e. Katrina, Japan, etc.

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I didn’t used to give much at all and felt like I couldn’t afford it. Once I started planning where every dollar went, suddenly I could give regularly.

My percentage is 3% now, but will increase next year when the last non-mortgage debt is paid.

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I start out with 10% of my net income but I also give 10% of anything that comes back from taxes. In addition, I volunteer my time to charitable organizations because often that is more beneficial for them than the cash it would require to hire someone to do the job.

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Financial Samurai Reply:
March 12th, 2012 at 12:43 am

That’s a great amount Latisha! Keep it up!

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Sam, I don’t understand your point: “My fear is that it becomes more difficult to give more if you are making much more due to how much you get taxed.” Seems it should be just the opposite!!

If a poor person who pays no taxes gives $100, he has given $100 of what would have been his to charity. If a person with a marginal tax rate of 45% gives $100, he is only giving $55 of what would have been his to charity because $45 of that would have gone to taxes had he not donated it. So it is really much easier for a rich person to donate.

Also, even for people who do pay taxes, at the lower income levels, they may not own a house so they may not be itemizing deductions, in which case they can’t deduct their charitable contributions. So if you are not itemizing, if you give $100, you are giving $100 of what would have been yours.

Remember – No matter what you are taxed, the more you make, the more you make. Sometimes you seem to imply that people who have low income and pay little or no taxes are somehow better off than people with high incomes and high taxes.

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Charity? are you kidding? My taxes go to build the roads and bridges I use for work. They create the infrastructure of my city. They go to support my local schools and public universities that educate my children and support the creation of my future employees for my business. Taxes support services I need in an emergency like the Police and the Fire Department. If they’re national taxes they go to support these same items in other states as well as defense which keeps our country competitive and keeps my assets at least somewhat safe. Taxes are used to protect my well being with programs like the FDA. My taxes go to support everyone else in the community and society. Charity? do some homework bro. These items are worth it.

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Financial Samurai Reply:
April 2nd, 2012 at 8:25 am

So how much did you pay in taxes in 2011? We can compare with mine.

I think if one pays up to $40,000 in Federal Taxes a year, that’s fine. But more than that? I don’t think we’re getting anything more in return.

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Bill Reply:
September 11th, 2012 at 3:53 pm

I have to disagree with Patrick. Paying taxes so the government can build a soccer field at Gitmo for inmates is not worth it. Paying taxes so the government can use 43 cents on the dollar to pay interest to China is not worth it. Paying taxes for drone strikes which often kill women and children is not worth it.

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I’m just getting my feet on the ground financially, I’ve only been in the work force for less than 3 years now. I haven’t given much my whole life really (most I ever donated in a single year was about $100) but now I’m giving more. I’m starting off small, just 1% of my after-tax income. But I play on giving a higher percentage of my income each year.

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“you should feel good that the government is utilizing your income for the greater good……”

BAHAHAHAHAHAAAAA!!! THAT’S SUCH BULL$HIT!!!

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