Scattered Thoughts on Tithing

My post on planning to give made me think about tithing: the Christian practice of giving the first ten percent of income earned to charity. I found myself going in two different directions on this topic. So, while my thoughts aren’t particularly organized, I want to take a post to lay them out.

On the one hand, tithing seems like a reasonable, achievable, and worthy goal. The post at ideas42 that I originally linked to pointed out that the average American gives about three percent of her annual income to charity, and believes that her neighbor ought to give about six percent. In other words, she believes that she should be giving about twice what she currently gives. Tithing would be an even bigger jump, tripling the amount of money going to charitable causes. That would be about $500 billion more dollars going to feed, clothe, house, educate, and care for people (among other things).

Moreover, for many people, this doesn’t seem like an unreasonable amount to give. Yes, reducing our take home pay by ten percent would mean changing our lifestyle. But perhaps it would be beneficial to have smaller houses, eat out less often, own less expensive cars, buy fewer new clothes, and so on. This is especially true if it means that low-income families would have houses, food, transportation, clothing, and so on.

Of course, I realize that not everyone is in a position to tithe. For some people, ten percent really does represent a significant portion of their income. But, for those of us who are in a position to entertain the idea, working our way towards tithing can be a good thing.

On the other hand, giving should encourage generosity, and tithing seems to – at least sometimes, as in the header image to this post – create a ceiling instead of a floor. We can come to believe that once we hit the ten percent mark, we’re doing enough, and we can say to the next person who asks for help, “No, sorry, I’ve already done my part.” We can come to believe that, as the sign says, “10% is good enough for Jesus.”

The problem, of course, is that ten percent is that ten percent is not good enough for Jesus. The Biblical narrative is clear that Jesus demands no less than everything:

Sell your possessions, and give alms. Make purses for yourselves that do not wear out, an unfailing treasure in heaven, where no thief comes near and no moth destroys. For where your treasure is, there your heart will be also. (Luke 12:33-34)

Now, I’m not saying that Jesus demands that we sell everything we have, give our money away, and live in destitution. What Jesus means – and I can go into this more another time – is that our lives should show that we don’t care about money. We shouldn’t be counting our way to ten percent and marking the task completed. Instead, we should give generously; perhaps even foolishly.

Tithing is good when it’s a starting point. Tithing is good when it leads us to always ask what more we can do for our brothers and sisters who are the least of these. But it’s bad when it becomes an accounting tool or a task we can get out of the way.

And that’s how I think the principle of tithing – even if we’re not concerned about a percentage – can be good. Rather than striving for ten percent, our average American, who gives three percent, might ask: what needs to change so she can give four percent next year? And, after that, so she can give five percent? In other words, tithing and percentages and all such things can be a tool for growing in generosity until she doesn’t care about percentages, but gives freely to people who are in need.

Planned Giving

A couple of weeks ago, I posted this link to an article from the folks at ideas42. Here’s the key point:

On average, survey respondents indicated that people should give 6.1% of their income to charity. This recommended level of donation is more than double the amount that people in the U.S. actually give…

…One factor stems from the fact that people are rarely, if ever, prompted to think about how much they currently give or how much they want to give overall. As a result, people often end up donating by happenstance or in response to direct appeals, sometimes giving much less (or more) than they’d actually like to. It’s similar to saving money. Unless you are prompted to set a savings goal or are enrolled to automatically save a percentage of your income each month, you may end up saving less for your future than you want to.

In other words, people think that they should be giving more to charity than they are. And a big reason that people don’t give as much as they think they should is because we don’t plan. We don’t think about how much we are giving, how much we’d like to give, and how we bring those amounts closer together.

I’m sure this is true in my own life. I don’t know what my family used to give, but since we started doing our budgeting in You Need a Budget (we use the free version 4), I know that we average around nine percent of our spending going to charity. And the biggest contributing factor to that percentage is that we budget for giving. We maintain a few different charitable line items. We put money in them every month. We give out of them regularly.

When fundraising professionals talk about planned giving, we usually mean gifts in the form of bequests or complex financial instruments. But all of us can benefit from planning our giving. All of us can benefit from thinking about how much we want to give and setting that aside as we make our budgets. All of us can benefit from saying, “This month I will give this much.”

I urge you to try it. You’ll make a different in your own life. You’ll make a difference in other lives.

ideas42: Is There a $250 Billion Gap in Charitable Giving in the U.S.?

One factor stems from the fact that people are rarely, if ever, prompted to think about how much they currently give or how much they want to give overall. As a result, people often end up donating by happenstance or in response to direct appeals, sometimes giving much less (or more) than they’d actually like to. It’s similar to saving money. Unless you are prompted to set a savings goal or are enrolled to automatically save a percentage of your income each month, you may end up saving less for your future than you want to.

ideas42: Is There a $250 Billion Gap in Charitable Giving in the U.S.?

Three Myths About Low Income Finances

The fine folks over at ideas42 recently did a three-part series called Three Myths About the Underbanked and connected to a recent white paper called Reimagining Financial Inclusion. I highly recommend that you head over there and read part one, part two, and part three.

Because there are so many misperceptions of how finances work for low income households, and because this issue is so important to how we think about poverty and addressing poverty, I’m going to offer a single summary post of their findings.

Myth #1: Low Income Households Don’t Want to Save

Read the original article at ideas42.

In Bridges Out of Poverty, Ruby Payne reiterates a common myth about poverty:

One of the hidden rules of poverty is that any extra money is shared. Middle class puts a great deal of emphasis on being self-sufficient. In poverty, the clear understanding is that one will never get ahead, so when extra money is available, it is either shared or quickly spent.1Ruby Payne, Phillip DeVol, and Terie Dreussi-Smith, Bridges Out of Poverty: Strategies for Professionals and Communities, Kindle Edition (Highlands: Aha! Process Inc, 2009), Kindle Locations 387-388

Payne and her coauthors are deeply concerned with ‘poverty culture’. The implication isn’t simply that low income families fail to save, but that low income households lack the desire for save (even if it’s for good reasons, like the lived experience of “never get[ting] ahead.”

But the problem isn’t that low income households don’t want to save. As the folks at ideas42 point out, “83% of Americans worry about their savings, suggesting a large majority of consumers do want to save even if they aren’t able to at the moment.” Moreover, low income households ‘save for sooner’, meaning that they expect to use their savings in less than a year (and often less than six months).

None of this indicates that low income households don’t want to save. In fact, those households are saving, if only for the short term. Instead, it indicates that low income households lack the resources to build substantial savings over the long term.

Myth #2: Low Income Households Are Bad at Managing Their Finances

Read the original article at ideas42.

One of the first proposals to addressing poverty is often to address financial literacy. We often assume that low income households live in poverty, in part, because they don’t know how to manage their money. But in fact, people who are low income tend to be more knowledgeable about what things cost and where their money is going. They even use creative strategies – like freezing a credit card in a glass of water or using envelope budgeting – to manage their finances.

Among the highlights:

Low income households are more likely to know the cost of goods than their high income peers. Whether it’s the starting taxi fare in their city or the price of a beer, low income people are more likely to know the price. They’re also more likely to change their willingness to buy the product based on where they encounter it.

Low income households are more likely to know where their money goes than their high income peers. In part because a higher percentage of income is spent on certain things – rent can eat up a lot of a low income household’s budget, for example – low income people tend to know where every dollar goes. They don’t wonder where their money went… they know.

Myth #3: Low Income Households Don’t Pay For Financial Services

Read the original article at ideas42.

We often think that only wealthy households pay for financial services: portfolio managers, financial advisors, and so on. But low income households pay an astonishing amount of money for financial services each year. In 2014, they paid an aggregate $34 billion in fees and interest. Much of that was for using services that other people access for free and as a penalty for having unsteady income.

Low income households pay for basic services. This includes services that many people can access for free, like check cashing and money transfers. While these fees aren’t necessarily high – Walmart charges $3 for checks up to and including $1,000 – the point remains that low income households have to pay in order to access basic services.

Low income households pay penalties for unsteady income. Many low income households have volatile and unpredictable income streams, must juggle bill payments, and have little or no access to credit. This means that low income households are more likely to pay overdraft fees, NSF fees, late fees, and other penalties simply for not having enough money at a given point in time.

The folks at ideas42 estimate that low income households pay an average of $1,100 a year on basic financial services. For a family of four living at the Federal Poverty Level (an income of $24,300), that’s about 4.5% of their income!

Conclusion

How we imagine problems affects how we choose to solve them. If we believe that low income households don’t want to save, we’ll work to educate them on the importance of saving and instill that desire. If we believe that they don’t understand finances, we’ll encourage them to take financial literacy classes. If we believe that they aren’t using – or paying for – financial services, we’ll encourage them to use those services.

The problem, of course, is that if we don’t understand the problems, we’ll apply the wrong solutions. And one of the biggest challenges facing us when we try to address poverty is that we tend to base our approaches on myths rather than facts.

The question facing us is not ‘how do we change the attitudes of low income households (e.g. how do we teach them the importance of saving)?’ It’s ‘how do we create financial products that serve low income households effectively?’ In other words: how do we help people who want to save, actually save? How do we help people use their financial knowledge and reduce financial burdens? How do we provide access to affordable credit and restructure fees to account for unsteady income? And so on.

But the first step to addressing poverty is overcoming the myths that we cling to and getting our facts straight.

Footnotes   [ + ]

People I Read: The ideas42 Blog

In the early-ish days of blogging, it was normal to have a blogroll: a list of links to other (often more popular) blogs that the author was interested in. The blogroll would sit calmly in the sidebar and let readers browse their way to other blogs and other authors, discovering fresh ideas and insights. Now, nobody maintains a blogroll. The best hope you have of finding someone else is to follow a link in the body of a post or in a comment or in a link dump. Around here, they also show up in link posts that I share fairly frequently.

But the fact is that I kind of miss the blogroll, and I think that it’s worthwhile to share some of the blogs I read and a note one why I read them. I’ll try to put up one example every couple of weeks.

This post’s person I read is everyone at the ideas42 blog.

ideas42 is a consulting group started by Sendhil Mullainathan and Eldar Shafir (the authors of Scarcity: Why Having Too Little Means So Much) and including an impressive roster of researchers. They perform research in behavioral sciences and develop ways to apply their findings to social problems. Their work ranges from redesigning violation and misdemeanor tickets in New York to improve compliance to redesigning Alliant’s credit services so that they can serve low income consumers. The most important work that they do is bring empirical research in behavior science to addressing poverty. In a field where policy is often determined by ‘common sense’, actual data is a welcome disruptor. Their blog is a great source for cutting edge research in behavioral science.

Poverty and Other Problems

Last week, I posted a link to this post by Erik Loomis at Lawyers, Guns & Money. The first comment on that post (the one at LGM) seemed like an excellent opening to a post I’d been thinking about for a while. Here’s the comment:

My Jesuit moral theology professor used to say “The number one cause of poverty in the US is not having enough money”, and then deal with the predictable chorus of counterarguments. He used to continue “Those are all interesting questions, but they’re other questions…”

Drove people nuts…1Davis X. Machina, April 4, 2016 (12:08pm), comment on Erik Loomis, “Stop Trying To Fix Poor People,” lawyers, Guns & Money, April 4, 2016

One of the biggest challenges to addressing poverty effectively is that we constantly try to address poverty by addressing other problems.

Poverty, pretty much by definition, is the condition of not having enough money. If you give enough money to someone who doesn’t have enough money, then you have solved her problem of poverty. She is no longer poor. She might have other problems, but the point is that those are other problems.

Unemployment is another problem. Financial illiteracy is another problem. Lack of education is another problem. As the Jesuit moral theology professor might say, they are interesting problems, they are problems that need to be solved, but they are other problems.

But anti-poverty programs spend their time and effort trying to solve other problems. Some do that in tandem with efforts to address poverty. Some make it a prerequisite to addressing poverty. For example, an anti-poverty program might require proof of a job search or a financial literacy class as a condition of receiving financial help. And this approach stems from the idea that poverty is ultimately caused by the moral or intellectual deficiencies of low-income people.

As Erik Loomis put it in that post at Lawyers, Guns & Money, we keep trying to ‘fix poor people’ instead of solving the problem of poverty. And that doesn’t work.

Emerging research suggests that poverty isn’t simply – or even mostly – the result of bad decisions made or inappropriate behaviors engaged in by low-income individuals and families. Poverty is a major cause of those decisions and behaviors. And that means that we may not have to address those other problems in order to address poverty. Instead, it may be the case that addressing poverty first will help with addressing those other problems.

It’s also true that some of those other problems might not even exist. Despite the stereotype that low-income people are bad at managing their finances, low-income individuals might actually be better at managing their finances than high-income people.

There’s plenty of research still to be done, but I have suspicions about what it will reveal. Philanthropy in America needs to make a huge cultural transition. We need to stop focusing on ‘fixing the poor’ – on the other problems that we’re so often told we need to address – and focus on poverty. And it may well be that the best and most effective anti-poverty programs will be simple: giving enough money to people who don’t have enough money.

Footnotes   [ + ]

There Are Shop Boys, and There Are Boys Who Happen to Work in a Shop for the Time Being

Recently, I watched the movie Stardust, based on the novel by Neil Gaiman. A few days later, I read a white paper from ideas42 titled Poverty Interrupted: Applying Behavioral Science to the Context of Chronic Scarcity. A similar idea – or, at least, an idea that looked similar when I saw at them one after the other – appeared in both.

The protagonist in Stardust is a boy named Tristan (Charlie Cox) who lives in a village called Wall. Wall is named for the wall that runs alongside it, a wall that has a gap that leads to a magical world. Tristan has a crush on Victoria (Sienna Miller), who sends him on a quest to bring her a fallen star. That quest leads Tristan through the gap in the wall and to the magical world of Stormhold where he meets and captures Yvaine (Claire Danes), a fallen star. On their journey back to Wall, they have adventures, fall in love, and are pursued by a witch who wants to take Yvaine’s heart in order to gain eternal life.

There is a moment when Yvaine and Tristan have been captured by pirates. Yvaine notes that, when she was a star in the sky, she used to watch people having adventures and envied them. Here’s what Tristan says: “Look, I admire you dreaming. A shop boy like me… I could never have imagined an adventure this big in order to wish for it. I just thought I’d find some lump of celestial rock, take it home and that would be it.”

And here’s how Yvaine replies:

If there’s one thing I’ve learned about all my years watching Earth, is that people aren’t what they may seem. There are shop boys, and there are boys who just happen to work in a shop for the time being. And trust me Tristan, you’re no shop boy. You saved my life. Thank you.1Matthew Vaughn (writer, director) and Jane Goldman (writer), Stardust (Los Angeles: Paramount Pictures, 2007), Netflix

“There are shop boys, and there are boys who just happen to work in a shop for the time being.” That’s a big statement.

There are boys who are shop boys. There are people who, deep down in the very fiber of their being, belong in a shop. It is who they are. It is who they always will be. Even if they work somewhere else – if they become pirates, for example, or kings – they will still be shop boys.

And there are boys who just happen to work in a shop for the time being. They are something else.

Similarly, in Poverty Interrupted, I came across this:

How do you describe the services your organization provides? What about the people you serve? The role your staff members play? These questions have implications far beyond organizational “branding:” the language you use and the labels you apply can have an outsized impact—positive or negative—on who takes up your service, how they use it, how your staff treats them, and the way their participation affects their self-esteem or self-image. If you conceive of someone as a “recipient” or “case,” for instance, it’s easier to adopt a mental model of her as a passive recipient of support than it would be if you referred to her as a “member,” “customer,” or “participant.” Because your mental model will shape your behavior toward her, a “recipient” may begin to believe that she is indeed needy or dependent.

In this paper, for instance, we’ve deliberately avoided using constructions like “needy families” and “poor people” to describe families living with low incomes. When used in this way, these words subtly reinforce the widespread perception that these families are qualitatively different from the rest of us, rather than regular people caught in a particular economic circumstance. When they are people first, and low-income second, it becomes easier to acknowledge individual situations, rather than to fall back on personal or societal stereotypes about “the poor.”2Allison Daminger, Jonathan Hayes, Anthony Barrows, and Josh Wright, “Poverty Interrupted: Applying Behavioral Science to the Context of Chronic Scarcityideas42 (2015), 44. The authors also discuss the importance of how we title staff and name programs. What we call things makes a difference.

To put that another way: there are poor people, and there are people who just happen to live in poverty for the time being.

Actually – and I think the authors of Poverty Interrupted would agree – I’m not so sure that there are poor people. There are only people who just happen to live in poverty. And that’s an important distinction. A lot of organizations act as though there are poor people, as though there’s something ontological about poverty. A lot of the people making the case against charity act as though there is something ingrained about being poor.

But there isn’t something ingrained. ‘Poor’ isn’t an ontological status. There are simply people who just happen to live in poverty. And if we work together as a community, they just happen to live in poverty for the time being.

And while I can’t promise that I’ll be good about avoiding terms like ‘the poor’ and ‘poor people’, I will try to be aware that even in my writing it is important to treat people as people first and low-income second (or third… or thirtieth).

There are, after all, shop boys, and there are boys who just happen to work in a shop for the time being.

Footnotes   [ + ]

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