Most people naturally worry more about “over-giving” and straining their finances than “under-giving.” You may react piecemeal to charitable solicitations, which may pressure you to err on the side of caution and underestimate your giving power. Or you may employ the ancient custom of “tithing.” Although admirable, this practice normally determines giving levels based on income, with little or no consideration for investment assets. So if the bulk of your wealth resides, not in income but in stocks, bonds, money markets, professional partnerships, or investment real estate, tithing ten percent of your income to charity generally falls short of donating to your maximum comfortably affordable giving capacity.
The underlying practice we have devised, “newtithing,” is a comprehensive budgeting approach that factors not only your income and investment assets into your giving decisions, but also the annual fluctuation of those assets, as well as anticipated expenditures, and tax savings from charitable gifts.
Since it is designed to preserve your lifestyle, newtithing can alleviate the worrisome side of planning donations. For example, to conservatively estimate your giving power, newtithing does not include as “investment assets” the value of your personal homes and possessions.
To follow is a definition of newtithing as a dictionary might describe it:
| new-tithe n., v., new-tith-ing -n., 1. making the maximum comfortably affordable donations to charity based on annual surplus income, the tax consequences of charitable gifts, and the market value, after debt, of investment assets (excluding personal homes and possessions). |
You can see NewTithing Group’s original research which uses these principles to estimate affordable giving according to wealth, or use PrudentPal Charitable Giving Planner, which allows you to practice newtithing in a way the suits your own financial profile and projections.