SYNOPSIS OF WEALTHY AND WISE
By Claude Rosenberg
Page 3 of 7
Know the Current Value of Donations Past And Present
People’s assessments of how much they can afford to donate can also be flawed by a misunderstanding of inflation. When I was young, a pack of gum cost five cents. Now it costs over ten times that. Does that mean that we should cringe at the cost of gum_ Of course not. Similarly, when someone asks us today to donate, say, $1,000, we may be taken aback. We may only relate to what $1,000 used to buy, making the request seem audacious in what it asks us to forego. In truth, assuming the $1,000 is more like what $100 was in my childhood, the request probably isn’t that bold at all. The same is true for higher sums. Especially when we consider how much assets have risen ahead of inflation in our lifetimes. Long term stock returns, regardless of short term fluctuations, have averaged over triple the annual inflation rate. So as donors, it’s important to adjust our thinking to the value of our assets.
For example, even if you are a loyal donor who gives “generously” each year to a charity, you may actually be giving less and less as time passes, because you fail to update your gifts in line with inflation -- while the value of your own investment assets may well be rising over the long term. If you are satisfied with a charity’s accomplishments, have seen your own investment assets beat inflation over the long term, the following table may give you good reason to at least keep up with inflation, which means raising the dollar amount you give to them each year. In fact, if organizations you support are successfully fulfilling their missions, you may want to give them a “raise” above and beyond inflation.
Table 3. below, The Effects of Inflation, depicts the declining worth of $1,000 over the past half a century.
TABLE 3. - THE EFFECTS OF INFLATION
NewTithing Group, www.newtithing.org
| If you donated... |
in... |
an equivalent gift in 2001* would require... |
| $1,000 |
2000 |
$1,020 |
| $1,000 |
1999 |
$1,056 |
| $1,000 |
1998 |
$1,085 |
| $1,000 |
1990 |
$1,332 |
| $1,000 |
1985 |
$1,631 |
| $1,000 |
1980 |
$2,067 |
| $1,000 |
1975 |
$3,211 |
OR
| If in 2001 you donate... |
it is equivalent to a donation of... |
back in... |
| $1,000 |
$980 |
2000 |
| $1,000 |
$947 |
1999 |
| $1,000 |
$922 |
1998 |
| $1,000 |
$751 |
1990 |
| $1,000 |
$613 |
1985 |
| $1,000 |
$484 |
1980 |
| $1,000 |
$311 |
1975 |
*For 2001, a 2% initial forecast was used. For further information, see: http://www.newtithing.org
Go to Next Page of Synopsis >>
Copyright © 2000, by Claude Rosenberg Jr. All rights reserved.
Citations of tables in this synopsis should be credited to: "Newtithing™ Group, San Francisco."
Newtithing Home Page