My guess of what you want to describe is tithing, which is usually 10% (at the discretion of the donator). Some churches do good stuff in their neighborhood, it can be a legitimate way to donate. I’m actually quite amazed when I see our budgets around here to almost never see a line for charities.
I have to say that one aspect that I don’t like about this FIRE and investing thing is that I actually donate less money than I used to, just because I think of the opportunity cost all the time.
I recently just donated money to a charity that supports children affected by the war in Jemen, out of spite to myself, do something good for others.
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This reminds me about the post about Effective Giving and FIRE I wanted to do for a while. There’s some potential conflict there but also a lot of mutual ideas.
I stopped effective giving because I started investing every scrap of money I could. I almost only donate to charities anymore that do direct debit from my bank account.
Strange, I would have thought that you, of all people, would have enjoyed having a tax deductible targeted impact on society to help push it toward a “better” world according to your views. 
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Just dont forget to live. FIRE is not everything, at least in my eyes.
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I usually don’t include donations in my budget because I treat it more like a deduction from my salary.
Right now I donate 500 chf per month to effective charities +10% of my bonus.
Due to a raise, I’ll increase my donation to 800 chf per month in 2022.
Due to my donation, I have prevented around 4 deaths of mostly children and increased the lifetime earings of children in low income countries by around 60’000 chf.
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This is happening to me first this year (admittedly, it’s the first year where I have decent enough leeway to make it happen). My IPS includes a rule that 10% of my take home income gets dedicated to donations and I’m having trouble convincing me to up my current donations to meet that number, thinking it’s delaying FI, which I feel like I need (because of inadequate job conditions).
I’m working on acceptig that the point I should work on is my current work conditions and that my planed donations are not the problem. I’m not sure yet if I’ll reach that state of mind.
I like your approach to this (you’re actually very inspiring in that aspect). How do you plan to handle it after retirement?
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I’m not sure yet. I will probably treat my withdrawals as normal income and base my charitable giving based on that.
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Donating to an effective charity has a measurable effect:
Believing that charitable giving can’t be effective seems like a cheap cop-out to not feel bad about the lack of personal charitable giving. It is a wrong belief.
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There is no obligation to donate. However, I would argue that if one believes in morals, then being a better or worse person hangs on the effect we have on the world, which we can deem good, bad or neutral. Giving to charities is part of our impact. In my views (so abiding to my morals, which don’t bind anyone but myself), giving to charities or not, when one has the means to do so, does participate in making someone a better or worse person.
Which is a big part of why I don’t invest in VT (another big part is that I don’t want to concentrate General Assemblies’ voting power in the hands of a few investment companies and yet another one is that I don’t want my taxable money to have anything to do with the US). We don’t have to invest in companies with which mission statements we don’t agree. To the contrary, I consider it part of the job of an investor, which is proper allocation of capital, to invest according to their own world view. On the other hand, I do consider Nestlé investment worthy so not everybody would agree that my moral compass is set rightly.
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Part of my point is that what makes us better or worse people depends on our own value system so, if you abide to your own values and feel good with it, then everything is fine. We go to sleep with our own morals and our own sense of fullfilment and are our own metric.
Edit:
I don’t think this example is very relevant for this board. I’d guess most of us do pay 10K+ in taxes, and someone paying 4K in taxes (with according earnings and wealth) giving 1.2K a year may be making a bigger sacrifice than one paying 10K in taxes. (Or it may not, personal situations and all that.)
10k in tax money will do less good than 1k in charitable giving.
You also personally benefit from the taxes you pay.
10k in Switzerland will pay for a few months of education for someone.
1k donated to a charity is roughly worth 10-15 QALY.
10k in taxes doesn’t even play in the same ballpark as 1k donated to charity.
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It’s not really comparable though. 10k of taxes pay for a variety of things (quite a few of them being kinda required for society to function), it’s not like an extra 10k goes to education or something.
(But I suppose you could make a donation to the canton or city if you wanted to direct it to education specifically)
Anyway, I’m happy to do both (though I should increase charity, I currently mostly only use up my employer gift matching while my compensation has increased a lot especially due to employer share gains).
I follow Peter Singer approach: the ethical thing to do is to donate 4% of your imposable revenue. That’s what I do.
But some of it is CO2 compensation project in Switzerland (like hear pumps instead of gas) which is more expensive than traditional CO2 compensation done somewhere else.
I can highly recommend the book “the live you can save” by singer. It explores the ethics of donating etc highly relevant to this topic.
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Thanks for the book recommendation. Can you briefly exlain how Peter Singer came to the 4% conclusion (and not 1% or 10%) ?
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First, you can download the book for free from the foundation website:
I highly encourage to read it, I can even go further that if you are not a subject matter expert, you should refrain on talking about donation until you give the book a read. He confront typical objections and express himself very convincingly.
Here a quote on the book:
Asking people to give more than almost anyone else gives risks turning them off.
It might cause some to question the point of striving to live an
ethical life at all. Daunted by what it takes to do the right thing,
they may ask themselves why they are bothering to try. To avoid
that danger, we should advocate a level of giving that will lead to
the greatest possible positive response. If we want to see those in
poverty receive as much of the aid they need as possible, we
should advocate the level of giving that will raise the largest
possible total, and so have the best consequences.
Hence in this chapter I propose a much easier target: roughly
5% of annual income for those who are financially comfortable,
with less for those below that level, and significantly more for the
very rich.
You can take the calculator on their website:
it says 3.6% for a pre-tax income of 150’000 chf.
Basically you need to walk the line on not pressuring people too much, while convincing that donate is the ethical and moral thing to do. And since he is an exponent of the utlitarianism, he came up with this notion in order to maximize raised donations globally. The impact of his book in 2009 has been immense in the field of donations, with better standard, and the promotion of truly effective charities, such as GiveDirectly that gives directly cash to the poors.
Here is a list of their top rated charities:
Peter Singer is a figure that will go down as one of the most influential of the second half of the 20th century. Some things you may not agree with (I personally don’t share all his view) but the impact of his books is remarkable. He is a pure utilitarian pushed to all logical conseguences, such as veganism and animal protection. Very interesting figure.
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I took his course on practical ethics on Coursera, highly recommended. From the lectures though I remember him trying to nudge people into donating as much as possible, he even invited a couple speakers who donated a kidney… he is quite radical and controversial.