My Giving in 2022

I just donated 5,000€, which is approximately 5% of my gross income for this year, to a variety of highly effective organizations that are addressing some of the most pressing challenges facing our society. In addition to this donation, I am committing to making a similar contribution every year for the next five years through a "Try pledge" on "Giving what we can" [1].

Last year I already created a post [LINK] on:

• Why I am donating, and telling you about it
• What I am donating for (Unchanged this year)
• How I am executing the donation for maximum impact using tax deductibility and matching

This year, after already maximizing the impact of my donations through these methods, I sought out other ways to increase my impact. I concentrated on two areas: 1) increasing the percentage of my income that I donate, and 2) encouraging others to donate a portion of their income.

1) Increasing my donation as a share of my income

Last year, I donated more than 2% of my gross income. This year, motivated by discussions with friends and colleagues, progress on building reserves, and a change in my income due to a job change, I wanted to do more. "Giving what we can" has a helpful article with some reference groups [2], which I supplemented with a few additional ones that were particularly relevant to my situation (see chart below). Some of the examples include:

• What you won’t miss: 1% of income
• “Generously”, or what e.g. Judaism and Christianity call the “tithe”: 10% of your income
• What you don’t need: Everything above a “living allowance” (hard to quantify as dependent on what you consider necessary, but could likely be 50%+ of income in many cases)
• The average case: <1% - >5% of income depending on your country and income-level

For now, I will shoot for average, as I don’t feel ready yet to commit 10% of more of my income. This is mainly because I am still building reserves for a variety of uses, e.g.:

1. A 24-month runway on living costs to always remain flexible in career choices and not be driven by money
2. Available back-up fund for short-term investment/business opportunities
3. Future down-payment for potentially purchasing housing

I plan to revisit the question of targeting 10% or more again in the next years with the potential to increase my commitment once I’m closer to my reserve goal.

This leads to the question: What is a reasonable average? To answer this, I looked at Germany, my home country, and the United States, one of the most charitable countries in terms of donations as a percentage of GDP [3].

In Germany, unless you opt out, you pay church taxes ("Kirchensteuer"), which could be seen as the minimum "average donation" for people who do not opt out. For me, church taxes would be around 2.1% of my current income [4]. Not really a step-up in ambition vs. my prior donations.

Apart from church-taxes, the average German donates about 300€ per year [5][6], although this figure includes about 48% of Germans who do not donate at all [7]. If we only consider those who report actual donations on their tax returns, the average donation is about 600€ per year. The amount and percentage of income donated vary significantly based on a person's yearly income. For example, people earning between 100,000 and 500,000€ donate about 1,000€ per year (0.3% of their income). Those earning between 1 and 10,000€ donate about 270€ per year (5.4% of their income) [8] (see bottom of post for full table by income). It's worth noting that a higher share of high income individuals is donating, and that these groups also shoulder higher taxes and transfers, which somewhat mitigates the discrepancy [7].

In the US, the percentage of income donated follows a U-shaped pattern based on income. People earning between 45,000 and 50,000$ donate 4% of their income, those earning 100,000- 200,000$ donate 2.6% of their income, and the highest earners with more than 10m$ donate 5.9% of their income [9, source quality is potentially not as good as source for German data].

As a competitive person, I believe targeting 5% or more is a suitable goal for me. If Germans earning less than 10,000€ per year and Americans earning between 45,000 and 50,000$ can do it, I feel confident that I can too.

2) Motivating other people to donate a part of their income

Next to my own donation, engaging in meaningful discussions about doing good in the world and how personal donations can contribute to that is another key lever to pull. One way impact from this materializes is through mobilized donations.

This year, I organized a talk on impact and effective donations within my company, together with effektiv-spenden.de. By organizing the talk, I currently estimate that I might have mobilized another 100 - 8,000€, with 1,600€ or roughly one third of my own donation being the average case. This would be a fantastic outcome, though it rests on a range of assumptions, like:

1. The number of people motivated to donate
2. The amount each of them donated on average
3. A strong assumption that donations happened purely because of the talk, and people might not have donated the money otherwise

80 people were invited to the talk, 16 joined the 60 minute session and discussion. After the talk I sent the presentation to all those invited including those that did not join. There are a range of speculative and simplified scenarios on potential impact (also see table below)

• Worst case, only one of the 80 people attending and e-mailed donated 100€ (Which would be 2% of my own donation)
• Average case: 3 talk attendees and 1 e-mail recipient donated 400€ on average for a total of 1,600€ (32% of my donation)
• Best case: 6 talk attendees and 2 e-mail recipients donated 1,000€ on average for a total of 8,000€ (160% of my donation)

I will follow-up with talk attendees and e-mail recipients with a short survey early next year to try and better quantify the actual impact achieved. For anything but the worst case scenario, for the time invested into organizing the talk it continues to be a solid return in terms of donations mobilized. This would be a model to repeat next year if possible.

Overall, I am grateful for the opportunity I had this year to have a positive impact in the world and hopefully was able to increase it over last year’s. Like at the end of 2021, I hope this post helped you think about your own contribution to solve some of the worlds most pressing problems, or has otherwise sparked new ideas. I am more than happy to discuss any of the points outlined above, and would be grateful to receive challenges on where I might be wrong.

A successful 2023 to all of you!

P.S.: Thanks to my AI-colleague Chat-GPT by OpenAI for helping me optimize the writing of some of my paragraphs.

Sources

[1] https://www.givingwhatwecan.org/pledge

[2] https://www.givingwhatwecan.org/blog/how-much-money-should-we-donate-to-charity

[3] Though this has to be taken with a grain of salt e.g. due to different tax regulations like church taxes in Germany, and other idiosyncratic funding factors per country https://en.wikipedia.org/wiki/List_of_countries_by_charitable_donation

[4] https://www.finanzfluss.de/rechner/kirchensteuer/

[5] (https://www.dzi.de/spendenberatung/spendenauskunfte-und-information/spendenstatistik/)

[6] https://www.spendenrat.de/spendenjahr-2021-rekordspendenvolumen-die-deutschen-spenden-im-jahr-der-flutkatastrophe-so-viel-wie-noch-nie/)

[7]https://www.diw.de/de/diw_01.c.859211.de/publikationen/wochenberichte/2022_46_1/reiche_haushalte_in_deutschland_spenden_relativ_zum_einkommen_weniger_als_aermere_haushalte.html

[8] https://www.destatis.de/DE/Themen/Staat/Steuern/Lohnsteuer-Einkommensteuer/Tabellen/spenden.html

[9] https://www.financialsamurai.com/the-average-percent-of-income-donated-to-charity/

Full table on German donations by income