What's the right way to think about how much to give to charity?

The important thing is not to burn out, which would substantially reduce future giving. Right now I'm aiming only to max out Google's $6K/year matching limit. I probably won't increase that until I have a lot of savings, like on the order of several months of salary. Then if my partner is OK with it I'll head towards giving 10%, and after that I'd hope to give away 50% of future pay rises; whether we go beyond that will depend on how our income and outgoings compare at that point.

I wouldn't pay any attention to any comments that don't discuss the commenter's giving, by the way! You would probably get more informative answers if the question was "How did you decide how much of your income to give to charity?"

Meta: please consider crossposting this (and future topical posts) to the Effective Altruism Forum.

The logical thing to do seems to be: figure out how much more you value yourself than a random African. Figure out how much money you have to have so that the marginal dollar is that many times more valuable to them than to you. Donate everything beyond that.

I just plan on trying to spend as little as I can, and just donating the rest.

Giving What We Can recommends over 10% of income. I currently donate what I can spare when I don't need the money, and have precommitted to 50% of my post-tax income in the event that I acquire a job that pays over $30,000 a year (read: once I graduate college). The problem with that is that you already have a steady income and have arranged your life around it- it's much easier to not raise expenses in response to income than it is to lower expenses from a set income.

Like EStokes said, however, the important thing isn't to get caught up in how much you should be donating in order to meet some moral requirement. It's to actually give in a way that you, yourself, can give. We all do what we can :)

My temporary solution is to max out my employer's annual match. That the maximum match is somewhere between 10 and 15 percent of my income is very convenient, as that makes me feel like I'm contributing the "expected" amount for an EA (this feeling is only important for fuzzies) but still leaves me with what seems to be a good amount to save and spend. It also allows me to avoid committing an answer to the question of whether to donate now or invest and donate later. The guaranteed, almost-immediate, soon-to-expire 100% return provided by the match wins pretty clearly over the EV of investing and donating later, and since I feel like I'm donating enough for now, I can evaluate what to do with what's being invested later on, based on my wants and needs.

Historical Reasons

Growing up, I had a pastor who advocated setting an upper limit on your income and donating everything you earned beyond that. I admired the principle of that stance. (It helped that he followed his own advice, living simply even though his books sold many copies.) But when I started making money after college, I learned how easy it was to increase your spending as your income grows.

A few years ago, when I was in the process of converting from being an Evangelical Christian to an agnostic/atheist, I decided that I didn't want a financial incentive to not be a Christian anymore. I wanted to be able to say I was doing it for more pure reasons. I had been giving 10% of my income to my church, so I pledged to continue giving away that much to other causes.

So I've decided that 10% is the bare minimum that I want to give. (And in the past month I finally got around to signing the Giving What We Can pledge.)

Buying Meaning

However, over the course of my lifetime, I hope that I'm able to give away more (if I get really lucky, maybe even signing this other plege). I don't really think of it as giving money away though, I think of it as buying meaning.

I've recently become a fan of the PERMA model of the good life, and I think it's useful to keep in mind when you think about how you spend your money. Paying those medical and tuition bills -- that's going towards maintaining relationships that are important to you, and there is probably a sense of meaning and achievement that come from supporting your family.

Engagement is probably harder to buy, though taking a lower paying job that you found more interesting would fall under this category. Positive emotion can come from traditional material goods, though probably more so memorable experiences like interesting vacations. (For more on how to buy happiness with your money, see: this post).

(It's also worth noting that all of these elements of the good life have diminishing marginal returns, both in terms of how much more of any one of these you can get with more money, and in the sense that if any is neglected, you'll likely get more value from focusing on the neglected element.)

As for me, now that I no longer believe in a higher power with a plan for the world like I did growing up, I've found meaning from supporting the cause of trying to make the future of humanity as bright as possible. That's a big part of what attracted me to Eliezer's writings on this site, and it's why I identify as an Effective Altruist.

I find it very exciting that I'm able to use my resources to support this cause -- if humanity's future is bright, I may have played a part in getting us there. I think it's important to have something larger than yourself to feel connected to, and for me that's it.

I see a lot of “rules of thumb” suggestions in the comments (% of income, match Google/employer, etc.). I disagree with these approaches.

I recommend that you spend the requisite time to create a detailed projection of your cash flow. Try to determine how you want to use every dollar you will ever have.

A probabilistic projection will return an optimal giving range. The range may be wide, but at the very least I think this exercise will help you identify upper and lower boundaries.

Added bonus - It’s a great way to take account of your true priorities.

I like Julia Wise's thoughts in "Cheerfully".

(Personally I aim for donate 20%, invest 20%.)

"What's the right way to think about how much to give to charity?" My answer: how much better a place do you want to make the world? Do you want to make it a little better, a medium amount better, or a lot better? And how does this goal trade off against your other goals? How much would you sacrifice by making the world a lot better? Keep in mind that money is not a good way to buy happiness. So you sacrifice surprisingly little. But giving up things that you already have is painful due to the endowment effect. Try to fight status quo bias and avoid anchoring on your current amount of giving. If you think for a while, I'll bet you'll be able to find a budget that does a smashing job of achieving both your personal and altruistic goals.

I gave ~$20K to FHI last year, which was over a third of my pre-tax income, but I see my major altruistic sacrifices as being time & energy ones (largely related to acquiring skills and doing independent projects in order to increase my long-run earnings capacity). I still buy most of what I want. I like living with roommates and I have little need for a car. And despite my time and energy "sacrifices", I suspect I'm happier now that I have a clear, obviously important goal in life, relative to the aimlessness I felt in my pre-altruism days.

My current rationalisation for my level of charitable giving is "if, say, the wealthiest top billion humans gave as much as me, most of the worlds current problems that can be solved by charity would be solved in short order".

I use this as a labor-saving angst prevention device.

Me: "Am I a good person ? Am I giving too little ? How should I figure out how much to give ? What does my giving reveal about my true preferences ? What would people I admire think of me if they knew ?"

Me: "Extra trillions thing. Get back to work."

If you are looking to build up savings while donating in the third world, a good middle ground is to make 100 dollars a week of short term (6months To a year) loans on Kiva.

After not too long you build up a decent roll of money each month and in the meantime you are helping third world business growth

I have a good intuition on how to allocate the money

Isn't that a far more formidable problem than just deciding how much to give? Maybe you should tell us your allocation method.

I think that something is better than nothing.

Sometimes setting an amount to give that is high can be discouraging, and can lead people to not give at all, or spend time feeling bad about not meeting their standards, rather than focus on what they can do to help.

If you give more than 0.7% of your income, you are doing better than most governments around the world, many of which have promised to spend 0.7% of GDP on foreign aid, but do not meet that threshold.

I don't think "How much money shall I give to charity?" is as important a question as "What change do I want to make in the world, and how will I achieve it?" I think that answering the second question can give some perspective on how to answer the first.

This post demonstrates a common failure of LessWrong thinking, where it is assumed that there is one right answer to something, when in fact this might not be the case. There may be many "right ways" for a single person to think about how much to give to charity. There may be different "right ways" for different people, especially if those people have different utility functions.

I think you probably know this, I am just picking on the wording, because I think that this wording nudges us towards thinking about these kinds of questions in an unhelpful way.

I'd like to chime in to counter the common intuitions seen in the other comments.

First, that the more you give, the better it is.
It's known that money has a powerful effect on human psyche, and I strongly doubt that pouring say a million dollar to a charity that is used to manage ~10K$ donations will suddenly multiply its efficency hundredfolds. More likely, that money will be wasted. Or given to local warlords. Or used to pay higher salaries, etc.
The unreasonable assumption here is that there's a direct path from money to utility for other people, as if charities were engines of perfect efficiency that burns money and churns out utility for poor people. Extremely unlikely, even for charities listed top tier on GiveWell.

The second assumption is that charity at all is a good way to spend large sums of money for improving the quality of life of those less fortunate.
I'm reminded of a meme that circulated last year: over the picture of a USB pen the slogan "This has saved more tree than Greenpeace". Kinda true, isn't it?
What if a much better way to improve people's life was to invest not in a charity, but in potentially fruitful R&D?

Reading over the other comments, I think a lot of this is about finding the right schelling point.

This past summer, I put a bunch of reminders spaced out by a month or two into my google calendar that say "make effective altruist plan" - the idea being to make some sort of contract with myself before I graduate and get a regular income again, and sit down and think about what goes into that contract many different times before actually "signing" (which will probably be showing it to a trusted friend or two and asking them to help hold me to it with social pressure). I'm probably at an advantage timing-wise, since I'm able to think about it while having some idea what my finances will be like (I've lived on my own while working a long internship, so I have a rough idea about groceries and rent and things), and before much chance of lifestyle inflation and hedonic adaptation happening.

I expect most of my donations will happen once I've got my career figured out. Right now, I think that will mean having a collection of small business activities that I can live off of, and end up with a really large surplus if I do well which I could donate, but something totally different could happen if I find I'm not cut out for self-employment. The contract is mainly about setting something up so that I stay in the habit of donating large-ish amounts, so that I won't be as likely to feel uncomfortable and change my mind if I get rich.

10% seems to be the most common schelling point, so I started from there. But that didn't feel like it was leaving me enough surplus to save as business-starting money. The current draft of the contract says 5% donated at whatever time of year it makes financial sense to (I know a lot of people base donations on tax seasons), 5% saved in an account that's only to be used for investing in things that I expect to be worthwhile profit-wise (likely my own projects). Money I use out of that savings account would be recorded, and that amount would eventually be donated later. If I don't use the account, it gets donated.

If you're worried about unpredictable expenses (like medical bills), maybe the charity-or-specific-other-use savings account would make sense for you? Also, if you've already got a full budget, looking first at where you'd cut back to make room for charity might make more sense than abstract percentages.

I was recently thinking about the same thing. I recommend starting small and giving to every cause you like, including causes that don't have 501c3s. Start with a small amount, maybe $1k or so, and the same amount for everyone. They'll all want to treat it as annual, so don't overdo. Then once you know them better, decide whether you're happy with it, want to increase it, or want to cut it before they ask for an annual contribution.

I also pick one month of the year for all of it so you don't make 3 "annual" contributions a year. My parents used May, for tax simplicity I think, whereas I use December so it can crowd out with giving to people I know.

This is assuming you're looking to give primarily. If its largely a tax question ask an accountant. Just remember, "they can only bury you with one set of golf clubs." Once you have more than you or your family will ever spend on yourselves, better for you to dispose of it than your heirs.

I agree with Mr Mind that there are a number of questionable hidden assumptions here. I would suggest that if you truly care about improving the world, you should seek to invest, not to give to charity. Ideally, this would be an area in which you already have some expertise, so you can pick wise investments. Most problems that charities work on are also business opportunities for entrepreneurs to solve; by being part of that, your money will do far more good in the long run. Market feedback makes sure that for-profit businesses really are solving the problem, whereas charities generally just drift.

For example, I am far more excited by Endaga (see e.g. here, here) providing cheap technology for mobile networks for rural areas in the third world, than I am about sponsoring a bike ride across Zambia to raise awareness of poverty. Only one of these activities has the chance to do anything about African poverty, and we all know it ain't the charity.

There is no fixed tithe... Donate slightly more than required to not feel guilty. If in doubt, increase the amount until you are sure.

The more is donated, the better, so figure out how much you expect to want for your own spending/saving and donate the rest. Don't give so much that it takes a toll on you; it must remain something achievable that you want to do.