Elizabeth Kerr looks at charity, tithing, and gift giving and where it fits within your money machine goals

Elizabeth Kerr looks at charity, tithing, and gift giving and where it fits within your money machine goals

By Elizabeth Kerr

Have you heard of the John Templeton Foundation?  It’s an organisation which supports scientific research on spirituality and the BIG life questions such as ‘Will the free market corrode moral character? Or ‘Will science make God obsolete?

It’s bloody fascinating stuff. 

This week they’ve come out saying that children who grow up in non-religious homes are more generous than those in religious homes.  

Hands up if you thought it would be the other way around?

I have no opinion on whether this is true/right/wrong but this got me thinking about generosity – specifically where might charitable donations, tithing and gift giving fit within your money machine goals.  

It turns out if you want to build a money machine one of the surest ways to get there is to give your money away. 

No, I haven’t lost my marbles. Just keep reading…

Starting with Science!

Researchers at the University of Columbia analysed people’s budgets and discovered that those who spent more money on other people than they did on themselves were so much happier and content with their lives than the others.

So imagine that you have $20 and you are in a florist shop and you can spend the $20 on a bunch of flowers for yourself or on a bunch for someone else.  

If you spend it on yourself then you are at the mercy of Hedonic Adaption.

You buy the flowers, take them home, put them in a vase, admire them for a day or two and then you forget them until they are wilting all over your tablecloth and you have to throw them out. Within a year you quite possibly have forgotten you even brought them.  

However, spend the time choosing the perfect bunch for someone else and you get a time bank of warm fuzzies, which will last forever because gift giving isn’t subject to hedonic adaption. You get joy from picking the flowers, joy from imagining the surprise of the recipient, joy from their happy reaction and afterwards the awesome feeling of knowing you made a good impact in that person's day. Now every time your brain recalls giving that gift you will feel all of these feelings as clearly as you had when you originally gave the flowers, no matter how long ago it was.

Now pay attention, the punch line is coming up!!!  The really great news about this phenomenon is that this giving needn’t cost you a fortune.  A small $5 to someone who really needs it delivers the same return on investment in your own gratitude and contentment as say $200 might. 

So, why we aren’t all selfless gift givers or charity donators?  It’s because we are all a bit arrogant and stupid!. The researchers probed a little further and found that we actually think it’s the other way around – we think that buying stuff for ourselves will make us happier than giving it away. Given the choice in the florist most people will choose to buy flowers for themselves first. But as I’ve illustrated, the happiness is only short lived.

Charitable Donations

The complexities for how this all fits inside your money machine goals are subtle and worth understanding. 

You see, after you’ve paid for all of your non-negotiable needs and set aside money for your money machine, anything that is left over could be wasted by buying cheap clothes or unnecessary goods and services that eventually clog up our landfills. 

Or it could be used to support things that you feel passionately about, and in turn bring about a deep content for your own good fortune. 

A while back I talked about how the way you spend your money is a reflection of your values. I like to think of donations as empowering people to do the things that I physically can’t do right now in this season of my life, but which I think are really important. No, I’m not referring to a gardener or cleaner, I mean the scientists and community workers who actually have an impact on people’s lives. The people who run breakfast clubs in low decile schools, support women at Womens Refuge, provide gumboots and jackets to those who need them, and house and educate teen mothers. I can’t do any of those things right now so I get pleasure from knowing I’m supporting those who can. Empathising and supporting those who really need help with their own non-negotiables like this can bring you a huge sense of peace with your own financial place in the world.  

Should I tithe or donate before my money machine is completed?

This is a very good question. My surface answer is that ‘it depends’. If you have calculated when your Money Machine will be ready (for your early retirement) based on your current savings percentage AND you are happy with that progress knowing that it includes tithing’s and donations then you have your answer.   

My personal take on it is that giving begets receiving.  Financial karma is a bit harder to demonstrate in an excel spreadsheet. But if you look at most wealthy people the really happy ones are always giving their money away and lack for nothing. The Bible goes into great detail about this – but I’ll save that for another day (unless you tell me otherwise). 

Taxes and your donations

Donations that are over $5 are subject to tax deductions provided the donation is made to a registered charitable company. Most churches are included in this so if you are a regularly tithing then be sure to keep your receipts or ask your church for a statement at the end of the financial year outlining your contributions. Loose change in the offering basket is harder to prove as yours, so, you need to use a giving envelope or internet banking transfers.

A valid receipt must contain:

  • the name of the donor(s)
  • the amount and date of the donation
  • a clear statement that it is a donation
  • a clear statement at the top of the page if the donation is a payroll giving donation
  • the signature of an authorised person, and
  • an official stamp with the name of the approved donee organisation.

As we close this week, I leave you with this: Giving money away to worthy recipients makes you realise just how lucky you are with what you have; and contentedness is the biggest weapon you can have against aggressive consumer marketing.

As we enter into the biggest consumer drive in the lead up to Xmas, try to stop for a moment and think about how you can bless those around you rather than buying into the crazy Xmas shopping chaos. Science guarantees you will take more long-lasting pleasure in the gifts toward those in real need than you will in any for yourself.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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I agree with a lot written here except that I will not support divisive and illogical belief systems based on imaginary and supposedly all powerful friends. Also our world would be a far better place if enormously fewer persons built their wealth on the exploitation of those with smaller resources. A disgusting segment of such are those building their wealth on our communities unable to purchase homes. If too many here continue along such destructive courses, we will quite possibly end up with the high homicide rates seen in the Americas.

The homicide in the USA rate has nothing to do with housing but significantly to do with the ease in buying a handgun. Here in NZ you need a B endorsement on you licence, to get that have to be an active member of a pistol club and get a pistol purchase approved and you cannot carry it day to day.

Those who have not thought this through and simplistically bellow at the top of their lungs for high levels of gun control are part of the problem. While quite effective in causing harm they are not the only way we humans kill each other and with sufficient intent or neglect the same end is easily achieved in countless ways. If someone stabs you rather than shoots you, is this a step forward for peace on earth?
Personally I own no firearm, but I hold a licence and have in the past. If you disagreed with your government and told them so, If they sent armed police or troops to subdue you rather than address your concerns, how relevant would gun control be then if you needed to protect yourself?

If you think this is far fetched, ask the Jews, among others, how smart it is to trust your fate to a nation state.

If you go to a concert, and a firefight breaks out, will you be huddled under a dead body hoping to survive?

Sure, giving to a charity is good as long as it is one which doesn't syphon a huge percentage away in advertising, staff salaries and corruption in foreign lands. (Hard to pick).
But giving a few presents to relatives at Xmas time could also be seen as being a pleasant thing to do. No need to go overboard of course.

I agree, I often think I would like to go to an affected place, hire a truck and buy a load of critical supplies to drive in and distribute, I hope that one day I will. But, in my cynicism, I cannot support those who are panhandling, making a living off the proceeds or have placed themselves in this situation by poor decision making and selfish behaviour. I will also decline those where it is all just populist window dressing with nil improved outcome for the afflicted, only photo ops with celebs who are well paid to raise awareness. Anything religion based is a flat no.

Blindlingly obvious data and I remain amazed at how many academic studies ar devoted to what is already widely accepted. Buying stuff for oneself never generates happiness... Satisfaction, pleasure, contentment and fulfillment yes, but never happiness. This can only be achieved via extending kindness and generosity, with ones identity only being associated with happiness if the kindness and generosity is firstly unconditional and secondly consistently ongoing. As a superannuant I donate 1% of my income each month to the amazing One Percent Collective... check them out!

I know right... someone paid for that study to be conducted... amazes me too. I am putting my hand up to the crazy people who funded that study to fund one whereby I am paid to research what happens if I give people limitless debit cards and tell them they can spend "until their hearts are content and satisfied" and then report on the average amounts spent. Who in? *laughs*

An interesting thing to note here: if you are regularly giving i.e. tithing then banks will want to know about this when they assess your mortgage application. It would probably show up on your bank statements or salary slips if its being automatically deducted at pay day.

Would I be right to suspect that their interest is not is not with a view to showering you with praise and offers of a discount rate in recognition of your thoughtful contributions?

lol.... funny.

I think it good that it is captured personally. In the case of tithing, when times are hard people i think are more likely to do away with other expenses that taking from their tithing monies... so therefore it is a fixed cost. The same could be said for other charity donations too of course depending on the person.

It's worth mentioning that by intelligent use of donation rebates you can increase the money you give organisations by approx 50% over time at no additional cash cost to yourself.

A $300 annual donation, gets around a $100 rebate. By giving both the next year you donate $400 and receive a $133 rebate. The multiplication adds each year with diminishing returns topping out at just under 50% of the original annual amount.

You had already given away that money, so why not give it away again and let it grow rather than buying a new pair of shoes.

Thereby creating a Money Machine especially for your giving - i like it !

I love the concept of 'effective altruism' (effective altruism is using evidence and reason to determine the most effective ways to give in order to improve the world). A $100 donation to a highly effective charity will make a much bigger difference in the world than a $100 donation to a less effective charity. The idea is that we should donate to make a real difference in the world, not to just 'feel happy'. There are a list of highly effective charities on the Givewell website. Since reading about effective altruism I've redirected most of my giving to more effective charities, so hopefully my money will go further :)

I'd like to know where to find the research on religious vs non-religious giving. I remember reading somewhere that Christians donate a slightly smaller proportion of their discretionary money to charities compared with non-Christians, if you exclude donations to churches. This is disheartening to me - one of Jesus' primary concerns was for the poor.

It's interesting to see the practice of Tithing being mentioned in this context. As I understand it, Tithing was a Jewish requirement under the old testament in the Bible. It involved giving a tenth of a one's income to a specific purpose that existed at that time and which no longer exits now.
Bible Christians follow the new testament which replaced the old covenant. The new testament has it's own teachings on giving generally and also giving specifically for the work of the church. The new testament doesn't advise people to tithe nor to use the old covenant practice of tithing as any guide for giving.

Philosophers and spiritual masters have been saying this for a long time. Communities were once built on a gift economy. Sharing is ultimately giving.

Modern civilization, and I use the term civilization very loosely, has been built on fear starting with the church and the fear of God. Through fear one can control another, through fear a few can control many.

The statement that we are not selfless givers because of stupidity and arrogance reeks of arrogance. Ignorance maybe. The current economic/money system creates the illusion of scarcity. Advertising and marketing prays on peoples insecurities. Consumerism ergo the economic system relies on the purchase of unnecessary goods and services.

The charity/donation system of today is in the end a token gesture. It assuages the ego and allows people to think they've done enough and yet the cause of the issues is never addressed and never solved.