End-of-year Taxes and Tithing, aka, The time has come, A fact’s a fact, It doesn’t belong to us, Let’s give it back


We’re coming up to the end of the calendar year 2011 and many of us are closing our books.

In two more days it will be the end of the financial cycle for most individuals… and many corporations and partnerships, too.  Whatever quantity of  income we’ve earned — whether in the form of salaries, benefits, disbursements, fees, commissions, bonuses, tips, rents, interest, dividends —  that quantity will get recorded somewhere on our tax returns in a few month’s time… that is, for those of us who pay taxes… or for that matter, for those of us who had income (can’t assume anything anymore, these days).

Also, since it is now December 29, many of us (statistically speaking) have recently spent a portion of the above-mentioned quantity of money (and hopefully a relatively small portion thereof) on discretionary purchases for ourselves and the ones we love (assuming we are not alone this holiday season) … possibly in the name of some culturally sensitive, politically correct, socially appropriate seasonal celebration (enough disclaimers yet?).

So, given the reality of our mainstream tax cycle and given the widespread seasonal affective spending that our culture has ordered for us,  it’s no surprise that this is also the time of year where we see many requests from not-for-profit organizations to give tax-deductible charitable contributions.

That guy in the red velvet hat and white pom-pom may not be ringing a handbell outside the supermarket anymore, but there’s still 48 hours left to give in 2011.

So here are some end-of-year questions to consider…

1. How much of your gross/net income goes charitable contributions?

We’ve earned it… we’re spending some of it… but it doesn’t all belong to us.

The concept of tithing — giving back one-tenth of what we make — goes back as far as recorded human history.  If you’re a modern adherent to the 10% rule (or some variant, e.g. 5%… or maybe 20%) you’ve probably thought about where to put government taxes into the equation.

Do you give 10% of your gross income, or your net income after taxes?  What about itemized deductions?  Should you consider a portion of your taxes paid to the government — ie, the percentage of the government budget that goes to provide direct support to the needy — as a form of charity?  The answer to these questions may be influenced by a person’s cultural, religious, national or political background. For example, if a person lives in a European welfare state with a high individual taxation rate, statistically speaking they will give less in direct charitable contributions as compared to a person who lives in a  jurisdiction with lower taxation rate. A similar statistical discrepancy appears between people with liberal versus conservative political leanings within the same tax jurisdiction. Perhaps our view of the government’s role and efficacy in supporting the needy affects our own desire to give back? (Ah, the old individual responsibility vs. collective responsibility debate… a false dichotomy if there ever was one.)

Layer on top of this our individual financial situation — our income, our expenses, our assets, our debts — and it’s quickly apparent how difficult it is to apply a single “standard” of charitable giving for all people.. and we haven’t even touched the subject of what is considered a “worthy cause.”

Yes, giving charity can be complicated.

The best way to deal with this complexity is to establish a household budget for charitable giving… aka, a “Giving-Back Budget.”

Why Establish a Giving-Back Budget?

  1. Most importantly, by budgeting for charitable giving, it actually gets done.
  2. Also, by establishing a budget, we can prioritize the causes we wish to support.
  3. This allows us to more easily say “no” to the things that fall outside our budget.
  4. Finally, it also gives us something to measure by, when we decide to say “yes” and stretch our budget.

Some people go as far as establishing a separate bank account for themselves, designated for charitable giving. They regularly move funds into that account, so that those reserved funds won’t have a chance of getting spent on non-charitable expenses… just like payroll withholding.  Hey, the government figured out a long time ago that it was easier to transfer funds at the source, rather than send out a big guy carrying an axe to do their collections.  (Thankfully, we still have the phrase, “Hey dude, that’s totally in my bailiwick.” )  I haven’t gone that far myself, but for the past few years I’ve been keeping a spreadsheet on my past/current/future charitable gifts and it’s been quite helpful in keeping myself organized, giving-wise.

2. Have you reviewed your Giving-Back Budget lately?

Each one of us, at whatever scale we operate, is a philanthropist.

Each one of us has a responsibility to increase our net social worth by choosing to give back a portion of what we make… and the nice thing is, the more we give, the more we get… or more precisely,  the more we give, the more we become people who have the means to give well.

To be sure, there are also non-monetary ways to increase our net social worth… no, I’m not talking about that “gently used” clothing that we dumped into a steel bin next to a parking lot… I’m talking about doing things, such as volunteering our precious time to help a worthwhile organization. That’s a whole other Giving-Back calculus, which overlaps with the concept of Life Balance… and as the previously cited Charity Navigator link describes it; the giving of time and the giving of money to charitable causes are two highly correlated behaviors.

Giving-Back Budget Review Questions:

How much of what I earn will go towards my Giving-Back Budget this year? 

What is the shape of my Giving-Back Budget for this year?  i.e., What types of charities/causes are I supporting… and in what proportion?

How well am I doing towards this year’s Giving-Back Budget?  Do I need to make any end-of-year contributions, to balance it?

What does my target Giving-Back Budget look like for next year?

The nice thing about these questions is that, even if we can’t answer them satisfactorily in the next 48 hours, these questions can become part of another great seasonal tradition: The New Year’s Resolution.

(all right, Mr. Big Shot here is going back to the spreadsheet now…)

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About danspira

My blog is at: http://danspira.com. My face in real life appears at a higher resolution, although I do feel pixelated sometimes.

Posted on December 29, 2011, in Accounting, Life, Positivity and tagged , , , , , , , , , , , . Bookmark the permalink. 4 Comments.

  1. You said, “The concept of tithing – giving back one-tenth of what we make — goes back as far as recorded human history. ”

    Actually, the concept of tithing as giving back a tenth of one’s income goes back to 1870. Before 1870, everyone knew that tithing meant giving back to God a tenth of crops and animals which came from God’s miraculous increase, not from man’s income.

    The Biblical tithe was always food from crops and animals and was never money, and it never came from anyone’s income. Yet the Temple Tax (tribute in the KJV) has to be paid with money, so they did, indeed, have money at that time.

  2. Interesting distinction, Gary.

    Indeed, the Biblical tithe (“ma’aser”) was on produce only. In fact, in Deuteronomy 14:24-26 there is a description on how one could convert the value of one’s produce into money for ease of transportation and then re-convert the money into produce at the temple (presumably any costs due to differences in produce-money exchange rates were absorbed by the donor!).

    As for the Babylonian tithe, I don’t have any source texts handy, but according to the online citations I could find, they did do a tithe on clothing… once again, mostly produce, though.

    Does this mean that people who made their income exclusively via a trade (blacksmiths? tanners? sandal-makers?) were exempt from giving a tithe? Seems a bit unfair, given how hard it is to make ends meet via agriculture…. but then, maybe if you didn’t grow your own food you were much more vulnerable to food prices… ah, those were different times…

    • The ONLY people in the Old Testament that were commanded to tithe were those who INHERITED THE PROMISED LAND WITH EVERYTHING ON IT. They got the land, house, animals, crops, etc. ALL FREE AND CLEAR. No mortgage payment or rent to pay. And THEY were commanded to tithe on the crops and animals and take it to the Levites who INHERITED the tithe INSTEAD OF the promised land with everything on it. No one else tithed. Wage earners did not tithe. Jesus did not tithe as a carpenter. Paul did not tithe as a tent maker. Peter did not tithe as a fisherman.

      When God gave the Israelites the promised land, he RESERVED, for Himself, a tenth of the crops and every tenth animal. They NEVER did belong to the Israelites. In other words, the tithe was from God’s increase of FOOD, not from man’s income. It was a way to distribute FOOD to the Levites and priests who did NOT inherit any land.

      No one, not even the farmers, tithed on their income.

      The farmers made their income by SELLING and/or barter-exchanging their crops and animals but did NOT tithe on that income.

      Today, ALL born-again believers are priests. ALL of us are called to be deciples of the Lord. No one of us is higher than another. Our bodies are the Temple where the Spirit dwells. According to the scriptures, priests do not tithe.

      When you understand the Biblical tithe, it makes sense, and it is plain to see that it makes NO sense to try to tithe today.

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