Thoughts About Giving Back and Sharing Good Luck

Introduction

Many people are fortunate. They have the financial wherewithal to provide for their personal needs and those of their families and then some. I count myself in this group.

Like many, I reached this status for a variety of reasons:

• the good fortune to be raised by parents who instilled in me a set of values and behaviours, including a respect for education and a strong work ethic;
• a lucky series of breaks and the ability/desire to exploit them;
• the good fortune to be born at a time of growing economic prosperity and to avail myself of a variety of progressive programs: a reasonably priced university education (where it was possible to pay tuition and expenses by working summer and part-time jobs and later, by scholarships); defined pension plans; comprehensive medical care (removing the need to pay for private health care and the need to plan for catastrophic events); living as a Canadian in a civil society which is safe, respectful of others (for the most part) and which rewards effort.

A Brief Overview of Giving

Much has been written on the topic of charitable giving.  One of the most fascinating overviews is presented here:

Who Gives Most to Charity

In addition to the usual rankings of rates of charitable giving by state, the article also provides some interesting insights, including:

Interestingly, when rich people live in separate enclaves they are not as generous as when they live interspersed in normal communities. The “How America Gives” study showed that when households earning $200,000 a year make up more than 40 percent of the residents of a particular ZIP code, they give just 2.8 percent of their discretionary income to charity. If they live in more mixed neighborhoods and towns, though, they give an average of closer to 5 percent.

Physical separation and economic stratification corrode social cooperation and generosity. In towns, villages, and cities where Americans of differing fortunes live in more traditional combinations, though, generosity flourishes. And for many Americans, the resulting giving seems to be deeply connected to satisfaction in life.

It is one reason why I dislike gated communities - they are physical expressions of the divide between "them" and "us".

The following article provides a synopsis of eight forms of giving:

8 Types of Charitable Giving

Of course, these are in addition to volunteering one's personal time - perhaps the ultimate way to express a personal commitment to the betterment of society.  

Another Way to Determine How Much to Give

This year, I'm going to try an approach which differs from allocating a set percentage of my income for charitable purposes.

1. I am setting aside a set number of shares of GROW and Abitibi Royalties.
2. The price at the date of the set aside will be recorded at the start of the tax year (or any other time). 
3. Any gains resulting from an increase in the value of the set aside at the year end will be allocated for charitable giving. The amount used for giving may not necessarily result from the sale of those holdings.  Instead, the cash could come from other sources (e.g. cash portion of the portfolio) in order not to dilute the potential for further gains.  
4. My intention is to repeat the process in subsequent years. 
5. Set asides may involve the selection of other stocks with the potential for capital gains. 

In good years, the amount the charities receive through this approach could be substantial.

If losses take place at the end of the year, the amount I give will revert to a preset floor in order for my selected charities to receive a steady income. 

It is one way to share one's good fortune.