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How Much Should You Give Away? When? And to Which Charities?

In his New York Times Magazine “Ethicist” column, the philosopher Kwame Anthony Appiah responded to a query from an individual who had inherited a large trust fund and family business when his father died. This person felt uncomfortable with such wealth and largely lived his life as if he were not rich. But a combination of the recent stock market rise pumping up his portfolio and his recognition of the suffering of many people during the pandemic have brought him to the conclusion he should give away a large portion of his wealth.

However, he would both like to give the funds away in a responsible way and not have his life consumed by the process. He asked:

How much money is it ethical to keep, and how much would it be ethical to give away? What is the best way to decide who should receive the money? And how much time and responsibility and rewriting of my life do I owe this gift that often feels like a burden?

Many of us have the same questions, though perhaps to a lesser degree. How much of our income or savings is it appropriate to give away? Should we do so during life or through our estate plan? And who should be the recipients of our largesse?


Of course, there’s no one-size-fit-all answer to these questions. They depend on our financial situation and obligations, the needs of family members, our involvement in various causes, and in some cases religious beliefs and traditions. For some people, the source of the funds may influence their choices. But let’s consider the main questions: How much? When? To whom?

How Much?

It’s very difficult to determine how much to give away to charity. You, of course, need enough to live on and to support your dependents. But even figuring out how much that is can be difficult to determine. It depends on what lifestyle you choose, whether your dependents need a assistance now or may in the future, how long you plan to work, how long you might live, whether you may experience a disability that would upset your plans. How do you balance your current needs and possible or likely future ones?

One approach is to choose a percentage of your income to give away, perhaps up to 10%, which is the amount of tithe referred to in parts of the bible and practiced by both Jews and Christians and different times in their history. In addition, when there was a generally accepted tithe, participants didn’t have to pay an income tax, which you might consider a similar contribution to the welfare of your community. Not being an accountant, I’m not privy to a lot of tax returns and don’t know how much most people give away, but my guess is that it’s less than 10% of their income.

Whether it’s as high as 10% or less (or more), choosing an annual number can help you be more thoughtful about your giving, rather than emotionally responding to various requests for funds. In other words, it can help you avoid random acts of giving.


Unless you clearly have enough saved up for all your possible future needs, you may want to make your larger gifts through your estate plan at which point you can be sure you will no longer have need of the funds. But, of course, when you’re gone you will no longer receive the satisfaction of seeing your funds go to the good works you support (or receive personal recognition for your contribution).

Gifts to charity during life and at death can reduce your taxes. Lifetime gifts will reduce your income taxes if you itemize your deductions. The resulting reduction in taxes in effect can reduce the net cost of the gift. Gifts at death can reduce the estate taxes on your estate if it is taxable — over $1 million for Massachusetts and $12 million federally. Lifetime gifts, in effect, get both tax benefits because they both receive the income tax benefit and reduce the size of your savings and investments, leaving less to be taxed upon your death.

Sticking with the tax theme, there are more complicated ways to combine charitable giving and tax planning which can include charitable trusts and annuities. Someone I know was loathe to cash in her Google stock whose value had multiplied over the years because she didn’t want to pay the tax on capital gains. Instead, she transferred the stock to a donor advised fund at Fidelity, for which she was able to take a charitable deduction. She then liquidated the stock with no tax resulting and distributed the proceeds to charities of her choice.

To Whom

The final question is who, or what organizations, should receive the benefit of your bounty. While only recognized religious and charitable organizations qualify for a charitable tax deductions, you may well believe that political contributions that may help leverage state and federal dollars to better serve the common good qualify as charitable. Gifts to individuals, whether family and friends or people who have suffered a tragedy, also do not qualify for a tax deduction, but are certainly charitable. Who you make gifts to should not be totally governed by the tax rules.

Many people are moved to give to organizations with which they identify, whether that is their alma mater, their religious congregation, or charities associated with their town or an illness from which they or a family member suffered. Others may wish to be associate with the prestige of a famous institution, such as Harvard. Others may be more concerned about the efficacy of their contribution, reasoning Harvard doesn’t need their money as much as a small grassroots organization. In that regard, a dollar may go a lot further in the third world than in the United States.

The issue of efficacy also relates to how well run the charity may be and how much of its budget it uses for administration and additional fundraising as opposed to direct services. A number of websites help evaluate charities in this regard, including:

Charity Watch

Charity Navigator

Giving Up Control

One issue related to efficacy has to do with control. How much do you need to know about a charity before making a gift? How much do you simply trust its reputation? I recently participated in a “donor circle” that supported five inner-city Boston youth organizations. The group met over two years and participated in various exercises to help us resolve many of the questions raised above. One thing I learned during the process was to give up control.

When I began the program, I wanted to know more about the five organizations, how they used the money and whether my contribution would help them be effective. The ethos of the group was that we should support these groups without necessarily getting answers to these questions. The donor circle leaders did not want to force the already busy organizational leaders to come to us hat in hand asking for money. Not only did they not want to burden them with this extra task, but they wanted to reverse the usual power dynamic. We were a largely white group with significant privilege. They were largely minority-led organizations with little money, where our contributions could make a large difference. By not asking them to account for how they spent the money we gave, we were able in a small way to transfer our power to them.

(If you might be interested in participating in a future donor circle, email me at and I’ll connect you with the group’s organizers.)

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