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Thursday, December 7, 2017

Charitable Giving (Plus musings on the 2017 tax reform plan)

'Tis the season

Every year at about this time piles of mail comes to my box asking for money. I look through the pretty envelopes, some with calendars and return address stickers, some with wrapping paper and greeting cards. Some have cleverly glued nickles or plastic membership cards so I can't recycle them without opening them. Occasionally there is an organization which has devised a new model of charity and I'm glad I looked a little further.

Giving to charity is a privilege which I have because I make more money than I spend. Not everyone has that luxury. Doctors, as a profession, are much better paid than most people in the world. We may have educational debts to pay off, but eventually we usually end up in the happy minority of people who have enough stored value to take care of themselves and their families and to feel secure if they live awhile past retirement. John F. Kennedy used to like the quote from Luke (this is the passage from the New Standard Revised Version, not JFK's) "From everyone to whom much has been given, much will be required; and from the one to whom much has been entrusted, even more will be demanded."

What is Money?
Recently I have come to have a different view of money than I had before. Money is just one way of storing value. It is convenient because it is usually lightweight and durable and it is now possible to represent it digitally, using credit cards or phones to transfer it from one entity to another. It is liquid, meaning that it can be quickly turned into something else like groceries or clothes or medicine. It also does no work while it is sitting around waiting to be used.

There are other ways of storing value which actually do work or give joy or provide comfort. These are usually not as liquid. Examples are stocks, which are ways of giving some kind of company capital for achieving some goal while expecting either a dividend or increase in value of the investment in return for tying up money. Stocks can be sold freeing up money, but the value of a stock is tied to the success of the company and so value stored as stock is volatile. Property is another way to store value. Property can provide a place to live or farm or be rented out for an income. It is not nearly as liquid as stock. Selling property takes time and is never a sure thing. Its value of can also go up and down. If it depends on things that grow on it or are built on it, fires and change in weather can profoundly affect its selling price.

Why not just put it all under a mattress?
The best value storage would be something that makes us happy, was a safe bet and could be turned back into cash whenever we needed it. The most durable way to make me happy is to make my family, my community and the world flourish. Here are some of the ways that this can work:

1. Invest in education: when I educate myself I become more productive. I get happier, better at what I do and when I am better at what I do I am less likely to burn out. I put as much money as I can into my children's education. It turns out I have kids who will turn education into value. This is fortunate. Having happy productive kids is an investment that is liquid, safe and makes the world a better place. There is a community music school in Concord, New Hampshire that pulls people of very different backgrounds to make good music so I support them. I also don't hesitate to donate to scholarship funds and would not vote against a school bond. I support candidates who support public education.

2. Invest in places to love and live: it made sense to buy a place for my kids to live rather than having them rent. The value of the property may be volatile, depending on who wants to live in that place in the future, but that investment provides shelter and a place for people to gather and make community. We have done some remodeling to make our house more accessible when we get old and wobbly and to make sure it can hold many visitors. The monetary value of these things may be unsure, but the real value is solid.

3. Charitable giving: giving money to organizations that share my vision for a more equitable and peaceful world is actually more of an investment than a gift if I do it right. Long ago I heard about a charity called the Potato Project. It is defunct now. They found food that would go to waste because it was surplus and routed it to places that needed food, nationally and internationally. It must have been really difficult, what with the fact that things like potatoes were perishable and that they had to deal with many different organizations, but I loved the idea and gave them money. Now there is a local project that has made national headlines called Backyard Harvest which gleans extra fruit and vegetables from local sources and distributes them via food banks and other programs. This combines community cleanup with a chance for adults and children to get out and do physical work together in order to provide really nourishing food for people in poverty.

Decades ago a the Heifer Project sent me a request for money. It was a novel charity that bought a farm animal for a poor family, trained them how to care for it and expected them to give one or more of its offspring to another family in need. This had a kernel of an idea that has become another excellent charity idea. Microlending including such organizations as FINCA provides low or no interest loans to people who want to start a project but don't have the capital to do it. The ones that got my interest initially were international, primarily lending to women who didn't have as much access to cash as men and tended to be more hard working and financially dependable. There are microlending organizations in the US as well, some of which even service the loans and give the investor a return on their money. When I was in Haiti in the tiny village I sometimes visit to help with farming and health projects, the community had started their own microlending bank, with no donated money, just a little cash box and ledger books. People who had next to nothing put money in, knowing that someday they might need to borrow some for a project or an unexpected death or illness. Money that we donated made it likely that more people could benefit from the loans, but the project was clearly self sustaining. Having this option for people in need means that when we go back, the community will be healthier and the limited money we have to donate will go to projects that can best benefit.

I like to give money to organizations which protect the environment. There are many ways to do this including the Environmental Defense Fund which engages in legal battles and the Sierra Club which has a myriad of projects. I like the approach of the Nature Conservancy which simply buys land to preserve it. That's a pretty expensive way to save a place, but it works. Locally we have The Palouse Land Trust which buys and protects local land from development. This makes it possible for everyone who comes here to walk in the hills and appreciate how amazing they are. We have the Palouse Clearwater Environmental Institute which teaches people about environmental issues and does stream and trail cleanup, has sustainable energy projects and more.

I give a large chunk of money every year to the Unitarian Church I attend. It sounds corny to give to a church, but it makes excellent sense. Without donations, the Unitarian Church would not exist. It has no product for which it charges and its services are free. It provides amply to the community by being a place that productive and concerned people get together to make good projects happen. It makes music in a way that everyone participates. Participatory music is one of the oldest ways that humans have bonded and it doesn't happen in many other settings. It provides counseling for people in trouble and mobilizes resources for people going through hard times. It makes people think about the big issues and pull away from the cycles of worrying and isolation. It needs to pay for heating and electricity and salaries of the people who work there. Walls must be painted and carpets cleaned and coffee must be bought and associated projects supported. The overhead is essentially nil. Every dollar that I give goes to something that matters.

I am associated with a Zen organization in Santa Rosa California whose teachings I benefit from, which means that my patients and my family and friends also benefit from them. Like my church they have no way to make money other than donations, so I donate. With money, peace and wisdom efficiently diffuses via wiser more peaceful students, without money, not so much.

Some of my charitable giving is in funding trips that I take to South Sudan and Tanzania to learn about their healthcare, teach ultrasound and treat patients. These involve large chunks of change, but they are the most clearly positive way I can contribute since, although the visits aren't necessarily sustainable, the teaching and learning are gifts that keep giving. The organization that supports the hospital I visit, Sudan Medical Relief as well as Doctors Without Borders needs money to keep doing what they do, so they get donations as well. A fully local Haitian group (Farming is life = "jadin legim se lavi peyizen") which provides community resources for farming and health gets a stack of cash when anyone I know visits, since they have no reliable way to get money from remote donors. Their work is essentially without any overhead or waste and completely self governed. Since the cash economy is not healthy in the little island of LaGonave it is difficult for a project to be truly sustainable at this point. 

There are charities that I used support and don't anymore, mostly related to my experiences overseas. I used to give to organizations like United Way and the Red Cross. I am sure that they do good work, but I don't know where the dollars go. I do know that money from large organizations with what appear to be deep pockets doesn't necessarily go to projects that sustain themselves. Overseas money is often diverted or spent to do projects at foreigner rates which are much higher than local rates. Donations are best when they act like a lever to make a bigger impact down the line, like a microloan to a small entrepreneur who creates a vibrant business rather than an overpriced bandaid on a preventable injury that will fall off in a few minutes.

The 2017 Tax Bill:
Recently a tax bill passed the senate which does various things with which I disagree. An under-recognized negative aspect is that it discourages people from "itemizing" by removing several ways which people can claim deductions and by increasing the "standardized deduction" which is available only to people who do not itemize. Itemizing is the way that people get a tax deduction from charitable contributions. When I itemize, I do not pay taxes on the money that I donate to charitable organizations. I will continue to give enough in charitable contributions that I will still be better off itemizing than taking the standard deduction, but many people will not. Itemizing has been a traditional way that people are encouraged to give to charity when they move toward being financially comfortable. Giving to charity has meant paying less in taxes. Often taxes pay for the same things as charity, but in a more roundabout way and far less efficiently. The opportunity to give to newer, more sustainable and efficient projects is up to legislators who may have very different priorities than individual taxpayers. I worry about the impact on organizations that are supported by charitable giving.

Overall I would encourage those who have become financially secure to turn stored value into things that sustainably create joy not only for ourselves but for the wider world. Give generously so that it is more than obvious that you should itemize, regardless of what deductions are pinched off. Spend generously on education, your own, your children's and through scholarship funds. Find local groups that have models of giving that you appreciate and give time as well as money. Give, as they say, until it feels good!

(Feel free to comment with other charitable organizations that you think are important to support. The projects I mention are in no way meant to be complete. For instance, I entirely forgot to mention Habitat for Humanity which is a great organization.)