Today’s blog is by Emma and is entitled:
How much should you give to charity?
“There are mixed messages about what is going on with charitable giving trends: the recent CAF annual giving survey showed that fewer people in the UK are giving whereas the Beacon Collaborative’s research into high-net-worth individuals has found a consistent upward trend in giving by the UK’s wealthy. It is hard to know how this will settle as the cost of living crisis and falls in investment income take effect. Certainly the need is rising, with charities experiencing increased demand for support whilst they too are experiencing increased costs. Whatever the overall statistics say, the question remains: how much, as individuals, should we give to charity?
“There are two concepts we can use to guide us.
“First of all is the idea of social norms. If you Google ‘how much should I give …’ you get all sorts of advice on how much to give at a wedding or birthday or other social occasions. This shows our need to know how much others are giving so we don’t give too much or too little. Knowing how much others give also helps guide our charitable giving. Most faiths set out the amounts to give: 10% is the tithe in Christianity and Judaism; for Muslims, Zakat is 2.5%. Of course, there are differing ways of working this out including which assets count, how savings are treated and whether it is a percentage of your income before or after tax. For example, with Zakat it is 2.5% ‘of wealth that has been in one’s possession for a lunar year’ and is payable above a certain threshold (nisab). The amount due can be calculated using a Zakat calculator. There are secular examples too: 1% business clubs or organisations like Giving What We Can which suggests giving 2-6% of your income. These all provide a useful steer for how much to give.
“The second concept is the idea of enough. Charity is often discussed as what you do with any surplus you have. Your ‘spare’ change is the extra money you don’t need; but is that a monthly contribution after paying all your bills; or an amount left after paying for other things like holidays, family plans or retirement? There are mechanisms to determine what is enough to live on. One example is the minimum income calculator which sets out how much money people in the UK need based on the public’s view of what everyone should be able to afford – it is currently £325.26 per week for a single person living alone. For those with incomes above this, we don’t have one clear view of what counts as enough. Our culture values financial success and our media celebrates the lifestyles of the rich and famous. Yet at the same time there are calls to cap wages, introduce wealth taxes or prevent the purchase of second homes. If giving comes from what is seen as surplus then what counts as enough matters. Cath Dovey at Beacon Collaborative finds that the data suggests that it may take an income of over £250,000 to feel financially secure enough to make regular major gifts – probably way above any common view of enough. There are other tools like Compare Your Income from the OECD, How Rich Am I from Giving What We Can and the World Inequality Database which you can use to calculate how your income and wealth compares with others in your country and around the world.
“Given that enough is so subjective, the simplicity of a percentage is very appealing. All the differing sources suggest somewhere between 1% and 10% is a good place to start if you can afford it. Even if everyone above the minimum income gave just 1% it would have a significant impact and would build a culture of giving as a social norm.”
Image: Emma Beeston of the Emma Beeston Consultancy, which advises grant-makers, companies and families on creating and implementing giving strategies. For enquiries or to book a FREE 30-minute consultation, contact Emma at email@example.com or by phone on +44 (0)7810 543737.
You can read more of Emma’s excellent blogs on the Insight page of her website.