Charity Gift Giving Guide

If you are like most people, you can afford to give more.  Read on, to see if you can win an Olympic medal in charitable giving. 

Where do these formulae come from?  If you were very rich, each year you could afford to give away 3% of your net assets plus 30% of your annual income not from assets.  If you are not so rich, those percentages are reduced (significantly) using a sliding scale, computed from how your assets and income compare to the gross domestic product that is attributable to an average household of your size.  More details are in the notes below. 

The values you will need to enter are as follows.  Approximate values are good enough. 

• Household size includes everyone who lives in your household or who is your financial dependent.  Feel free to include a fractional amount for those partially dependent upon you. 
• Net assets includes everything owned by the people in your household minus all the debts — with some exceptions.  Add together the value of bank accounts, mutual funds, stocks, bonds, cars, boats, real estate, patents*, small businesses*, etc., and subtract off credit card debts, student loans, etc.  However, do not include the net equity in your primary residence nor the amounts saved in pension/retirement plans or college savings plans. If the household debts exceed the assets then enter a negative value using a minus sign. 
• Annual income not from assets includes household income not derived from your assets.  Include gross wages, but do not include interest, dividends, capital gains, royalties*, etc.  Do not subtract for any deductions, though see the notes below. 

This is a JavaScript form; the calculations are done on your computer and your financial information never travels over the Internet.  Please enter numbers, but no commas or dollar signs, etc.  (Instead of entering dollar amoungs, if the values on Lines B, C, and D are all entered in thousands of dollars, or all in euros or whatever, then all computed values will be similarly denominated.) 

Notes:

• For patents, small businesses, royalties and other hard to value assets and income, try to distinguish the asset from the income.  For instance, imagine that you sold your small business to someone else, who then employed you in your current role.  The price for that sale should be included in your net assets.  The annual salary you would be paid should be included in your income. 
• If this year's income value is unusual, you might instead use a typical year's value. 
• If you have out-of-pocket medical, tuition, or other similar expenses that are nontrivial for you, then you yourself are a charitable cause.  Include these expenses in your charitable giving as you work for a medal. 
• If you live in a country where taxes are atypically high or low, then it may be appropriate adjust your charitable giving.  You should consider including a typical year's entire tax burden as charity, but you should double the giving levels computed in Line 3. 
• The percentages shown on Lines 1 and 2 are computed in several steps. 
  • A maximum giving amount is computed as 30% of your income plus 3% of your assets. 
  • A normalization is computed as the per capital GDP times one more than your household size. 
  • A normalized maximum giving amount is computed as the maximum giving amount divided by the normalization. 
  • A sliding scale is computed as the normalized maximum giving amount divided by one more than normalized maximum giving amount. 
  • The sliding scale multiplies 3% to give the asssets percentage on Line 1.  The sliding scale multiplies 30% to give the income percentage on Line 2. 

Copyright 2008, 2011, Lee Newberg.  All rights reserved.