Why — and how — I’m donating 5% of my income to charity
For better or worse, money is powerful. Whether a company, a movement or an initiative survives often comes down to cold hard cash. This isn’t great for lots of reasons — it’s rarely the most upstanding people that end up with lots of money, after all — but it does provide a strong avenue for influence.
Financially speaking, I’ve been one of the lucky ones during this pandemic. Despite upended holiday plans and seeing far less of friends and family than I would like, I have kept a stable income and a stable living situation. As a result, my bank balance has survived unscathed. I have been acutely aware that this hasn’t been the case for many. As well as individuals, charities have also been hit hard as donations fall and demand for their services escalates.
This realisation brought me back to a thought process that began during my degree, concerning how I could ensure my time, energy and resources were best spent to bring about positive change. Like many others, I very much want to do the most good I possibly can in the world, but knowing how to go about this isn’t easy. When I graduated, getting my career off the ground was the obvious starting point, and so I worked to get a position where I knew I was making a positive difference. I can now check that off my list, which leaves me thinking about the next item on the agenda: money. After lots of thought on this front, I’ve finally reached a decision: I am going to begin donating 5% of every paycheque to effective causes tackling climate change.
But I would like to make one thing clear: this isn’t meant to be a virtue signalling exercise. Sure, I could just quietly make donations and not harp on about it online, but there’s a very good reason why I am choosing to publicise this — as I will explain later.
The Power of Donation
Donations are a uniquely powerful tool in tackling climate change, arguably far more so than individual lifestyle changes. Changing our diets and travel habits are worthwhile, but ultimately the large-scale changes needed require funds to be funnelled in a particular direction. This is where charities come in.
However, it’s not simply a matter of donating to whatever charity catches your attention first. It is worth remembering an important distinction between charities and private companies when making your decision. If a company is bad at what it does, it will end up facing bankruptcy. If a charity is bad at what it does, it can keep on going indefinitely, as long as donations keep on coming in. A problem with the third sector is that charities ‘compete’ against one another not by comparing who makes the most impact, but rather by who is best at fundraising. Unfortunately, clever marketing does not necessarily translate into effective utilisation of the resultant funds.
One notorious example of an ineffective charity is the case of PlayPumps. The idea was to replace hand pumps in African villages with pumps connected to merry-go-rounds, so that the laborious task of pumping water was replaced by a multifunctional piece of playground equipment. Unfortunately, the fun of merry-go-rounds relies on the lack of resistance — as these ones were also pumping water, they were laborious to use, and were more expensive and difficult to maintain than the traditional hand pumps. Despite best intentions, they were in many cases actually making people’s lives worse.
Choosing the Charity
Despite bad apples, many charities do amazing work and should be supported as far as possible. To differentiate between bad, good and best, an approach that carefully compares charities’ effectiveness is needed — but thankfully, there are people that do that for you. Giving What We Can, a ‘community of effective givers’ overseen by the Centre for Effective Altruism, has a directory that guides you to the funds and evaluators most relevant for you. For me and my particular values, I strongly believe that climate change is the most pressing issue for humanity, and so am directed to the Founders Pledge’s Climate Change Fund. Their fund divides donations between climate charities based on three key criteria:
- Audacious advocacy — influencing policy or corporate spending, and so massively magnifying impact by encouraging more significant funding towards supported causes.
- Blind spots and bottlenecks — overlooked and underfunded solutions that act as ‘low-hanging fruit’, leading to significant impact for relatively little investment.
- Coordination and co-funding — solutions where other innovators or investors can get on board, so magnifying impact.
Using these criteria, they go on to recommend three charities:
- Clean Air Task Force, who work on advocating carbon capture and storage (CCS) and carbon removal initiatives in the US.
- Carbon180, who work on strategies for the uptake of carbon removal approaches such as through changes to land management and direct air capture.
- TerraPraxis, who advocate nuclear and hydrogen power to complement renewable energy in combatting climate change and energy poverty simultaneously.
The Founders Pledge is aimed at equity holders rather than individual citizens, so I cannot sign up to the pledge directly, but I can still piggy-back on their research outcomes. The three charities they recommend are a useful shortlist, that I can then use my personal values to whittle down. I am still on the fence about nuclear power, so I can’t see myself donating to TerraPraxis at this stage. I think there is a significant role for CCS and similar strategies as Clean Air Task Force advocates, but I am also mindful of another looming global challenge: biodiversity loss. Carbon180 tackles this as well through promoting better land management techniques such as soil restoration, so that is where my 5% will be going.
The Saving Dilemma
The main quandary I have grappled with is whether to donate now or later. Being in my mid-twenties, there are plenty of reasons to save money rather than spend it. Even just by doing nothing my savings gather interest, and there is also the potential to grow them further through canny investments. Furthermore, the sooner I can afford to buy property instead of renting, the sooner I stop haemorrhaging rent payments to undeserving landlords. In terms of donations, I could ultimately have more to give if I saved now and spent later.
This brings me to something of a paradox, because no matter when I decided to start donating, I would always have more money to donate if I waited a bit longer. But this approach forgets that it is not just interest rates that bring compound benefits: so, too, do donations. By donating now, the positive impacts can lead to a snowball effect, as the ‘cause’ in question becomes increasingly effective, and as it becomes more able to attract further funding. This is especially true of climate change, where the urgency of the issue means that a mantra of ‘now not later’ is applicable across the board.
But, at the end of the day, it is a question of balance. It would be silly to give all my potential savings to charity and never escape the rental market, for instance. I also have those pesky student debts to pay (or at least start paying) at some point. That’s why I’m starting off with 5%, which is a pretty small percentage, all things considered. Giving What We Can’s standard pledge, for instance, is 10% of one’s income. I do plan to raise my percentage as my salary increases and my financial situation changes — and I will think about what thresholds I should commit to, to ensure I stick with this plan.
But why go on about it?
I’ll be the first to admit this whole article could look like a self-serving exercise in virtue signalling. It’s not very humble to publicise your philanthropy, it’s true. But there is a good reason why I am putting this online.
Societal changes start small, and then snowball as more and more people get on board. People follow those leading by example. It’s why everything from veganism to electric vehicles have taken off in recent years — because people see other people doing it. The Climate Change Fund recognises this, which is why it emphasises advocacy — which is, in effect, what I am doing here. I am advocating that others, such as yourself, consider doing something similar to what I am doing.
I recognise the volumes of cash that I am giving are close to insignificant. But, if other people see this article and consider donating themselves, that can set off an exponentially growing chain reaction. This is why I encourage you not only to donate yourselves, but also to talk about it, tell people why you are doing it. Tell your friends, your colleagues, your family, your boss. Once they start talking about it in their own networks, then the snowball has begun rolling — and who knows where it might end.
