Money To Live

January 28, 2009

More on holiday giving

Filed under: Uncategorized — by moneytolive @ 5:00 am

Last month, I wrote about my plan for the holidays:

To celebrate the holidays (and also being gainfully employed), I made a contribution to every organization that asked me to. I enjoyed picking out a pink box of Legos (because girls need Legos, too) for Toys for Tots and some sweaters for a young adult in an alternative high school.

And I got this response from Ellen C:

I really enjoy your blog but I keep thinking about the phrase that you made a contribution to every organization that asked you to. I was really surprised when I read it because you seem really focused and intentional about your financial decisions and that didn’t seem to fit. Maybe I just have never thought about giving money to every organization that asks! I read this blog post last night and thought it was really interesting and that you might like it too.
His considerations for who to give to match up with some of mine.

Since I am not a famous billionaire, people are not pounding on my door asking for donations. If that were the case, my donation strategy (give to anyone who asks) would not have worked. As it is, there were two groups that requested donations from me: (1) organizations I was involved with in the past and (2) organizations that a friend or colleague is involved with. By giving to organizations that I am already involved with or which I have a personal connection to, the donation is more tangible – I know what kind of an impact it will have, and I trust the donation will be used in a meaningful way.

Now I will get at Ellen’s point more directly, that I seem “really focused and intentional about” financial decisions. There is a topic that I have been wanting to write about here, but I could not decide how to bring it up.

(very) Roughly speaking, there are two types of people in the world: maximizers and satisficers. In economics lingo, a rational person wants to maximize his utility. Utility means something like “happiness” but is hard to define in a real world setting. Economists and philosophers will continue to talk about utility until the world ends.

Back to these to types of people – the maximizers and satisficers. When a maximizer buys a car, he finds the absolute best car for his situation. “Best,” of course is relative, but it is probably some combination of cost, gas mileage, number of doors/seats, horsepower, sound system, cup holder placement, seat options, convertible options, etc. The satisficer picks a few car options that are important and then buys the first car that satisfies those few options. For example: under $15K, four doors, gas mileage above 30 mph, blue paint job.

Very loosely speaking, satisficers are happier than maximizers because the maximizer always knows what wasn’t optimized.

Though in some ways I can be an optimizer, in a lot of ways I am a satisficer. Especially compared to many of my former classmates, I am a satisficer.

A few days ago I had coffee with some friends, and I brought up Ellen’s comment because I thought these friends could help me think through the issues. One friend admitted that she had a horrible time trying to decide how to donate her money. In December she stayed up until 3 am for five days in a row agonizing over where to donate the money. In the end, she gave up trying to figure it out and gave the money to the World Bank. This is how she described her thought process:

One of the best ways to ensure children receive proper nutrition is to feed mothers. So, let’s say I donate my money to an organization that feeds mothers in an efficient way. But what if the local crops are abundant that year – then they didn’t need my donation. And if the crops are abundant, then there was a lot of rainfall, which may have resulted in a cholera epidemic. In that case, it would have been better to donate my money to a medical relief organization.

My poor friend – she was obviously stressed out. She is a perfect example of a maximizer (and she would not be offended by my classification, she is a self-proclaimed maximizer).

When it comes to charitable giving, I am a satisficer, not a maximizer. I like to give to organizations that have a record of fiscal responsibility. I like it when I understand the impact my donation will have – I can imagine a child playing with a toy, a teenager without a family opening a gift on Christmas morning, an immigrant taking English classes. The issues that I care about the most are education and health, so most of my giving and volunteer work are somehow related to those issues.

I am impressed with what Tyrone Boucher has to say about his giving plan. He has put a lot of thought into it, and I love what he says at the end of his description of his plan:

The process of trying to figure all this out has taught me that there are so many ways to give money, and most of them are both useful and challenging in their own ways. I try not to get too caught up in working towards perfection, because there is definitely no perfect or best way to create a giving plan. I think of giving money as one small facet of my social justice work that hopefully reflects my broader commitment to wealth redistribution, anti-oppression, and grassroots organizing.


1 Comment »

  1. yay, thanks for your post! i was picturing you just giving to every organization that happened to send you something in the mail, now i understand much better.

    Comment by Ellen — February 12, 2009 @ 2:31 am |Reply

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