“Why is it that giving money is good?” Plonkee asked in the newly-revived Get Rich Slowly forums. Brad replied citing a December 2006 article from the New York Times Magazine: “What should a billionaire give — and what should you?” (If this is behind a paywall for you, try this mirror.)

In this essay, philosopher Peter Singer discusses the magnitude of recent donations from the two richest men in the world: Warren Buffet contributed $37 billion to charitable foundations, and Bill and Melinda Gates gave $30 billion. What does this mean?

Philanthropy on this scale raises many ethical questions: Why are the people who are giving doing so? Does it do any good? Should we praise them for giving so much or criticize them for not giving still more? Is it troubling that such momentous decisions are made by a few extremely wealthy individuals? And how do our judgments about them reflect on our own way of living?

I expected Singer to pounce on rich men like Gates and Buffet, to criticize them for an unethical road to riches. Instead he writes:

Sniping tells us more about the attackers than the attacked. Giving away large sums, rather than spending the money on corporate advertising or developing new products, is not a sensible strategy for increasing personal wealth.

Singer philosophizes about our moral obligation to help the poor, and explores whether this is properly the role of the government or of the individual. He concludes that philanthropy is best left to the individual.

Unconstrained by diplomatic considerations or the desire to swing votes at the United Nations, private donors can more easily avoid dealing with corrupt or wasteful governments. They can go directly into the field, working with local villages and grass-roots organizations. Nor are philanthropists beholden to lobbyists.

The rich should give, Singer decides — the real question is, “How much should they give?” He compares Gates to the world’s sixth-richest man: Microsoft co-founder Paul Allen. Gates is worth $53 billion. Allen has $16 billion. Gates has donated 35 percent of his wealth to charitable causes; Allen has donated 5 percent. Each has indulged in seemingly obscene luxuries. Gates owns a 66,000-square-foot house in Seattle — Allen owns a 413-foot yacht that carries two helicopters and a submarine. In what way should we judge these men? Should we judge them at all?

As a comparison, Singer cites Zell Kravinsky. In his mid-40s, Kravinsky gave away most of his $45 million real estate fortune to medical charities. Then he donated a kidney to a stranger. “Kravinsky says that the hard part is not giving away the first $45 million but the last $10,000, when you have to live so cheaply that you can’t function in the business world.” This is noble, Singer writes, but should such nobility cause us to condemn the actions of men like Gates and Buffett?

Even if Buffett left each of his three children a million dollars each, he would still have given away more than 99.99 percent of his wealth. When someone does that much — especially in a society in which the norm is to leave most of your wealth to your children — it is better to praise them than to cavil about the extra few hundred thousand dollars they might have given.

Based on all of this (and more — it’s a long article), Singer performs a thought experiment: How much should the rich donate in order to ensure that the poor have a decent chance at life? His conclusions:

  • The top 0.01 percent of U.S. taxpayers — 14,400 people earning more than $5,000,000 — ought to donate 33% of their income.
  • The rest of the top 0.1 percent of U.S. taxpayers — 129,600 people earning a minimum of $1.1 million/year — ought to donate 25% of their income.
  • The top 0.5 percent of U.S. taxpayers — 474,900 people earning at least $407,000 — ought to give 20% of their earnings.
  • The rest of the top one percent — 719,900 taxpayers earning at least $276,000 — should donate 15%.
  • The rest of the top 10 percent — nearly 13 million taxpayers who earn an more than $92,000 — should give 10%.

“You could spend a long time debating whether the fractions of income I have suggested for donation constitute the fairest possible scheme,” Singer writes. That’s not his point. He’s trying to demonstrate that these levels of charity are unlikely to impose hardship on those who make the contributions. He says that the rich in other countries should share the burden. Ultimately he believes that “it should be seen as a serious moral failure when those with ample income do not do their fair share toward relieving global poverty.”

This article makes several other notable points. Plonkee recently wrote at her site that atheists should tithe. Singer has something to say about this, too:

Interestingly, neither Gates nor Buffett seems motivated by the possibility of being rewarded in heaven for his good deeds on earth. Gates told a Time interviewer, “There’s a lot more I could be doing on a Sunday morning” than going to church. Put them together with Andrew Carnegie, famous for his freethinking, and three of the four greatest American philanthropists have been atheists or agnostics. (The exception is John D. Rockefeller.) In a country in which 96 percent of the population say they believe in a supreme being, that’s a striking fact.

Though Singer strays dangerously close to an irrelevant “moral superiority of atheists” argument here, it’s possible to derive a larger point: philanthropy is not the exclusive domain of a specific creed or set of beliefs. Altruism is a larger ideal, one that seems to be intrinsic in most ideologies (Ayn Rand aside).

The article also features a number of quotes from Warren Buffett, each of which elevates him further in my eyes. (As you know, he’s one of my financial heroes.) For example, Buffett acknowledges that his success is largely a product of the time and place in which he lives. His financial acumen would be useless under other circumstances.

“If you stick me down in the middle of Bangladesh or Peru,” he said, “you’ll find out how much this talent is going to produce in the wrong kind of soil.”

I’ll be the first to admit that I don’t do enough charitable giving. For too long, I’ve been my own favorite charity. But as my situation improves, as I eliminate my debt and fund my retirement, philanthropy is going to take on greater importance in my life. For more information on this subject, please explore the following links:

All of this is interesting as a philosophical discussion, but what does it mean to you and me? Does it mean anything? How do we account for charitable giving in our daily lives?

Obviously, each of us is going to have “pet” causes to which we contribute. Singer’s definition of charity probably wouldn’t extend to some of the organizations to which I give money. (I contribute regularly to the National Trust for Historic Preservation, the Oregon Historical Society, and to the local classical music station.) My wife supports OSPIRG and public radio.

Where do these fit into Singer’s notion of philanthropy?

How does one decide which charities are worth supporting? Moreover, how do we find a balance between supporting charities with money and supporting them with time? For many organizations, time is the more valuable of the two. And even people without disposable income can find time to volunteer for causes they believe in.

[New York Times Magazine: What should a billionaire give — and what should you?]

This article is about Odds and Ends