Why you shouldn’t give to charities… …until you retire or die.

[b4freedom]

I know some very religious people that give 10% of there income as tithing. I know that many of these people aren’t making a lot of money. Yet, they give lots of money to their church. I have created the following arguments as to why they should wait until they retire before giving. This argument is true for all charities, not just churches.

The assumptions: Let’s assume that the average person makes $30,000 a year between the ages of 25 and 65 (40 years). The market return is about 8.5%.

Being a good church going person, you would give $250/month ($3,000 a year) for 40 years, or $120,000 over your lifetime. When you retire, you’ll have nothing to show for your $120,000 gifts.

However, if you invested the same $250.00 a month with an average rate of 8.5% over the same 40 year you’ll end up with $1,009,663! That’s over a million dollars!

Now, this is the crazy part: When you retire, take all of that money and give it to the charity or church. Yes, give away a million dollars! Now here is the catch: Give it away as a charitable gift annuity. As a charitable gift annuity, you get a giant tax break and the charity pays you every year for the rest of your life. I looked around and found an average rate of 6% a year if you give at the age of 65. The charity would pay you about $60,500 a year until you died. Everyone wins. The church gets over a million dollars instead of $120,000. And you’re taken care of until you die.

For those who are offended: Should I tie my own noose? Or would you like to tie it for me?

[sweeps]

There are a lot of ministers and priests wincing right now.

[poundwise]

Mathematically sound. Spiritually... eh, not so much.

[PrincessPerky]

Originally Posted by b4freedom

you’ll have nothing to show for your gifts.

I think the trouble is with that line.

[cbmeeks]

Makes sense to me. I'm not religious but I TRY to give money to charity. Usually St. Jude. Some of us can't afford 10% of giving. Does that mean we are bad people? Nah.

I believe in giving local first (your own town), then to charities that help people that can't help themselves (children).

The financial problem with your method is that most people are broke and most people die broke. So, that wouldn't work for them.

Charity starts at home. I'd like to know who said it "should be 10%".

One guy at a local soup kitchen handing out food is "worth" more than some average joe giving $250/month in my opinion.

[Writer@Large]

What a great argument. Of course, as I'm not a religious person, tithing isn't a problem. But the basic financial argument is impressive!

--W@L

[autoxer]

Don't forget the affects of inflation. The $1 million in 40 years will have the buying power of $300,000 of todays dollars assuming 3% inflation per year. Also the $60,500 will have less buying power than $20,000 of todays dollars.

Originally Posted by b4freedom

However, if you invested the same $250.00 a month with an average rate of 8.5% over the same 40 year you’ll end up with $1,009,663! That’s over a million dollars!

However, if the church invested the same $250.00 a month with an average rate of 8.5% over the same 40 year they’ll end up with $1,009,663!

[sweeps]

Originally Posted by autoxer

However, if the church invested the same $250.00 a month with an average rate of 8.5% over the same 40 year they’ll end up with $1,009,663!

Why is the church immune to inflation?

[poundwise]

I guess the people who need money will have just have to hope that people who have money die before they do.

[autoxer]

Originally Posted by Sweepsplayer

Why is the church immune to inflation?

I'm sorry, those were two separate thoughts that shouldn't be in the same post. Either way the inflation will limit buying power. The second thought was just implying that the church can also make smart decisions with their money and make it work for them.

[boefixepa]

We have a battle of the natural man vs. the spiritual man here. So let me list the spiritual reasons I believe a tithe is important.
1. It is commanded as a christian to teach many priniples such as obedience, self-lessness and putting others needs before your own and carring for the needy etc..etc..etc - The list goes on. I can expand if you want me to.
2. The blessings far outweigh the dollar value given - I will personally attest to that. Too many people call blessings 'coincidences' or 'the result of your own hard work' but I will say to my dying day that getting a free college education, after the fact, (IE work agreeing to pay off student loans) was a direct blessing of faithfully paying my tithing throughout my life and in college when it was VERY difficult. There were times I was living off $400 a month, but tithing always came first.
3. If we did not donate taxes would increase to make up for it...and we'd end up paying anyway.
4. The opportunities to give and serve are the most charished in my life, if I was 'waiting' I'd be a much different person, and probably not want to, nor see the need in my later years.
5. I can't imagine what children raised in home that did not teach these principles would be like...but all charity would be gone in less than a generation.

Those are just off the top of my head. Though mathamatically it may seem better, the personal price you'd pay would be devistating. So I wouldn't touch it with a ten foot poll.

My two cents.

[sweeps]

I certainly respect those that so freely give to help others. It takes a lot of faith to do that each week for years and years.

Serious question though. Do people that give to their churches really know and/or agree with where their money is going? Would God approve of millions of dollars going to lobby for a ban on gay marriage, rather than helping those who are dying in Africa? Is it morally right for Rev. Smith and Rev. Jones to have the best houses and cars in town? Is it right to build these massive megachurches with video and sound systems in the 7-figure range while down the block a woman is starving to death?

[Writer@Large]

Originally Posted by boefixepa

1. It is commanded as a christian to teach many priniples such as obedience, self-lessness and putting others needs before your own and carring for the needy etc..etc..etc - The list goes on. I can expand if you want me to.

As a humanist, I certainly agree with you that charity is important. My problem with the practice of tithing, though, has always been that the most devout people do it irregardless of their own need, even when tithing hurts their own situation. 10% each week, every week, even when doing so would make the rent late.

My grandmother would do this, tithing even when she couldn't cover her own costs of living (and she wasn't a woman who lived extravegantly). As a result, as a kid, my father would sometimes go without. More than anything, such blindly stupid tithing made him resent his religious upbringing.

If you can't cover your own expenses or put food in front of your own children, you should be taking care of your own needs. I think that we give when we can, as much as we can, for the betterment of our society. But when we can't, we need to look after ourselves.

--W@L

[slimcustomer]

Originally Posted by b4freedom

I know some very religious people that give 10% of there income as tithing. I know that many of these people aren’t making a lot of money. Yet, they give lots of money to their church. I have created the following arguments as to why they should wait until they retire before giving. This argument is true for all charities, not just churches.

The assumptions: Let’s assume that the average person makes $30,000 a year between the ages of 25 and 65 (40 years). The market return is about 8.5%.

Being a good church going person, you would give $250/month ($3,000 a year) for 40 years, or $120,000 over your lifetime. When you retire, you’ll have nothing to show for your $120,000 gifts.

However, if you invested the same $250.00 a month with an average rate of 8.5% over the same 40 year you’ll end up with $1,009,663! That’s over a million dollars!

Now, this is the crazy part: When you retire, take all of that money and give it to the charity or church. Yes, give away a million dollars! Now here is the catch: Give it away as a charitable gift annuity. As a charitable gift annuity, you get a giant tax break and the charity pays you every year for the rest of your life. I looked around and found an average rate of 6% a year if you give at the age of 65. The charity would pay you about $60,500 a year until you died. Everyone wins. The church gets over a million dollars instead of $120,000. And you’re taken care of until you die.

For those who are offended: Should I tie my own noose? Or would you like to tie it for me?

As stated before, you left neglected the effect of inflation on your illustration. You have also neglected to illustrate the value of the charity utilizing monthly tithes over time, the relative tax advantages the charity has over a individual taxpayer, and the fact that there would be little tax benefit to a taxpayer in the bracket you have described getting a giant tax break all at once at retirement barring other assumptions. Furthermore the Charity only gets near the full value of the lump sum donation to the charitable gift annuity if the donor dies immeaditely after giving it, something I don't believe your illustration envisions. The longer you live, the less the lump sum donation is worth as you continue to recieve lifetime income from it. Assuming the Charity has access to the same investments that you do, from the Charity's perspective, your donation is more valuable now than down the road through a charitable annuity where they only get a partial value of your donation. From an individual standpoint, unless you expect to be in a lower tax bracket in retirement, there is no real advantage to using a charitable gift annuity, except to fool yourself into believeing that you are actually giving more to the charity than if you had just made an outright donation.

[shengmei]

I think the plan makes sense as long as you adopt a million black cats so they won't get euthanized this year.

I'll get off my soapbox for now..............

[boefixepa]

Giving is eay when you have the money, giving takes faith when you don't. To say you shouldn't tithe until you have the money to do so is like saying you'll excercise once you are skinny and have the energy. Everything we have is a blessing and yes I will attest sometimes it means going without, but that is the principle of sacrifice.

I also agree that you should be aware of where the money you are donating is going. You have to trust to a certain degree and remember no one is perfect. Even the bum on the street my go and buy alcohol, but that doesn't mean you don't feel good, or that you won't be blessed for giving him the money.

Each person must reconcile their givings to their own concious, but personally tithing for me comes before everything, because the Lord is first on my list.

[Lemony]

I'm an agnostic Buddhist, but I do give quite freely to charity. I love the OP's mathematical argument, but if I wait to give my money to, say, Juvenile Diabetes Research, won't I be postponing the vaccine for said disease? Charities kind of need my money now, don't they?

[cbmeeks]

Originally Posted by Lemony

I'm an agnostic Buddhist, but I do give quite freely to charity. I love the OP's mathematical argument, but if I wait to give my money to, say, Juvenile Diabetes Research, won't I be postponing the vaccine for said disease? Charities kind of need my money now, don't they?

Agreed. In fact, waiting 20 years from now and then giving them a lump sum would delay even more. Once they rec'd the million, they would then have to start research with that new money.

It's always better to give when you can, what you can. The actual dollar amounts don't mean as much as the effort.

cb

my $0.03 because my opinion is worth more than two pennies.

[b4freedom]

Originally Posted by autoxer

Don't forget the affects of inflation. The $1 million in 40 years will have the buying power of $300,000 of todays dollars assuming 3% inflation per year. Also the $60,500 will have less buying power than $20,000 of todays dollars.


However, if the church invested the same $250.00 a month with an average rate of 8.5% over the same 40 year they’ll end up with $1,009,663!

I left inflation out for a reason. Nobody expects to make $30,000/year for the rest of their lives. The buying power of $30,000 in 40 years would only be $8,871. If your income adjusts for inflation each year and you continue to give 10% of your inflation adjusted income, the numbers work out to be the same.

[b4freedom]

Originally Posted by PrincessPerky

I think the trouble is with that line.

I thought about that line for a long time. It is the “cringe” aspect of the argument.