Isn't it refreshing to see a story about someone giving back?
Not every wealthy person is Ebenezer Scrooge, clutching every penny for himself. Some of the wealthiest people on Earth also realize how fortunate they are to have been so blessed, so they share the wealth. When they open their pocketbooks, they aren't stingy.
Just look at Jeff Bezos, who recently announced he was donating $100 million to food banks to help America get through the coronavirus. Wow! That's so much money, and he's just giving it away! It's way more than you or I or several families put together are likely to earn in our entire lifetimes! It's more money than you could fit in your fridge in stacks of $100 bills—unless you're Nancy Pelosi.
If you had that much money in a bank account with just 1% interest compounding annually, you and me and those several families could easily live off that interest without ever touching the principal! Forever! Come to think of it, it's kind of more money than any one person could ever need or even spend on anything reasonable.
Sure, if you want your own private jet to shuttle you around the world eating dinner off the naked bodies of a series of celebrities, you could spend that much pretty easily, but if you just want to have a good, satisfying life, $100 million in the banks isn't much better than an $80,000 salary—depending on factors like your debt burden and the cost of living where you live.
So why don't any one of these mega-billionaires like Mark Zuckerberg, Bill Gates, Elon Musk, and Michael Bloomberg—if they really are as generous as they seem—just give away their riches and secure a place in history as the person who personally ended world hunger or homelessness in America? They could even keep a few hundred million to continue living like kings (or at least like Warren Buffett).
Surely it must not be that simple? Because if this was just a matter of private greed preventing that kind of transformational change, governments would surely have used their ability to levy taxes for the public good to seize that fallow wealth and make the world a better place. There has to be some reasonable explanation for why they don't just give it all away. Surely...
In this series we'll look at myths around philanthropy, including the notions that it's possible for billionaires to be generous, that their "wealth" is substantially different than money, that their private foundations do a lot of good, and that they are patrons of the arts.
But to start things off, let's look at one of the simplest explanations for this disconnect.
Myth: Charity Is Actually Better Than Taxation
What you'll hear
Government intervention is a blunt instrument, and charity is a scalpel.
The government is okay at helping people, but charity is really the way to go. Private individuals aren't hampered by government bureaucracy and can respond more efficiently and directly to needs as they occur. Over time we should try to shift toward a more voluntary charity-based model of social assistance, rather than relying on big government.
Why It's wrong
Actually the opposite is true.
During economic downturns, when the need is greatest, government assistance like unemployment, food stamps, and welfare kick in automatically to help those in need. They're called automatic stabilizers, and they help to mitigate the impact of these crises and make it easier to shift toward recovery.
Automatic stabilizers | National income and price determination | AP Macroeconomics | Khan Academy www.youtube.com
Meanwhile the wealthy are often anxiously tending to their own floundering finances or businesses amid the tumult and aren't as likely to open their checkbooks for charity. What this means is that charitable giving actually declines when people need it the most.
On top of that, as bad as politicians often are at being responsive to the needs of their constituents, at least they have constituents. By contrast, there's nothing to stop the wealthy from holing up in their gated compounds, beholden to no one and only responsive to the needs of the rarefied elites they know—donating to foundations developing a cure for gout or gene therapy to treat Habsburg Jaw.
To the extent that they are aware of the plight of others, it's often connected to their religious affiliation, which is why religious charities—that often spend money on churches and missionary work and who proselytize to the needy—are among the largest charities in the US.
If you don't mind someone else's idea of God determining which causes are important and who gets helped, then charity is a great way to go. For the rest of us, higher taxes on the wealthy—and reducing the amount they can dodge those taxes through, say "charity"—would be better.
In this sense, a blunt instrument is often exactly what we need—just a flood of money going to everyone who might realistically need it. And while government bureaucracy is annoying and should be cut where possible—particular when it comes to overzealous means testing—the fact that the federal government deals with such massive sums of money actually makes it possible to consolidate administrative overhead.
All this means that the government can actually use its resources for the public good far more efficiently than a bunch of disparate charitable foundations. In other words: Taxation and government handouts are (generally) much better than charity.
Charity: how effective is giving? | The Economist www.youtube.com
While charitable donations have the added value of making rich people feel good and earning them some good PR, they aren't actually better for the world—or even nearly as good—as a robust social safety net. That means we should really limit the amount of taxes that can be written off through charitable donations.
Of course, without that tax incentive a lot of charities might receive substantially less in donations from the ultra-wealthy. But in that case we would have to ask: Are Billionaires really that generous? Check out our next installment to find out.
- Charities You Can Donate to During COVID-19 - Liberty Project ›
- The Most Overlooked Tax Deductions - PayPath ›
- No Good Billionaires—Myth 2: But They're So Generous! - PayPath ›
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The Trump Administration's solution to aid the 16 million Americans who are out of a job thanks to coronavirus? One big, shiny, $1,200 check.
As MarketWatch explains, "The Internal Revenue Service will send $1,200 payments to individuals with adjusted gross income below $75,000 and $2,400 to married couples filing taxes jointly who earn under $150,000. The government will also pay $500 per qualifying child." That plan is a little skewed—$1,200, after all, isn't even enough for one month's rent for a studio in NYC's outer boroughs. And for everyone who's receiving the check, there's someone else who, fortunately, is able to work from home and hasn't faced a huge setback due to COVID-19.
If you're one of the lucky ones, or if you're just feeling generous, here are just a few good causes that deserve your donations to help those in need.
WeCount!'s Immigrant Worker COVID-19 Fund: Florida nonprofit WeCount! is on a mission to address the gap in medical support for undocumented immigrants, emphasized by COVID-19.
Immigrant Worker Safety Net Fund: National Day Laborer Organizing Network allocates cash donations to worker leaders, organizers, and volunteers who have already contracted the COVID-19, as well as undocumented laborers who are especially vulnerable to the virus, such as those over 60 or with preexisting health concerns.
National Bailout: Prisons, jails, and detention centers have raised big health concerns in the coronavirus's wake. National Bailout is galvanizing funds to get people out, in an effort to slow the spread. The organization also already hosts an annual #FreeBlackMamas campaign to specifically help incarcerated black mothers each Mother's Day, but donations are welcome and encouraged year-round.
Restaurant Workers' Community Foundation: With restaurants limited to takeout only, many folks in the service industry are taking a major hit. RWCF's emergency relief fund collected $2.8M since its launch in late-March. Of that, half goes directly to individual restaurant workers, 25 percent to non-profits serving restaurant workers, and another 25 percent for zero-interest loans to keep restaurants running.
Coalition for the Homeless: Homeless people are predisposed to major risks year-round, but the pandemic has brought additional attention to their health care. In New York City, the Coalition for the Homeless is providing temporary safe housing to the community thanks to donations.
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It's the season of giving, and while many Americans reach for their wallet without hesitation to show their love for their friends and families, it doesn't always occur to them to donate to charity. But maybe you want to contribute to your favorite cause, but simply don't have the time. Luckily, with charity gift cards, you can show your love for family and friends, and do good at the same time.
There are two types of charity gift cards to choose from: one that operates like a regular gift card to a store, but a percentage of the money you spend is given to charity, and one where the gift card allows the receiver to give the full amount of the gift card to the charity of their choice.
The first type of card, the percentage of money given to charity kind, is the easiest option, because all you have to do is buy a gift card you were already going to buy, and some of your money goes to a good cause. Some examples of this kind of card are, Gap, Nordstrom, and Williams Sonoma.
The type of card that allows the receiver to give the card amount to the charity of their choice is a bit more complicated. To make it easier, we've compiled a list to help you weigh the benefits and drawbacks of each card:
- Giftcards don't expire
- Tax deductible for the purchaser of the gift card
- 1.5 million+ charities to choose from
- $1.49 for plastic cards to cover cost of card; $0 transaction fee and $0 credit card processing fee. Shipping: free
- Giftcards don't expire
- Tax deductible for the purchaser of the gift card
- 1,000+ charities to choose from
- $0.50 per card plus 5% administrative fee and 3% credit card processing fee. Shipping: $4.95 per order
JustGive GiveNow Card
- Expires after one year
- 2 million charities to choose from
- $5 for every company-printed and mailed 4x5-inch card; $2 fee for each Email Charity Gift Card, Print-At-Home Charity Gift Card or Charity Gift Card Claim Code. 4.5% processing fee plus a $0.35 flat fee per donation
- Gift cards expire after six months. If the gift card is not spent, the funds will be applied to urgent classroom projects through the Community Fund.
- All projects supported by donors choose are related to education. The person who spends the giftcard will also receive photos and thank you notes from the students helped.
- Gift cards expire after one year
- 100% tax-deductible to the purchaser of the gift card if the project selected is pre-qualified for 501(c)3 equivalency status.
- More than 5,000 projects to choose from
- $0 for card plus 15% administrative fee
Gift of Giving Card
- Expires one year after purchase
- 100+ charities to choose from
- Each card costs $4.95, which goes to support the operation of The Gift of Giving.
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Imagine you're at a dinner party, and you're going around the table asking everyone what they do.
"I'm an investment banker."
"I'm in advertising."
"I work for a nonprofit."
The word "nonprofit" can garner some pretty quick judgments. Maybe this person is an idealistic do-gooder that doesn't understand how reality works. Maybe this person has a handsome trust fund and can happily live on a subterranean salary for the rest of their lives. But before the judgments start flying, many people at some point in their lives consider the nonprofit route. Here's why you might want to, too.
A nonprofit, contrary to popular belief, is not exempt from making a profit. The term means that it doesn't distribute revenue to private investors or owners, but instead puts that money towards perpetuating the mission. These organizations include everything from the United Nations Children's Fund (UNICEF), to the American Museum of Natural History, to the American Cancer Society. They span in category from arts and culture to history to medicine. Whatever sector you're interested in, there's probably a nonprofit out there that would align.
Perhaps the most important aspect of finding any job that you will stick with for a long time is having a sense of purpose. Many people feel burnt out from corporate America because they don't have the opportunity to contribute to the greater good of the world beyond "profit." That's a reason to get up and go every morning: to know that you are helping someone who needs it.
It's also possible to make a competitive salary while working for a nonprofit. While it's unlikely at first, it's not impossible. Many people shy away from nonprofits because they don't think they will be able to make a living. However, your nonprofit job does not have to be your only source of income. We compiled a list of high-paying odd jobs that can help you supplement your salary.
While people that work for nonprofits are not all going to be angelic all the time, they share a common mission. Inspiration is one of the most powerful forces in any workplace. Many people that work for nonprofits are personally connected to the subject matter, and therefore they are more engaged and motivated to do more.
If you're working for a small nonprofit, there will likely be a lot of opportunity to grow and develop your career. Whereas in a larger company, you might be confined to your original job requirements, nonprofits have a spirit of collaboration on all aspects of business operations. You may find that you discover a new skill or talent that you'd like to pursue. Some nonprofits can give you the flexibility to learn on the job.
While not all nonprofits are the same (yes, there will office politics and a hierarchy), it might be the right route if you're looking to branch out your skills for a good cause. It's not only service work, too. There are plenty of opportunities to find jobs that mirror corporate life in the nonprofit world. Be creative.