A Novel Idea: Generosity Planning Month

Steve Lear |

Our lives include many types of recognition rituals, from the light-hearted—such as proms and school graduations, to the more serious—for observing coming of age, marriages, births and deaths. As a society we also designate entire months to acknowledge important values, commemorate historical issues, or address ongoing problems or concerns. These range from the well-known Black History Month in February to the perhaps less-celebrated National Financial Literacy Month or American Cancer Society Month, both in April. (And yes, there’s California Dried Plum Digestive Health Month, too.)

I would like to propose that we officially recognize December as Generosity Planning Month. The reason for calling out a particular month is obviously to create a platform for awareness. Why December? For one reason, because of Christmas and Chanukah, it’s the focus of gift-giving. Since we’re already thinking about giving (hopefully more than we are thinking about getting), it’s the ideal time of year. Even if we wanted to, the Salvation Army bell-ringers won’t let us forget—and we appreciate it!

Second, this is the time at which Americans are already giving: half of all donated dollars are given in December. [1] This is no doubt driven by the tax codes which allow charitable donations to be given for the current year up until Dec 31, making the last week of December the busiest time of all, with nearly 25 % of all online giving occurring on Dec. 30 and 31. [2] After all, what good is a last minute if you don’t use it?

What will happen during Generosity Planning Month? I envision it not only as a time to give money to your family’s preferred charitable organizations, but something much more. During that month, it will be helpful for families to take the time to think about all the ways in which they give back, and also about how they plan to deal with whatever wealth there may be after they die. To broaden the scope in this way also allows the discussion to include ways in which you may help not only organizations, but everyone—including friends and family members.

Lest you imagine this conversation applies only to “the rich,” think again. First, any assets you have when you die constitute your “wealth” or your “estate.” And regardless of the amount, you can choose to do with it whatever you wish—leave it to family, leave it to charity, or divide it up in order to do both.

Second, if you aren’t rich, you are probably more generous than those who are. Somewhat shockingly, according to the Atlantic magazine,

“One of the most surprising, and perhaps confounding, facts of charity in America is that the people who can least afford to give are the ones who donate the greatest percentage of their income. In 2011, the wealthiest Americans—those with earnings in the top 20 percent—contributed on average 1.3 percent of their income to charity. By comparison, Americans at the base of the income pyramid—those in the bottom 20 percent—donated 3.2 percent of their income.”[3] That’s nearly two-and-a-half times more.

The author, Ken Stern, continues:

“The relative generosity of lower-income Americans is accentuated by the fact that, unlike middle-class and wealthy donors, most of them cannot take advantage of the charitable tax deduction, because they do not itemize deductions on their income-tax returns.”[3]

Stern suggests one reason might be that those who have struggled with the basics of survival have more empathy for others in the same position. Also, he notes that, “underlying [the American] charity system—and our tax code—is the premise that individuals will make better decisions regarding social investments than will our representative government. Other developed countries have a very different arrangement, with significantly higher individual tax rates and stronger social safety nets, and significantly lower charitable-contribution rates.”[3]

So here are some things think about during Generosity Planning Month.

  • Consider formulizing your generosity. For example—
    • If you are still working: give at least 10% of your after-tax income to help others; if you can afford to give 20%, even better.
    • If you are retired: give 5% of your unearned income and 1% of your net worth annually.
  • Whatever your formula, make it something you are comfortable with and will stick with. Once you have the formula, you can be completely spontaneous within in it, giving to whomever you please. Or, set aside a certain amount to be spontaneous with.
  • When you are dividing your estate among your children, consider adding an additional child—and that child is the community.
  • Consider Ken Dayton’s “Stages of Giving.”[4]. The following is based on Dayton’s nine stages of giving, which he formulated based on his personal experiences with philanthropy:

1. Minimal Response: Giving only because we were asked.

2. Involvement and Interest: We believe in the cause and want to make it better. It becomes meaningful and purposeful.

3. As Much As Possible: A major transformational breakthrough that requires thinking, a budget and priorities.

4. Maximum Deductible Allowed by the IRS: The IRS has established rules providing us with opportunities to plan and think creatively about philanthropy. The rules can be found at http://www.irs.gov/publications/p526/index.html

5. Beyond the Max: We ignored the IRS deductions and began to give what we wanted. We decided we would no longer let the IRS govern how much (or how little) we could give.

6. Percent of Wealth: If one no longer measures giving against income or income tax deductibility, logic soon leads to using total wealth as a measure of giving. Until we started to measure our giving against our wealth, we did not fully realize how much we could give away and still live very comfortably.

7. Capping Wealth: How wealthy do we want to be? This means setting a limit on your wealth and giving away everything you earn beyond that figure.

8. Reducing the Cap: We’re not there yet. Whether we will have the courage, fortitude and intelligence to lower the cap as we get older, we can’t say. But we are comfortable discussing the subject.

9. Bequests: Long ago we decided we had transferred enough assets to our heirs. Accordingly, we are able to leave almost all of our assets to the nonprofit organizations we have selected.



[1] Marketplace, American Public Media, Dec 2011.


[2] http://money.cnn.com/2011/12/30/pf/holiday_money_donations/index.htm

[3] http://www.theatlantic.com/magazine/archive/2013/04/why-the-rich-dont-gi...

[4] Kenneth N. Dayton, “The Stages of Giving,” Independent Sector, http://www.independentsector.org/, 1999.


The views and opinions shared in this article are strictly those of Steve Lear and do not represent Affiance Financial or Private Client Services. Further, nothing in this article should be viewed as financial advice. Please consult with your financial professional.