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Giving More on a Limited Income, Part 1: Financial Security

“Your generation doesn’t tithe,” my boss drily remarked to me as we discussed efforts at getting my friends to financially join our mission. “Don’t expect much from them.”

I immediately began to think of excuses why I was not giving more to the causes I cared most about. My income was limited, student loan payments comprised half of my monthly paycheck, and I did not see myself coming up with money to donate anytime soon (only a month removed from this conversation, this is still the case).

Fortunately, statistics do not support my boss’s claims. According to Forte Interactive’s “The 2014 Millennial Impact Report,” 87 percent of American millennials donated to nonprofits in 2014. Contrast that with Gallup’s claim that 83 percent of Americans in general have given charitably, and millennials seem more charitable than Americans as a whole. Moreover, The Chronicle of Philanthropy estimates that poor and middle-class Americans give a greater percentage of their income to charity.

However, if we are to take God’s biblical direction to give 10 percent of our income as a tithe literally as stated in Numbers 18:26, then it is true that our generation leaves a lot to be desired. According to “The 2014 Millennial Impact Report,” 28 percent of us gave between $100 and $500 during the course of a year, while 49 percent gave less than $100. If we assume (correctly) that most of us make over $5,000 in a year, this means that over half of us give much less than 10 percent of our income—and almost half of us give less than $100 a year, which is far, far less than 10 percent.

Even if you believe the Old Testament isn’t to be taken literally, there are three major reasons to sacrificially donate more to charity this year: donating increases your financial security, it increases your happiness, and it is in line with Jesus’ teaching.

Financial Security

As AEI President Arthur Brooks details in his book “Who Really Cares,” billionaire industrialist John D. Rockefeller once reasoned, “I believe it is my duty to make money and still more money and to use the money I make for the good of my fellow man…” (138).

For Rockefeller, giving charitably was a moral imperative, and he correlated giving with becoming wealthy. Brooks calls this “the Rockefeller Hypothesis,” and sums up Rockefeller’s reasoning as follows: “Rockefeller believed that God made him rich so that he could be a steward of God’s blessings on earth…. Accordingly, he believed that if he failed to give charitably, or gave unwisely, God would withdraw His generosity” (138).

Even when his income was limited, Rockefeller’s personal ledgers show that he was donating a consistent amount of his income. Brooks writes that “without consistent and responsible charity, prosperity will not continue.” He also cites the classic “Pilgrim’s Progress,” in which a character remarks, “He that bestows his Goods upon the Poor, Shall have as much again, and ten times more” (138-140).

[pq]A charitable person earns $14,000 more per year than an uncharitable one.[/pq]

The view that private charity creates prosperity holds up among other researchers, as well. Robert Putnam’s “Bowling Alone” reasons that charitable giving increases social capital. In turn, social capital creates “happiness, health, and economic prosperity.” Social capital lends itself to increasing networks, which in turn lead to “employment possibilities, business opportunities, and access to financial capital.” Economist Thorstein Veblen believed that charity encourages industriousness (and in turn higher pay), because people either work harder to make money to offset their charitable gift, or they want to work harder to have money to give (141-142).

Brooks suggests that people often give because they believe their gift will result in goodwill toward the giver and a willingness to help when the giver is in need. Modern psychology dictates that when people give, they feel more successful. Perceived success then leads to confidence, and confidence leads to increased compensation. Moreover, if a person gives to charity, he or she is more likely to budget and keep careful track of his or her personal finances, which creates prosperity in the long term (142).

Data lends credibility to Brooks’ “Rockefeller Hypothesis.” In 2000, a family earning over $100,000 was 10 percent more likely to give to charity than a lower-middle income family (145). According to Daily Finance, those who tithe consistently are 40 percent less likely to owe more than $50,000 in debt, half as likely to have overdue credit card payments, and twice as likely to be completely debt free. Controlling for education, age, religion, politics, sex, and race, Brooks reasons that a charitable person earns $14,000 more per year than an uncharitable one (145).

The skeptic may dismiss the correlation of wealth with giving: “Sure, it makes sense that rich people give more. But it isn’t that charitable people earn more—rather that rich people can give more.” Brooks reasons, however, that not only does rising income increase charitable giving, but that the reverse is true as well. A dollar donated to charity can be associated with $4.35 in extra income, due to better budgeting and increased social capital, confidence, and industriousness—extra income which is then partially reinvested into more charitable giving (146). Additionally, charitable donations increase income across the spectrum of an entire economy, lending credibility to the maxim, “A rising tide lifts all boats.”

Charity stimulates economic growth, both personally and in society. As Brooks argues, “giving is important to a balanced investment strategy” (147). While financial return should not be the only reason to give to charity (later posts will examine others), it is a compelling one.

My generation does tithe on limited income, but it could always do more.

What motivates you to give generously of your time and money?