How much I gave to charity this year -> and to which cause -> and why my giving might be mistaken

Every year I write a post about how much I give to charity. I consider this an act of positive virtue signaling. If we’re going to compete on something, competing on how much we give to charity is the right kind of competition.

This year I’m slightly altering my reporting. Instead of reporting this year’s giving, I’m reporting a five year charitable giving percentage. I consider this a more honest reporting, as it smoothes out year to year fluctuations.

Over the past five years, I’ve given away 8.5% of my total five year pre-tax earnings.

How does this compare to your giving? I’d love to hear about how much you give and what you give to in the comments.

What I Give To: Expanding Bed Net Access to Reduce Malaria 

Most of my giving goes to the Against Malaria Foundation. They are recommended highly by Givewell.

I donate to AMF because there is good evidence that bed nets save lives and because my marginal contribution increases the number of people who have bed nets. Despite the massive success of bed nets, there is still an on-going need.

Researchers studied the decline of cases of malaria in Africa between 2000 and 2015. They found that the single most important contributor to the decline were insecticide-treated bed nets.

Bed nets were responsible for the aversion of 68% of the 663 million averted cases in Africa between 2000 and 2015. These are 451 million averted cases. Given that children make up 72% of malaria fatalities, this is a truly remarkable impact for families.

Screen Shot 2018-11-22 at 12.57.25 PM

Additionally, researchers estimate that the malaria “penalty” to GDP ranges from 0.41% of GDP in Ghana to 8.9% of GDP in Chad, all of which could be regained following elimination of malaria.

Not only does my gift potentially saves lives, it is also positively impacts economic productivity.

All together, Givewell estimates (very roughly), that every $4,000 spent on bed nets saves a life.

If this is true, and I keep up my giving, I will be able to save a lot of lives.

As a new father, I can barely comprehend what it would be like to lose our child. I hope my giving will over time help hundreds of families avoid the pain and suffering caused by one of life’s worst tragedies.

When I think about whether or not it’s worth it to give, I think about our daughter.

Two Reasons (Out of Many) I Might Be Wrong

It is hard to help other people. I’ve tried to minimize this risk by giving in an area with  lots of evidence, low operational complexity, and clear health benefits.

But the fact is bed nets are never going to get people out of extreme poverty.

The only way for people living in extreme poverty to get out of extreme poverty is through rapid economic growth. Bed nets will not cause rapid economic growth.

The problem is that I have no idea what will cause massive economic growth in Africa.

But here are somethings I have considered funding:

Economic Research: Lant Pritchett makes the case that economic research allows us to learn truths that help countries escape poverty; i.e., the research on the benefits of trade, property rights, and other liberal economic principles have led to many countries adopting these policies, which has led to massive increases in wealth. Perhaps the same could be said of the research on domestic industry subsidization that forces subsidized companies to export competitively (some say this is a key driver for the Asian tigers). I could fund this research in the United States, or work with others to set-up research programs in local universities. A few friends and I could probably cobble together enough money to fund a full-time professor at a prestigious African university to work on these issues.

Technological Innovation: Technological progress is a primary cause of wealth creation. People living in Africa have much longer lifespans today because of technological innovations invented elsewhere. While my giving alone probably isn’t enough to impact technological research or venture capital investing, I’ve wondered about trying to get a group of 50 people or so and invest alongside established funds that are dedicated to technological innovation in globally important areas, such as energy. It’s plausible that in the case of investing, I could even get my money back and do a lot of good.

How I Feel About Giving

For the most part, giving makes me feel good. It feels morally correct to reduce my consumption so I can save the lives of children living in poverty.

But it also stings a bit. If you put together all the various taxes I pay, my tax burden is somewhere between 40-50% (such is life in California!). When you add my charitable contributions to this, that’s nearly 60% of my income out the door.

I also sometimes worry about my family. I live a very comfortable life and don’t want for anything. But life is unpredictable and this could change. If I or a loved one were in a severe accident, it’s quite plausible that I could run through my savings in under a decade. Giving to charity now reduces my ability to withstand big shocks later. Ultimately, I view the ability to withstand big shocks as a privilege that shouldn’t trump my duty to help others now, but it’s still something I worry about.

So there it is.

I give away 8.5% of my pre-tax income and I allocate much of it to malaria reduction. I hope this helps others in need.

 

 

2 thoughts on “How much I gave to charity this year -> and to which cause -> and why my giving might be mistaken

  1. Cozzi, John

    Good commentary. We’ve given at least 10% since 1987 and the bulk of that is to programs focused on at risk kids. This increasing has been focused on Newark and Camden in an effort to demonstrate statistical significance around our initiatives. It obviously includes KIPP. It all of the feeders and beneficiaries as well (DFER, TFA, Braven, advocacy, etc). My thought is that I don’t have Walton-like assets so where can I create real change that is unassailable and can act as an exemplar for other states. This has led to a concentration in this type of investment.

    All honest philanthropy is good, so there is no moral virtue to one type. As with investing, you need to determine where you can achieve the greatest impact with the least risk.

    Thanks for putting this out there. Too many people love the concept of giving, especially with other people’s money, while you challenge them to walk the walk. It’s impressive.

    Regards, John

    John F. Cozzi
    AEA Investors LP
    666 Fifth Avenue, 36th Floor
    New York, New York 10103
    (T) 212-702-0504
    (M) 908-347-1427
    jcozzi@aeainvestors.com

    Like

    Reply
    1. nkingsl Post author

      John, thanks for your note. It’s always good to hear from you. Your concentration and focus in NJ has been incredible. I think both Newark and Camden can be national exemplars.

      Like

      Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s