Monday, September 9, 2013

Why Do The Rich Give Less?

There's a lot of research showing that the rich donate less than the poor (as a percentage of their income). I've seen statistics say the wealthiest Americans give 1.3% of their income while the poorest give 3.2% of their income. I've seen other studies claim that once your income goes over $100k the percentage of your income that you donate dives by about 3 percentage points.

[On a side note, do you see why these percentages make the One Percent Difference campaign look so unambitious?]

There's some good articles out there exploring the reasons that wealthier people are less generous (as a percentage) but I wanted to add my own two suggestions:

1. The Happiness Derived From Giving Has A Cap
I've read a few pieces of research that show money can buy happiness - to a point. In other words, as you earn more you become happier until you reach a certain threshold. I've seen that put at various amounts around €40k-€60k per year. After that your happiness levels off and it doesn't matter how much more you earn. I can believe that.

Is there a similar pattern in giving? Do you get more and more pleasure from giving away money, but only to a certain point?

If that was the case it would explain the figures. We want to give more and more, we want to give a higher amount. But once we hit a certain level there just really is nothing more in it for us and the amounts we choose to give, with pleasure, level-off.

If this is true how can we address it? How can we make giving continue to be pleasurable ad infinitum?

2. We Live In Fear Of Losing Our Lifestyle
One of the main reasons we don't give, no matter how wealthy, is not because we can't afford it but just in case we can't afford it. You may well have €10, €100 or a €1 million sitting there - and this could make a massive impact on someone else's life - but what if things go pear-shaped in the future and you need that money?

We give such a small percentage of our income because we fear being alive for another 30 or 40 more years and, if something goes wrong, we'd have to make sacrifices.

Look at Simon Cowell. He sits on a fortune of more than £200 million and earns about £50 million a year, and last week he was in the news talking about what he'd do with his money when he dies. Who can even spend that amount each year? Now if he knew for certain he would earn £50m a year for the rest of his life he would be much more willing to give away nearly everything he has right now.

Or what if the rich knew they could get their money back if they needed it?

What if the very wealthy could give all of their current wealth to a charity and should they need it in the future they could simply take it back? Think of it as prize bonds where the prize goes to someone who actually needs it. Charities could sit on the money, invest the money, even live off the interest, until that wealthy celebrity kicks their pearly bucket.

Would the wealthy give more if they knew there was no chance they'd ever have to clean their own house again?

Monday, September 2, 2013

13 Reasons It Sucks To Be A Charity In Ireland Right Now

If you set up an organisation or group whose purpose is to make the world a better place you would generally look in to calling yourself a charity. But the benefits of having the word 'charity' associated with you are really beginning to get outweighed by the drawbacks and negativity surrounding the word. You might be better off calling yourself a 'social enterprise'.

Here are 13 reasons why it sucks to be a charity in Ireland right now:

1. Nobody Cares What You're Doing
The media, the public, everybody - we just keep asking charities about their finances and their staff salaries. Or, on a more positive note, we'll sometimes talk about fundraising events and mini-marathons and pub quizzes. But nobody is talking about what charities are actually achieving and the impact they are having. Yes, good charities are providing that information - the proof of their good work...We just don't read it, share it or care about it.

2. People Want Good Governance But Nobody Is Willing To Pay For It
Everyone wants to see good governance from charities. We want to see transparency, good reporting, thorough accounting and more. But nobody wants their donation to go towards admin. CHY-22.

3. Your Staff Are Paid Less For Doing Good
If you work in the charity sector you're automatically earning 18% less than if you were doing the same job in the private sector, and that figure gets much higher in some roles. Yes, we're happy to reward you financially if you're making the world a worse place...but if you're working with the world's most vulnerable people then that should be it's own reward.
Nevertheless, the public still think charity staff are overpaid without batting an eyelid at private sector pay. Many people think charities should rely on volunteers, but people who register to volunteer on average only give about an hour a month of their time - how could any organisation run like that?

4. Changes In Tax Relief Have Cost You Money
Charitable tax relief in Ireland sucks in a lot of ways. But the latest changes to tax relief are good: charities now get the relief on donations from self-assessed individuals. However, charities won't see that relief until next year. In 2013 they just have to put up with the reduced income caused by self-assessed donors giving less (because it now costs them more).

5. City Councillors Hate You
Over 30% of Dublin City Councillors felt that no charity should financially benefit from a shop on Grafton Street. It didn't matter what you sold, what you looked like or even what consumers wanted. If a charity was going to generate income then these councillors wanted you banned.

6. You're Judged On Others' Behaviour
If a different charity has done something wrong, well you're going to be tarred with the same brush. We wouldn't dismiss 'businesses' because we had a bad experience with a business, but if a 'charity' does something rotten, well then all 'charities' are rotten.

7. The Regulator Is Going To Cost You
The Charity Regulator will finally appear next year, which is great news for everyone. Unfortunately, for the first year they're probably going to have the resources to do very little except copy and paste the list of charities registered with Revenue. Charities are going to pay an annual fee for that.

8. The Data Commissioner Is Making It Harder To Compete With Businesses
If the recent Irish Times article is to believed, the DPC has changed their interpretation of when it is and isn't acceptable for a charity to 'market' to its database, and this new interpretation does not seem to be in line with what private companies can do.

9. Charity Scratchcards Are About To Get Destroyed
When the National Lottery appeared the Government agreed to compensate charities who generated income from scratchcards. They did this because charities have an embarrassingly low limit on how much they can pay out in prize money, so can't compete. The compensation will go and these charity scratchcards will wither away and die because, frankly, why would you try to win €20k when you could win €4 million?

10. People Hate Your Most Cost-Effective Forms Of Fundraising
The most tolerated forms of fundraising (such as events, cash collections and selling stuff) are the most expensive and least efficient ways to raise money. Every form of fundraising people hate? Well, unfortunately they're much better.

11. The Most Unethical Corporate Sponsors Have The Most Money
Think of the top companies in Ireland: Alcohol, cigarettes, oil, gambling, financial investments. They're the ones with all the money. When they're not busy killing people and destroying our planet they'll sometimes donate money to charity. The really clever ones donate other people's money and take credit for it. Unfortunately, a lot of charities have to refuse this money because they have to behave ethically and, to be honest, they're trying to fix the problems these companies caused.

12. People Think There Are Too Many Charities
In fact, there are are less charities per person in Ireland than in countries like Wales, Scotland and Norway. But, assuming there were too many charities, nobody is actually able to specify which charity should or could be eliminated.

13. Large International Charities Are Pretending There Are No Admin Costs
Large well-known charities like Charity: Water have enough support from businesses and foundations to pretend that public donations will not go on 'admin'. The whole thing is meaningless and nonsense, but it gives the Irish public an unrealistic expectation that charities can operate with little or no overheads. This restricts small to medium charities and cripples their ability to grow.