I am Pledging 5% of my salary to charities for the rest of my life
June 29, 2018Tags:
- What? I am pledging 5% of my salary to charities for the rest of my life.
- Where does the money go? The money is donated to charities recommended by GiveWell. GiveWell is a non-profit organisataion dedicated to assessing charities and finding what’s the most effective way to spend donations and aid.
- Why am I doing it? The short answer is because I feel it’s the right thing to do. Slashing 5% of my salary would not make a major impact on my quality of life. It will certainly make an impact on how long it will take me to pay off my mortgage. But the impact I can make to the poorest people with this money is much much more to how it impacts me.
- So what? Why am I sharing this? Well I am hoping by sharing this I would get you to think about doing the same. You don’t have to donate 5% of your salary, you can start by donating 3%, 2% or even just 1%.
The longer version
If you are still reading, then you are interested in knowing the whole story, and I am glad you are :)
Last month, Matthew Green (I do not know the guy by the way) tweeted something about how Jeff Bezos of Amazon was too rich that he cannot even find ways to finish or spend his wealth. Lots of people were replying by asking why does not he donate some of it to charities. Then Jacob Gill (I do not know him either :) ) replied back by asking everybody how much they are donating from their salaries. The reality is most people would answer that with 0% as a regular donation. Please do not feel bad, this is not my purpose and I am certainly like you when I read Jacob’s tweet. I read that tweet and started thinking about how much contribution I am making? and how much I am capable of? I have been donating $20, $50, and sometimes even bigger amounts like $250. but these are very small, rare and only occasional, they would not make that huge impact.
I'd be curious how much % income everyone replying to this thread spends each year on anything other than their own self-interest. My guess... not a whole lot. Net worth aside, most of us just aren't that willing to give up what we've worked to earn...— Jacob Gill (高健） (@criticalowl) May 2, 2018
The initital Tweet by Matthew Green and the Reply by Jacob Gill
Interestingly, most people, myself included, think that well it’s the wealthy people who should be donating and it’s true. What we do not realise that most-likely, if you are reading this post, you live in a one of the OECD countries, then chances are you are in the top 2-5% wealthiest people on earth. I can see your jaw just dropped :) before saying anything, bear with me.
Figure 1: Wealth Distribution (Source: The source of the data is from World Bank, and this post explains the details.
This post which was written by analysts from Oxford looked at the distribution of wealth around the world. I have borrowed their diagram here (See figure 1 above). You can see that most people are earning very little, in fact the majority earns well below the US$2000 per year. In my social circle, where I live, most people on average earn $80,000 or more. This makes us the wealthiest in the world.
Moreover, this calculator which was done by the nice people at GivingWhatWeCan.org, shows you how rich you are compared to the rest of the world. I have put snippet of the tool outcome for an AU$80000 annual income. As you can see below, a person with such income living in Australia would be in the top 1.3% richest people.
A screenshot from the calculator at GivingWhatWeCan.org
Now someone might argue that yes I earn that much but I have credit card debt to pay off, I have bills to pay, and I have mortgage and so on, and it’s all true. However, slashing a small portion of my salary could literally save or change somebody’s life on the other side of the world.
Think of this for a second. If somebody told you that you have a choice between a) Spending $2000 on gadgets per year or b) Giving sight (or education) to somebody in Africa. Which one would you choose? We do not normally make these choices because these people that are the poorest are far away from the communities where we live. That’s why causes like cancer research always get better donations, because we can see the impacted people closer to home so our choices are influenced.
Furthermore, there is enough research that suggests getting paid more does not make us happier. This post talks in more details about this topic. Interestingly, some of this research was done in multiple countries and still produced the same results that getting paid more does not have correlation with our own levels of happiness or satisfaction.
Once I made the decision to donate, the next hard bit was how do I make sure that I find charities that are doing effective work. After doing lots of research I found 3 organisations that stood out:
- GiveWell website: They are a non-profit that is focused on doing research to assess charities. I was very impressed by their professional work and that’s why I decided to follow their recommendations and donate to their top-listed charities.
- Giving What We Can (website): Very similar to GiveWell with some differences. They are part of the Centre for Effective Altruism, and they have operations in Australia (Australian Website)
- GiveDirectly (website): The work that GiveDirectly is doing is very impressive. Basically the money goes from you directly to people who need it. You can see in real-time the recipients of your money and what they are doing with it.
I then decided to make the donations to Effective Altruism Australia and made a portion of it go to GiveDirectly. The donations go through the Effective Altruism Australia website, which is a registered charity in Australia, then I could direct the donations to these charities that are recommended by GiveWell.org.
How much are we contributing to help the poorest? and how much are we capable of?
Lastly, I fully respect everybody’s choice of how they want to live and how they spend their money. What I am hoping in sharing this is to get you to think about what are we contributing? and how much are we capable of?. You do not have to go as far as 5%, you could do 1% and I can guarantee you that it would not have an impact on your life-style but it could totally change somebody’s life.
If you have a comment, feedback or a question, I would love to hear from you