Give a Little

The World is Going Hungry

One way I enjoy looking at charities is to consider Maslow's Hierarchy of Needs.  The concept is relatively simple: all humans have basic, essential needs (depicted at the bottom of Maslow's pyramid of needs) such as food, shelter, and safety.  Between the bottom and the top of the pyramid, there are other personal needs, including friendship, family, and self-esteem.  Finally, at the very top, there is self-actualization, including morality, creativity, lack of prejudice, etc.  I believe that each charity generally serves a component of the hierarchy - some provide food and shelter, and others work to eliminate prejudicies, or enhance creativity and the arts.  Overall, the world of charity works to give access to these fundamental components of human needs, ideally so that individuals can eventually each become fully self-actualized.  If things were to go according to plan, someday we might solve all the problems that lie at the bottom of the pyramid (homelessness, hunger), and move to developing the needs higher on the pyramid.

Unfortunately, we're about to take a giant step backwards, perhaps halting our global progress in serving the needs at the higher levels of Maslow's pyramid.

We're in a global food crisis.  The price of rice and grains in some countries has doubled in the last year.  On top of this, the price of oil - which is the predominant cost in transporting food to where it is needed - has shot to record highs.  Fingers are being pointed in all directions - ironically, some are saying that the demand for biofuels for environmentally-friendly transportation has shifted grain production outputs from food to fuel, and increased cost for the grains as a result.  The UN World Food Agency has raised the alarm, and at the same time, is being accused of bureaucratic fumbling and inefficiency.  Factories in the developing world are subsidizing food purchases for their employees, which itself is troubling: isn't the basic premise of working for a salary supposed to mean that a worker can afford to at least put food on the table for their family?

Governments around the world are being called on to provide food aid, and Canada is being criticized heavily for not doing enough.  Canada's a food producer - we've also got a role to play beyond simply providing aid. And let's not kid ourselves, this problem is not one that exists only in developing countries.  So far, we've been lucky - food prices have remained relatively stable, but that will change soon enough.  When it does, food banks will be hit hard.  They struggle already to keep up with increasing demand, and food donations are never enough. 

Think about this: removing an essential item from the bottom of Maslow's hierarchy (in this case, food) - upsets the entire balance.  When people are looking for food, very little else is of interest.  Solving other world problems - let alone domestic issues - becomes a distant dream when the pain in your stomach keeps you up all night.  In fact, new issues crop up - there is the very real possibility of violent disputes over arable land and property.  As personal income is increasingly consumed on food purchases, families will creep closer to, or tip over into poverty.  Those living in poverty will face increasing hardships.  Political rhetoric also tends to become more inflammatory, as leaders try to place blame and scramble for solutions.  For a de-stabilized region, these pressures can have disastrous results, beyond the immediate effects of famine and malnutrition.

So, what to do?  Charities will do what they always have - dig in.  Appeals will grow for help in directing dollars and resources to those who are hardest hit, whether abroad or at home.  More will call for real solutions from our government and from world agencies, and hopefully we will see a real response, not empty promises of aid that don't always materialize.  And I hope that these solutions won't be short-sighted, but will deal with both immediate needs and the ways that we can provide for the food needs of growing populations on a sustainable basis. 

We've already been told what we can do as individuals: eat and buy local.  Donate to your chosen causes. Give to your local food bank - both money and non-perishables. 

And finally, I hope and wish that we will also be able to sustain our charitable endeavours at all levels of Maslow's pyramid. Ultimately, societies should be able to serve and provide for the needs at every level of the hierarchy of needs.  Winston Churchill demonstrated this balanced approach when, according to anecdotes, his finance minister came to him during the war, asking him to authorize budget cuts for the arts so that more could be directed to defense funding.  Churchill's response: "No, God no.  What do you think we're fighting for?!"

Donations in a Questionable Economy

I'm way behind in my blogging, so this post is overdue.  It's another long one - I hope to blog more frequently, and make my entries shorter (eventually!)  But I thought this is an interesting topic - you can't open a paper or watch the news without more speculation about where the global economy is headed, and this has always had an impact on charitable giving.  Plus, the federal government just released their annual budget, and it's got one (!) mention/incentive for charitable giving.

There’s always debate about what happens to giving during an economic slowdown.  While generally, statistics show that giving goes down as people devote more of their income to pay for increasing expenses, we also know that in geographical areas where the economy is lagging, the rates of giving per capita are often the highest, and remain high in good times and in bad.  Newfoundland and Labrador is a great example of this – it’s a province that has struggled economically but consistently has one of the highest rates of charitable giving per person year after year.  Having grown up there, I have some theories about economics and giving, which I think are relevant to our current economic uncertainty worldwide.  Keep in mind that I don’t have data for all of this – some of it is speculative and based on personal experience. 

Charitable giving is built on the sense of community, not on one’s economic situation.  People with fewer assets tend to give a greater proportion of their income as donations, while wealthier donors give larger gifts, but the proportion of their giving to their income or assets is less than those with less in their pockets.  I can say from experience that the residents of Newfoundland and Labrador enjoy a strong sense of community – they support each other through hard times, and celebrate each other’s successes.  Part of this means sharing resources with each other, to take care of one another directly and ensure no one gets left behind.  Giving to charity is a natural extension of this – you give to charity to help out those around you.  We also know that people don’t tend to give rationally – emotion leads to compulsion.  While we like to think of ourselves as highly logical in our decision-making, we tend to give with our gut: when you see images of people’s homes and livelihoods swept out to sea in a natural disaster, your reaction is to help – you probably don’t need to think very hard about why.

So, my theory is that giving continues in areas where people are affected by economic slowdowns.  When some people lose their jobs, others in the community reach out to help.  However, large gifts will dry up – those who think about giving and treat it as an investment look at their dwindling returns on the market and make a rational decision about affordability.  Overall, I have no doubt that giving trends downwards during an economic slowdown, but I think that there exists interesting pockets of communities where smaller, individual gifts go up.

In an earlier blog post, I made a comment about how our tax system continues to reward those who give a lot, over those who give a more average amount.  In the most recent federal budget of February 26th, I saw this situation exacerbated.  A few years ago, the government eliminated the capital gains taxes on gifts of publicly-traded securities (stocks, bonds, and mutual funds) to charity.  Great news – and CanadaHelps now accepts gifts of securities online for donors who want to take advantage of this.  The budget added a new feature (and the only real mention of the charitable sector in the 400+ page document) – for donors who have shares that are not traded on a public exchange, they can trade those shares for ones that are, and then donate them, without triggering a capital gains tax again.  This is good, for the few donors who own shares that are not on a public exchange.  But, there are no measures in the budget that help the average joe – those of us who probably don’t own shares that aren’t publicly traded, if we own shares at all.  If my theory above is true, then the average donor gets no recognition from the tax man for sticking it out and continuing to support their community during an economic slowdown. 

Basically, my argument boils down to this – if governments at all levels are reducing their investment in the social fabric of society – in our charitable services and organizations, then they need to also reward those who take it upon themselves to support and maintain our social fabric, especially when it matters the most – when people are facing bleak economic opportunities.

Thoughtful Philanthropy

Earlier this year, I wrote down some thoughts on philanthropy in Canada.  I came across my writing again this week, and thought it would be a good year-end blog entry:

Canadians are giving in record quantities, and there are a record number of registered charities accepting our generosity: 22 million Canadians gave almost $9 billion to charity in 2004 .  At the same time, however, there are questions and disillusionment.  How much are charities spending on fundraising and administrative costs?  Are charities even effective at resolving the problems they face?  As charities become more professional, aren’t they ‘losing touch’ with the people they serve and the causes they help?  The answers vary depending on how you want to peer into the multitude of organizations that are doing good, and on what criteria you use to measure impact and finances.

But I am heartened by the charitable landscape in Canada.  If you do a search through the long list of charities you can give to through CanadaHelps (83,000+ and counting), you find some interesting stories.  Canadians care about literacy, about water quality, and about healthcare.  We care about our local community, and we care about international issues.  We care about the arts, and we care about homelessness.  The mosaic of charitable interests that rests in the CanadaHelps database represents the true spirit of Canadians.  Canadians have chosen to participate in our communities by bringing together people and resources to make change.

For CanadaHelps, we want to make these acts of generosity easier, and we want to make giving something that every individual thinks about consciously from time to time.  Giving shouldn’t be an unconscious act – we shouldn’t just give because our neighbour does, or because the collection plate passed by us, or because we don’t know what else to do.  We should give because we care to give, because we think – at least for a moment – about the causes we are giving to.

In the 12th century, there was a Rabbi called Moses ben Maimon, or Maimonides.  ‘Rambam’ became the colloquial version of his name: he lived and worked in Egypt as a physician and a religious figure.  Part of his writing – especially on the concept of philanthropy – was brought to life for me in a book by Julie Salamon, entitled Rambam’s Ladder: A Meditation on Generosity and Why It Is Necessary to Give .  Rambam created an 8-step progression of giving, a Ladder of Charity.  The bottom rung is the first step in giving, and the ladder progresses from the realism of giving to the ideal of giving at the top step.

MAIMONIDES’ LADDER OF CHARITY
Step 8 – Responsibility
To give the gift of self-reliance – to hand someone a gift or a loan, or to enter into a partnership with him, or to find work for him, so that he will never have to beg again.
Step 7 – Anonymity
To give to someone you don’t know, and to do so anonymously.
Step 6 – Direction
To give to someone you know, but who doesn’t know from whom he is receiving help.
Step 5 – Boundaries
To give to someone you don’t know, but allow your name to be known.
Step 4 – Shame
To hand money to the poor before being asked, but risk making the recipient feel shame.
Step 3 – Solicitation
To hand money to the poor after being asked.
Step 2 – Proportion
To give less to the poor than is proper, but to do so cheerfully.
Step 1 – Reluctance
To give begrudgingly.
As adapted by Julie Salamon, in Rambam’s Ladder

I present the ladder here because I think it provides an interesting framework for thinking about philanthropy.  When you hand a homeless person some loose change, where were you on the ladder?  When you attend a black-tie gala fundraiser, what motivation did you have for giving?  And when you click ‘Donate Now’ to give through CanadaHelps, why did you give?

The ladder obviously presents some judgements about giving: about how much is appropriate, and how it should be given.  At the most basic, essential level, giving – no matter at what level on the ladder – is a vast improvement over not giving at all.  You may disagree or debate about the order of the steps, or you may omit a few based on your own experiences, but overall, it has stood the test of time for nine hundred years as a model for giving, proving its incredible relevance for generations. 

CanadaHelps was founded as an electronic collection plate – a way of giving online where the donor manages their experience and their philanthropy.  We put control in the hands of donors.  Giving over the internet wasn’t an option for Maimonides or his followers, but the principles of giving apply equally as well on the web as they did in his time. 

As you consider making a donation to charity this year (or next), I urge you to move from being a donor to becoming a philanthropist – someone who carefully and conscientiously considers both why they are giving and to whom they are giving.  While we can’t all give at the level of the Bill and Melinda Gates Foundation (which gave away $1.5 billion in 2005), a small, carefully considered contribution is worth much more than a large, carelessly given donation, given for the wrong reasons, or in fact, for no reason at all.  Charities continue to make a difference in Canada, and intelligent giving will ensure the difference they make becomes even more profound.  Ultimately, let us continue to build a Canadian culture that is steeped in the tradition of philanthropy.  Let us each make our difference one thoughtful contribution at a time.

Where's giving going?

Two recent news items are creating an interesting window into the Canadian philanthropic marketplace.  The first item was a release from Statistics Canada on Nov. 1 that reported that “Canadian taxfilers reported making charitable donations totalling $8.5 billion in 2006, up 8.3% from 2005, while the number of donors decreased 1.4% to 5.8 million.”

Most of the media reports I saw touted the increase as good news, and commended the removal of capital gains taxes on gifts of securities in the last federal budget as the basis for the continued growth of philanthropic dollars.  That is indeed good news, and now that CanadaHelps can accept gifts of securities online, more donors can give to more charities in this tax-effective way.

However, there is the second half of the Statistics Canada statement that disturbs me the most – fewer Canadians are giving.  Since CanadaHelps is about encouraging people to get engaged, and to help more people give more dollars to more charities, this isn’t such great news at all.  It means we have our work cut out for us.

The second piece of news was one that was released today – the Canadian tax system is increasingly penalizing those with lower incomes, and rewarding the wealthy.  This tax system includes charitable donation incentives, incentives that definitely penalize the poor and reward the rich.  That’s not a bad thing in itself – we should encourage those who have a lot more to give away to actually give it away.  So the thinking goes, the wealthy have a lot more to offer philanthropically, and those of us who are poorer don’t need as many tax incentives to give money away – money needs to be kept to spend on life’s necessities.

The problem is, that’s not how it works.  Some of the territories and provinces with the lowest median incomes give the most, according to the same Statistics Canada report.  In fact, it seems that communities where income levels are generally low are places where giving is important, and a way of life.  I presume that, with economic resources scarcer, the idea of sharing is more embedded as a part of the culture, and that also includes charitable giving.  In fact, we’ve also heard that as your income rises, while the size of your donations grows, your donation amount tends to decrease in proportion to your income – lower income people give a higher proportion of their income as gifts than the wealthy.

The gifts of securities tax breaks are a marvellous way of encouraging giving by those who actually own stocks and bonds.  And the additional tax incentive for those who give $200 or more per year is also nice.  But if you give a little, your tax break for giving is the lowest possible.  Basically, if you’re poor and you give, you get much less of a tax break for being generous than a wealthy philanthropist.  You can be generous, but if you don’t have money invested outside of an RRSP that you can use for donations, the current tax structure doesn’t reward you very much.

Let me be fair – this isn’t the major reason that we’re seeing lower donation rates among the Canadian public.  There are other reasons, including donor confusion in an increasingly scattered charity marketplace, the focus of larger institutions on their wealthiest constituents, and the increasing concern among donors of how their money is being used by charities.

But the story changes online – donors are giving more than they ever have online.  They’re giving in larger amounts than through traditional channels, and they’re growing at a rapid rate.  Online giving is going against all the trends.  Online giving puts donors in the drivers seat, and that’s powerful.  While charities still need to address donor disengagement, at least we’ve found a medium that is more attractive to the average donor, and growing in attractiveness year over year.  It can provide the transparency that donors wish, and it can help donors choose the cause that best matches their interest among the many competing charities.

Unfortunately, the tax situation still doesn’t encourage giving for the average donor.  If we believe in philanthropy as a society, then a policy change will have to be a priority.  Currently, there doesn’t seem to be much appetite for this sort of change.  If, however, we continue to see annual Statistics Canada reports such as this one, we will need to face a change or risk losing the valuable organizations that provide community services across Canada that don’t attract the major, wealthy donors.

Opening up the Markets

Last week was exciting at CanadaHelps - we had the honour of opening the Toronto Stock Exchange (TSX) on Tuesday, Oct. 16.  We were opening the markets because we launched our newest way of giving on our site - donating gifts of securities online.

This seems to be a Canadian first - donors can now make donations online of appreciated stocks, bonds, and mutual funds.  Here's what's really neat about it:

Previously, if you were a donor with several favourite charities, you may have wanted to make a donation of shares to each of them.  That was great, because you got an incredible tax break - giving securities has additional tax benefits (such as the fact you pay no capital gains taxes) that makes it favourable in comparison to donating cash.  But there was a catch - to give to all of your favourite charities, you had to initiate mutiple share transfers.  That's a lot of work.  And, your broker probably charged you a fee for every share transfer you made.  To make matters worse, some charities - especially smaller ones - don't have brokerage accounts to receive those shares. 

The arduous process would have involved coordinating the share transfers with each recipient charity, their respective brokers, and your own broker.  But now, there's an easy solution!  Simply visit www.canadahelps.org/securities, and after entering your information, a Letter of Authorization is ready for your broker.  With a click of the mouse, you can donate securities to all your favourite charities, with only one transfer.  And, it doesn't matter if the charity you're choosing doesn't have a brokerage account, since CanadaHelps takes care of the receipt and sale of the shares, and your charity receives the cash.  You get a tax receipt, your charity benefits. 

We're pretty excited about this, and the potential it has for all charities to benefit.  And, it was pretty cool to open the TSX.