Dollar Philanthropy

Michele Martin from Bamboo Project on Scarcity vs. Abundance Thinking

I want to welcome Michele Martin from Bamboo Project Blog to Dollar Philanthropy.  She recently wrote a series on how different thinking styles (scarcity and abundance--- first post here) affect our behavior surrounding philanthropy and giving.  I have written about my struggles with cynicism, but it was her thoughts on these two thinking styles that helped me understand another player in what keeps me from acting on things I know I should.

Then...  Michele made the mistake <wink...wink> of Blogtipping me and telling me that she thought I should put up more guest blogger posts.  So I thought it only appropriate that I ask her to write about the same subject that created some insight on an obstacle that I often bump into and --even worse--- had failed to recognize.

So without any further adieu... welcome Michele!
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Scarcity and Abundance

Recently I’ve been exploring the concepts of scarcity and abundance thinking and how they influence the ways we view the world and the choices we make to act in it. Carol kindly asked me to share some of these reflections with her readers, so here goes.

I’ve come to believe that there are two types of people in the world—those who act from a scarcity mindset and those who act from a fundamental belief in abundance.

Those who believe in scarcity see the world as a pie with a fixed number of pieces in it. Their goal is to grab and hold onto as many pieces of that pie as they can. They live in a world where resources are limited. There’s never enough time or money or people. Everything is a fight for survival of some kind.

Those who believe in abundance also see the world as a pie. But to them, that pie’s size is not fixed. The pie can grow indefinitely, so the goal is not to figure out how to get your piece and to hold onto it. The goal is to figure out how we can grow the pie so that everyone can have a larger slice. These people live in a world where resources are abundant, where you can always find the time, the money and the people if you’re willing to think differently. They aren’t fighting for survival. They are fighting to grow the pie so that everyone benefits.

What does this have to do with Dollar Philanthropy?

Well what Carol is trying to do here is to encourage her readers to move into abundance thinking and to use this abundance approach to grow bigger pies.

Abundance thinkers believe in the power of collective action. They see that small actions can add up to big impact and they’re always looking for ways to harness the power of the small choice made big. While scarcity thinkers see nothing but barriers and problems, abundance thinkers see challenges and opportunities. Where the scarcity believer focuses on maintaining his/her slice of the pie to make his/her life better, the abundance believer gives freely of his/her time and resources in the assumption that this giving will make things better for everyone, themselves included.

Personally, I really struggle with the scarcity mentality. When I’m worried about paying my own bills, it’s hard for me to think about how other people are worse off than I am. When I’m swamped  with work, it seems impossible to me that I should consider time to be an abundant resource. But sometimes you have to act in order to change how you feel, so I try at those times to behave as though I believe in abundance, even when I really don’t.

Seth Godin, one of my favorite writers,  suggeststhat one of the ways we can live in abundance is by always focusing in any situation first on what we can give. Not on what we can get out life, but what can we give back to it? He tells a story about his very successful father who used the idea of giving first as a fundamental guiding principle of his life—and it was giving all the time, not just when it was convenient.

To me, this is probably the greatest lesson of moving to an abundance mentality. That it’s through giving that we actually get all the happiness we want out of life. Even if we don’t feel like it, by giving, we can change our world.

Thanks to cobalt123 for the photo

Sean Stannard-Stockton on Philanthropic Planning on $10 a Week

As I've been reading more and more about non-profits and philanthropy, I've become more and more interested in developing a giving plan for our family that reflects our values and interests.  I've discovered a number of different and creative ways to give, but the difficulty has come in determining if we have to have a lot of disposable income to begin.

I suppose it is this effort to understand my options has led me to call in some help -- in the form of a guest blogger.  Thus I am excited to announce my first guest blogger -- Sean Stannard-Stockton.  Sean helps people plan their philanthropic giving and has a real gift for explaining things well. 

So without any further adieu... welcome Sean!

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Philanthropic Planning on $10 a week

My name is Sean Stannard-Stockton and I write the blog Tactical Philanthropy. Carol has asked me to write a guest post about philanthropic planning tactics for people who aren’t millionaires. Over on my blog, most of the tactics I discuss are appropriate for people who give over $25,000 a year. I would say that one of the most frequent complaints I get is from people who wish I would talk about tactics for people with lower giving levels. I’m excited to collaborate with Carol to bring some of these tactics to you.

The reason that most philanthropic planning is targeted to high net worth philanthropists is two-fold. The first reason has to do with the tax code. Most philanthropic tactics revolve around leveraging the charitable tax deductions to increase your giving without increasing your cost of giving, or increasing your net worth without decreasing your giving. However, you must itemize on your tax return (although during 2007 you may be able to use your IRA to take deductions for charitable gifts even if you don’t itemize. I’ll discuss this in a future post). The simple requirement of itemizing on your tax return raises the bar for people to engage in philanthropic tactics. The second reason has to do with the cost of implementing philanthropic tactics. Many tactics require the creation of some sort of philanthropic account or legal entity, or require the assistance of professional advisors. There are fees involved in this process and your level of giving must be high enough to justify the fees.

For today’s discussion, I am going to assume that you do itemize on your tax return. If you don’t, take comfort in knowing that the standard deduction you take instead of itemizing assumes that you make some degree of charitable gifts each year.

Donor Advised Funds:

A donor advised fund (DAF) is like a charitable checking/savings account. The account lets you take a charitable income tax deduction when you put money into the account. At a later date, you can make charitable gifts out of the account (and in the meantime the assets are invested and will hopefully grow over time). In the future, I expect that you will be able to link a DAF to your checking account at your bank and divert a portion of your paycheck into the DAF if you wish. Today, however, you have to open a DAF at a community foundation or a national donor advised fund. The lowest minimum account size that I am aware of is $5,000 at the Fidelity Charitable Gift Fund. If you give $10 a week to charity, then you give about $500 a year. Over the next 10 years, you’ll give $5,000. If you “front load” your giving by shifting $5,000 into the account (preferable using appreciated assets from a brokerage account), you will end up being able to give more to charity at less after-tax cost to you.

However, what if you don’t have $5,000 you are able to dedicate to a charitable account? Another way to utilize a donor advised fund is to set up a giving circle with friends or family. Giving circles are small groups of people who pool their resources and meet to decide what nonprofits to give to and learn more about philanthropy. I think we are on the verge of a massive boom in giving circles. While you don’t need any kind of formal giving vehicle to start a giving circle, using a donor advised fund certainly makes the administration easier. Each member would then be able to record the gift to the giving circle as a charitable gift for tax purposes, rather than needing to track their pro rata share of the gifts make to charity.

The Washington Post published a first person article on Sunday written by a giving circle member. The giving circle in the story is sponsored by the Washington Area Women’s Foundation, which is one of the leading champions of giving circles. You can learn more about the giving circle services here and you can read their excellent blog here.

To start a donor advised fund you can contact the Fidelity Charitable Gift Fund, Schwab Charitable, the Vanguard Charitable Endowment Program or your local community foundation.

If you have any questions please feel free to post a comment here.  We'll try to get you some answers.