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2019 July 4

How much to give to charity

Filed under: Uncategorized — gasstationwithoutpumps @ 14:56
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I have been doing a short series of posts about charitable giving:

  • Thinking about charity started the series by giving a series of links to articles my son recommended on effective altruism.
  • Why charitable giving gave some of my initial thoughts on why people (and more particularly, why I) give to charity.
  • Readings about charity gave my reactions to each of the articles my son had recommended to me.

Today, I want to think through the amount that I will give and maybe a rough allocation for what sorts of charities I’ll give to.

The effective altruism movement has selected 10% of gross income as a good target for people to hit for feeling good about themselves—it is neither so high that everyone will feel bad because they can’t do it, nor so low that giving is meaningless symbolic gesture.  There is a pretty good explanation of why this arbitrary goal was chosen in, so I won’t repeat those arguments here.

The effective altruism movement seems to consistent mainly of young people, for whom income is the primary measure of what they can afford.  Net financial worth (assets minus liabilities) is low or even negative for many of them, so plays little or no role in their calculations.  For people like me, who have a moderately good income but have been frugal and invested much of their income for decades, the 10%-of-income rule of thumb underestimates what is reasonably affordable.  (For people with high debt load, it probably over-estimates what is affordable.)

There are several ways to handle invested wealth consistent with the 10%-of-income guideline:

  • Wait until the investment is converted to income and give away 10% of the amount withdrawn as income.  This is simple to compute, but doesn’t seem consistent with the effective-altruism principle of giving now, rather than delaying giving until later.  It also makes for some difficulties in figuring out how much to contribute if withdrawals from the investment are being made only for the purpose charitable giving.
  • Compute the change in investment value (minus contributions from income to the investment) each year and give away 10% of the growth in the investment.  This is a little messy to compute, as it requires keeping track not just of the current value of the investment, but previous values and how much was contributed to the investment from income.  Also, taking differences is essentially a high-pass filter on the investment value, and high-pass filters accentuate noise in the estimates of investment value (particularly a problem for illiquid investments like real estate, whose value is hard to estimate accurately).
  • Estimate the income that would be obtained by converting the investment into an annuity, and use 10% of that estimate as the amount to give.  This approach has the advantage of asking relatively little from the wealth of young people, but scaling up the distribution of wealth as a person ages.  Because annuity rates are set to be safely less than reasonable expectations of investment income, this method on average results in lower income estimates than growth of investment for young people, but higher estimates for old people (as principal is depleted over the duration of the annuity).

I favor the third approach, as it only requires estimating net financial worth (excluding any assets that have already been converted to annuities, which get treated as income). The resulting formula suggests giving about 0.5% of net worth each year for someone my age (0.4% for someone much younger and up to 1% for someone much older), in addition to 10% of income.

This year, because I’m forgoing 1/3 of my salary in order to take leave in the fall, 0.5% of net worth would make up a bigger share of my giving than 10% of household income—more than doubling the 10%-of-income guideline.  This means that I expect to give about five times as much this year as in previous years (when I fell short of even the 10% guideline based on income alone).

I don’t plan to simply multiply my checks by a factor of five to the same charities I’ve been giving to—if I’m giving that much more, I want to more certain that the giving is effective at meeting my goals.  I do not have a linear scale of “utilons” and the different sorts of charity are for incomparable goals, so I’ll be setting levels of giving for each type of charity based on what I think is sufficient to meet my needs for contributing to that sort of charity, not trying to maximize the value of my donations in a single dimension.

  • Global effective charities in development and health—possibly the Against Malaria Foundation that is one of Givewell’s top charities.
  • Local health and nutrition services (Planned Parenthood, Second Harvest Food Bank, …)
  • Local education (student projects at UCSC, Cabrillo College Foundation, WEST Performing Arts, … )
  • Environmental organizations (particularly ones involved in more sustainable transportation at the local, state, and national level)
  • Local cultural organizations (Museum of Art and History, Santa Cruz Shakespeare, …)
  • Social justice organizations mainly at the national level (Southern Poverty Law Center, ACLU, …)
  • Political organizations mainly at the national level (Verified Voting, PAC for a Change, …).  I probably won’t give much directly to political campaigns, as that seems to be a rather inefficient use of money (most of it seems to go towards raising more money).  There is no tax benefit to giving to politics, but tax advantage is not the primary reason for giving (and I may end up taking the standard deduction anyway, so charitable giving would have no effect on my tax deductions).

I have not decided how to balance the different sorts of giving, nor exactly what organizations to give to in each category.  This will require some calculation to figure out exactly how much we will give, then some probably long discussions as we allocate the money to different pools and different charities.

The effective-altruism approach would argue for picking whichever charity is most valuable (maximum utilons/dollar) and putting all the donations there, but that approach does not work for me—the different sorts of giving are not comparable and I’d rather give a little in several directions than a lot in one.

2019 June 24

Readings about charity

Filed under: Uncategorized — gasstationwithoutpumps @ 19:33
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In Thinking about charity, I listed some references that my son sent that influenced his thoughts on charitable giving.  Now that my grading is done, I finally have time to read them.
This one is a fairly simple plea for doing expected-value calculations, but it does not provide any insight into the relative values of different outcomes, assuming that everything is trivial to quantify.

This argues that money is the unit of caring, and that professionals should give money rather than time to organizations (under the assumption that the division of labor with specialists doing what they do best is most efficient).  The post does not preclude volunteering time, but sees it as a pleasure for the donor that should be bought with hard currency.

There is some validity to the thought that a highly paid professional will do more good by working an extra hour at their profession and donating the extra income, rather than volunteering to do something less skilled that someone could be hired to do more cheaply. The author misses a few points though: 1) Salaried professionals do not generally earn more by working longer hours, so volunteering time may provide working hours that would otherwise be wasted on unpaid effort for some corporation. 2) For many people in semi-skilled trades and low-level office work, the extra income from working longer (after taxes and other deductions) is less valuable than their direct labor (thanks in part to underpayment in those fields). 3) Working continuously on the same things can lead to burnout and a shortened career, hence to less total money to give—a change of pace can be valuable for maximizing the total value of a person’s labor.

This post suggests “I recommend that you purchase warm fuzzies and utilons separately.  Not at the same time.  Trying to do both at the same time just means that neither ends up done well.  If status matters to you, purchase status separately too!”

I think that this post had the main point that my son was trying to make—that it is more efficient to buy the different benefits of charitable giving separately.  The post identifies three benefits: warm fuzzies, status, and utility (though again it gives no real guidance in determining utility).  I identified a few other reasons for giving in Why charitable giving, but the basic notion that the different benefits are separable and may be most efficiently purchased separately is probably a good one.

This post makes a good argument for giving 10% of income more or less continuously, rather than delaying donations to the “wealth-distributing years” as university development officers refer to the post-retirement time of life.  They make a good argument for 10% being a reasonable target.

They do point out reasonable exceptions to the rule, but do not take into consideration reserves people should set aside for emergencies and for retirement (they are more focused on student debt and mortgages).  For people like me, whose salaries are much larger than living expenses and who have good insurance and liquid investments for unexpected expenses, the 10% guideline is a good one, but for people with little in savings, it may be better for them to delay charitable giving until they have adequate reserves—it is not efficient to give money and then need to have others give to you in order to survive.

Their guideline for retired people is also unclear: “People who have retired or partially retired (which we roughly define as having started to draw a pension) can join Giving What We Can and remain members for as long as they continue to donate at least 10% of their spending money.”  Their definition of spending money assumes an externally determined income (like a pension or annuity) rather than drawing down invested money.  Once one reaches 70½, the required minimum distributions from tax-deferred retirement investments may provide a reasonable definition of income, but there should probably be also a wealth-based, and not just an income-based component.

Overall, I felt that this post made a better case for effective altruism than the “lesswrong” posts.

This one argues for charitable giving over political action as being much more efficient use of time and money, and provides a rationale for the rather arbitrary 10% of income giving level recommended in the effective altruism community.

This post presents (and rejects) a utilitarian argument that animal rights are more worth funding than alleviating human suffering (because of the very much larger number of animals killed than humans).  It presents a bit of a reductio ad absurdum for utilitarian arguments about charitable giving, and those utilitarian arguments are the main basis of the effective altruism movement.

Some of the discussion in the comments of the post is also interesting.

This article discusses some rather silly arguments about “existential risk”—the risk of human beings going extinct—and points out the absurdity of calculating expected values of extremely high value events with extremely low probabilities.  Humans are extremely bad at dealing with very large and very small numbers, and our ability to estimate either large or small numbers is terrible.  As a result, the expected value (the product the badly estimated high value and the badly estimated low probability) can be almost anything.  Using this essentially arbitrary number as an input to a decision-making process is absurd.

The comments were again interesting, and I particularly liked one by Murphy:

Keep in mind that the “become a hedge fund manager” advice is based on the current situation where many charities have volunteers lining up to help while being strapped for cash.

In a world that already has many hedge fund managers channeling their money to the most effective charities but a lack of volunteers the most effective choice might be to volunteer.

If you imagine it as a market where the options all have some expected return, the rational thing is to invest in the cheapest item. This moves the price and the guy walking in the door behind you might look at the same market and see that the most effective choice is to invest in the next option which is now the cheapest.

I’m going to agree that I don’t buy arguments based on numbers of future people, I don’t believe in there being a moral incentive to maximize numbers of future people though future-suffering of people who have yet to exist I would attach some weight to. I don’t care if there could be a trillion people on earth, that’s not a goal in my mind but I do care if the grandkids of the current generation might live in misery.

This post argues against investing in politics, particularly for large-scale systemic change (man-vs-man instead of man-vs-nature problems).  The basic argument is that people, even intelligent people, have been historically very bad at making or attempting large-scale changes (the disastrous communist states resulting from Marxism are brought up as an example, as is the eugenics movement).  Focusing on smaller-scale incremental changes, where results are more predictable, is more likely to result in the desired net positive effect.

One comment on the post that I liked is

In some cases, I think it’s pretty obvious that there’s a market inefficiency in morality. The general reason for this is that I’m utilitarian and most people aren’t. Most humans have revealed preferences to care more about people close to them in time and space and mind-shape, all of which I reject. So it’s totally plausible that given my values, the most important interventions are massively underfunded.

There’s good evidence for this. Most Americans happily (or unknowingly) torture and kill dozens of animals every year. The total spending on existential risk reduction is a tiny, tiny proportion of what it would be if the world cared about humans a thousand years in the future as much as we cared about humans now. And the ratio of spending on local versus international charities speaks for itself.

That’s the more polite reason that I believe that there’s an inefficient market in morality. The less polite version is that most people aren’t strategic or selfless, and their implicit main motivation in morality is demonstrating that they’re trustworthy and generous. I think it’s pretty obvious that very few people are actually trying to help others in a cause-neutral way. So I think it’s very likely that I can “beat the market”, as it were.

I’m not a pure utilitarian, and I do care more about people close to me physically, genetically, or in terms of what they value.  I could probably cast my beliefs into the expected-value computations preferred by the effective altruism movement by assigning numeric values to different benefits for different people, but I’m not going to do that, because I don’t really accept the underlying utilitarian ethics.  (Also, the numbers would argue against almost all the local charitable giving I do, unless you consider the life of child at risk of malaria to be much less than a week of theater summer camp for a kid whose parents can’t quite afford it.)

Like Buck, I find So it’s totally plausible that given my values, the most important interventions are massively underfunded.”    I end up, however with a different set of charitable investments, because I have different values and a different basis for figuring out how to spend my money.  (Note: I still haven’t made up my mind what charities I’ll support this year, much less on an on-going basis, nor am I at complete odds with Buck—I’ll probably assign some portion of my giving to the sorts of charities Buck would support, but I’ll also be giving locally and to organizations that support culture and not just life.)

I noticed (after the fact) that the author of the post called out the same comment by Buck as particularly interesting.

This post argues for the value of having a community set a standard for how good one has to be to be considered a good person, and the economic argument for setting this level to try to maximize the goodness actually achieved.  The basic theory is that if most people are being good in order to meet society’s expectations, then setting the expectation too low results in little goodness, but setting the level too high results in many (most?) people not giving because they see the goal as unobtainable.  Setting a threshold somewhere where people are willing to strive to achieve it maximizes the goodness obtained.  Different thresholds (perhaps self-imposed) may apply to different people.
The post seems to be about letting people feel good about being “less bad” without requiring them to be saints in order to feel good.  It seems reasonable in principle, though the examples given did not resonate with me.  The discussion in the comments seem to wander off into random topics with little connection to the post itself.
This post presents two arguments: one in favor of diversifying charitable contributions (at least to some extent) and one that presents a simplistic utilitarian argument in favor of individuals finding the most effective charity for their values and donating everything that they are going to donate to that organization.
I don’t have a constant and consistent way of valuing charities—some I value for one thing some for another.  There is no one-dimensional scale (“utilons” is the term used in the effective altruism posts) that makes them comparable.  Multidimensional spaces are inherently unorderable.  Of course, if I am trying to decide on dollar amounts to give, the dollar scale is a simple one-dimensional scale, and so I need to make decisions on mapping incomparable benefits onto a linear scale.  But I don’t have a linear scale of “utilons” to work with (some effective altruists like to use quality-adjusted life years), and the optimal assignment of dollars is quite likely to be a mixture of different charities, each of which is aiming at a different dimension of the space.
This describes some of the groups at an effective altruism conference.  Some of them seem pretty weird to me (which is a strong statement from someone who has lived in Santa Cruz for 33 years).
This post explains why Giving What We Can recommends giving money to Against Malaria Foundation as the most cost-effective charity for reducing death of children and preventing suffering. Givewell also list Against Malaria Foundation as one of their top charities.
My post today is not intended to reach any conclusions—merely to provide some knee-jerk reactions to the effective altruism posts that my son sent me.  I don’t think I accept the premises of the effective altruism movement, and I still plan to give to a diverse range of charities, but I will take advantage of research done by organizations like Givewell and Giving What We Can to send some of my charitable contributions towards organizations they see as effective.

2019 May 20

Why charitable giving

Filed under: Uncategorized — gasstationwithoutpumps @ 11:32
In my post Thinking about charity, I provided a number of links to articles my son had sent me for thinking about charity and philanthropy.  I promised my readers that I would “write future blog posts as I work my way through the list.”  Because of my heavy grading load this quarter (and more fatigue than usual, for unknown reasons), I have not had much time to read or think about those posts.  I’ll probably get to them mid-June or in early July, once the grading is done for the quarter and I have a 6-month break from grading.

I have done some thinking about charitable giving (mainly during my morning bike commute, which is long enough for random musings on all sorts of things) without the benefit of reading the articles.

My first conclusion is that before I decide how much to give to charity and who to give it to, I need to get clear in my own head why I’m giving, so that the action will further the goals.  I tried to list mentally various reasons that people might have for charitable giving, to see which ones resonated with me.  Here are a few reasons I came up with:
  • feeling good about oneself.  Giving altruistically with no return makes one feel noble and virtuous.
  • giving back or paying forward. Acknowledging that one has been given much by others and reciprocating makes for a fair balance.
  • virtue signaling. Letting others know that one is a good person (or faking it, to hide being not such a good person) seems to be a bit too manipulative, but serving as a good example to others is not a bad thing.
  • making the world a better place. Fixing everything wrong in the world is impossible, but progress can be made in small steps.
  • participating in a community. Joining a group dedicated to making some improvements can provide a circle of similarly minded people who are good to have as friends and associates.
  • reducing the money given to the government or to heirs.  Giving money away to charity can reduce the amount paid in taxes while living or the amount left to others when one dies.
  • religious or social obligation.  Require charitable giving as a tenet of a religion is common, though this requirement has often been corrupted into con games to enrich the leaders of the religion at the expense of the followers.

There are undoubtedly many other possible reasons for charitable giving.

I was brought up to believe that good people are charitable, so feeling good about myself requires charitable giving.  I do not feel further obligation to those organizations that supported me when I was younger—most of them have already received more from me than they provided—but I do feel an obligation to provide for others some of what was provided for me.  That is, “paying forward” makes more sense to me than “giving back”.

Virtue signaling is not a big deal for me—I don’t feel any need to trumpet my contributions.  But I do believe in setting an example, so I don’t feel obliged to keep my donations secret either.  If my modest contributions can encourage those wealthier than me to give more, then I don’t mind my name appearing on donor lists.  Being an example does not require boasting—I’ve been quietly advocating for bicycle transportation for decades by relying on my bicycle for transportation, rather than getting a driver’s license.  Some people have been inspired by this example to try the car-free life themselves, or at least to try bike commuting occasionally.

Making the world a better place seems to me to be the main point of philanthropy—but this broad goal is so vague that it does not provide a lot of guidance on where to give.  The tiny amounts of money I have to give cannot make much difference to the world as a whole—so should I concentrate on improving a small part of the world (like the local community), look for giving that may have a large effect in future (giving to research, for example), or having maximal effect right now.  Are political changes more or less important than direct services to those in current need?

I’m not much motivated by tax consequences, nor by religious or social obligations.

The two reasons for giving that resonate with me right now are feeling myself to be a good person and making the world a better place.  The main thing I feel I need to think about is in what ways I can effectively make the world (or some small part of it) better.

Readers, what reasons for charitable giving have I missed? What motivates you to give?

2019 April 13

Thinking about charity

Filed under: Uncategorized — gasstationwithoutpumps @ 21:39
As I enter what university-development people optimistically call the “wealth-distributing years”, I’ve been thinking about increasing the amount I give to charity.  Currently, the amount I give is modest (about 2.5% of gross household income), but I’ve determined that I now have more than enough retirement savings and income, and my son is finished with college, so I can up my giving substantially, without much risk of running out of money in my lifetime.
My wife and I will be discussing who we want to give to and at what level over the summer (when we time to think about something other than work).  I mentioned my intention to up my level of giving to charity to my son,  and we had a discussion about the philosophy of charity. He suggested a long reading list that has shaped his own approach to charity (he plans to be more generous than me, initially giving 10% of his gross income to charity).
Here is what my son sent me:
Here are some of the essays that shaped my views on charity and philosophy. I don’t expect you to fully agree with them (I certainly don’t), but most of the arguments that I was making are derived from these essays. If you’re only going to read a few, they are organized in roughly decreasing order of importance.
A good FAQ about giving, specifically giving 10% of income:
About political activism and what it means to be a good person:
About animal welfare and local giving:
About existential risk:
About political giving:
About classifying good and bad:
About spreading donations over multiple charities:
Anecdotes about the weirder aspects of the movement:
And, finally, some feel-good news:
I don’t have time right now to read everything here—certainly not and think about it carefully, which is what I need to do—so I’m putting the list up on my blog so that I can find it again easily.  I’ve not started on the reading yet.
I expect to write future blog posts as I work my way through the list.  I suspect that I’ll find things that I agree with, things that sound good but I’m not convinced by, and things I disagree with.  I’ll probably be asking readers for help thinking about the things I’m not convinced by or that I disagree with.

2015 November 27


Filed under: Uncategorized — gasstationwithoutpumps @ 12:26
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I get inundated with requests to donate money to worthy causes—most of my hardcopy mail consists of such appeals.  Some I recycle unopened, some I open and glance over before recycling, and a very few I respond to.  I’ve started making some rules for myself about which ones I respond to:

  • Ones that are based just on emotional appeals with pictures of the supposed beneficiaries: recycle.
  • Ones that send me letters frequently (more than twice a year): recycle unopened.
  • Ones that tell me when I last donated and how much: seriously consider donating the same amount or more again, as long as it has been at least 10 months since the last donation.
  • Donations to politicians: recycle unopened.
  • Ones that I’ve looked up on various charity-watch websites and determined to be scams (or at least very inefficient charities): recycle unopened.
  • Year-end appeals: recycle.  (I prefer to make my donations in the spring or summer—trying to guilt-trip people who may have winter depression or holiday stress strikes me as too cynical a ploy.)

There are a few exceptions to these guidelines:

  • Newsletters from organizations that I have signed up for newsletters from are welcome (Southern Poverty Law Center, Jewel Theatre, Museum of Art and History, Friends of the Santa Cruz Public Libraries, Shakespeare Santa Cruz, … )
  • Notices of special events from organizations that I donate to don’t count against the “frequent nagger” penalty, but end-of-year donation requests and “matching-fund” donation requests most certainly do.
  • I do give to political campaigns occasionally (which is how I got on the “sucker” lists for political donations), but I do it on my own timing and never in response to mailings. The ones asking by mail for me to donate are rarely for politicians I would want to support, even though they may belong to the same political party as people I have supported. If someone is taking money from billionaires, then they don’t need my money and aren’t going to listen to my voice—they’ve already been bought, and I’m not about to throw my money away supporting yet another voice for the billionaires.

My biggest donations are done by payroll reduction, split between United Way, Planned Parenthood, and Second Harvest Food Bank.  My next biggest donation is to Santa Cruz Shakespeare, which is going to need a lot this year in order to build a new performance space, now that UCSC has refused to let them continue to use the Festival Glen (a very short-sighted decision on UCSC’s part, in my opinion, as the community goodwill and press coverage were worth a lot, not even mentioning the rent they collected).  After this year, I may be splitting my theater donations up more (I didn’t donate to Jewel Theatre or West Performing Arts this year, but probably will next year).

I give token amounts or membership dues to a number of charitable organizations.  From most of them, what I’d like is a monthly newsletter by e-mail (so I can see what they are doing) and an annual reminder that it is time to renew (with the date of the last donation).  Hardcopy newsletters are ok, but e-mail generally wastes less of the donated money.

I’ve started dropping from my list any that send several donation requests a year, hoping to double dip by taking advantage of donor forgetfulness.  Generally I start by missing a year—if they send me a single letter saying when I last donated and asking if I missed donating to them, then I generally renew.  If they start flooding my mailbox with generic pleas for money, I drop them.

This year, I’m thinking of giving to two organizations that have done particularly good appeals—ones that stood out from the pile of trash that usually comes in the mail:

The Friends of the Santa Cruz Public Library, whom we usually join every year, have started a "New Year's Eve Gala" for introverts—the idea is you stay home and read a book.

The Friends of the Santa Cruz Public Library, whom we usually join every year, have started a “New Year’s Eve Gala” for introverts—the idea is you stay home and read a book.

I've not donated to UNICEF for decades, I think, but the idea of buying yourself off a donor mailing list is appealing (the first time—if other charities start doing it, it'll be recycle-unopened status for them).

I’ve not donated to UNICEF for decades, I think, but the idea of buying yourself off a donor mailing list is appealing (the first time—if other charities start doing it, it’ll be recycle-unopened status for them).

I think I’ll give some extra money to Friends of the Library, and a one-time donation to UNICEF, just to reward them for having more imaginative campaigns that stood out against the relentless give-me-your-money-or-the-baby-dies guilt-tripping of most charitable organizations.

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