Giving in Tough Times
Charities are especially challenged this year end. The potentially worst recession and financial crisis since the 1930s is brewing the perfect storm for many.
Donations are dropping. Laid-off Wall Streeters whose stock options are nearly worthless are slashing their charitable budgets. Many face the loss of their houses and are strained to meet daily expenses. Ditto for those laid off, likely to lose their jobs or facing evaporated year-end bonusees and shrinking stock portfolios. Corporations with disappearing profits aren't very charitably-minded as they say painful goodbyes to loyal, long-term employees. And foundations that support charities have reduced portfolios from which to contribute.
Charities that depend heavily on their endowment are also devastated. Not only are their stock portfolios decimated but their alternative investments in hedge funds, commodities, commercial real estate, etc. have also dropped significantly.
Meanwhile, demands on nonprofits are leaping. Colleges and universities are pressed to increase scholarships as the home equity and investment portfolios that many parents relied on to pay their kids' tuition and fees disappear. Parents' incomes are falling and part-time jobs for students are evaporating.
Food banks and soup kitchens have lengthening lines of hungry, unemployed folks as cash donations drop. Furthermore, as Americans shift their diets to more healthful fresh fruits and vegetables, less food is in canned form. The surplus canned goods that food producers donate is much easier to keep and handle than fresh produce. Also, improved computerized inventory control techniques result in less surplus food in all forms.
The mushrooming recession and deepending financial crisis could not come at a worse time, right before Christmas when most Americans are in their most giving mood. Actually, the origin of Christmas presents lay not with Christ's nativity but with gifts of gold, frankincense and myhrr by the Wise Men. And in the Western Christian calendar, that's celebrated on Jan. 6, not Dec. 25.
Of course, there's nothing in the Bible that dates either of these events, but the shepherds were probably "abiding in the field and keeping watch over their flock by night" in the spring or summer, not winter. Historians believe early Christians pre-empted the Roman festival of Saturnalia, which ran from Dec. 17 to Dec. 24, during which no work was done and Romans concentrated on parties, games, gifts and decorating their housees with evergreens. It celebrated the winter solstice after which the sun climbed higher in the sky.
In 354, Pope Liberius set Dec. 25 as Christmas, not long after Emperor Constantine declared Christianity the official religion of the Roman Empire in 325. Dec. 25 was the day of the sun god, Sol Invictus, who was associated with the emperor, so the church became tied to him. The IRS also spurs Christmastime charitable giving since most of us procrastinate until the last few days of the year before making tax-deductible contributions.
How should we all react to the appeals from our favorite charities this Christmas season amidst tough economic times? Many of us in addition to Joe Biden were not particularly big givers during the lush days, so the excuse that we were such big givers then that we can skimp now doesn't wash. Sure, Americans are more charitable than Europeans where taxes pay for all education and medical care, but in 2006, the latest data, we contributed just 2.3% of our adjusted gross income.
Many treat charitable gifts as discretionary, at least if they're more than tokens. They come after living expenses, travel and recreation, kids' tuition, etc. I'm more convinced that giving, like saving, should come first and then you spend what's left. With this approach, it's not a matter of giving until it hurts, but rather giving until it's meaningful to you, until you're convinced that your gifts will make a significant difference in good causes that you truly love.
That's the love that Della and Jim, a desperately poor young husband and wife, had for each other in O. Henry's short story, The Gift of the Magi. They each wanted to give the other a wonderful Christmas present. Her only possession of value was her gorgeous long hair that she sold to buy him a chain for his pocket watch. Meanwhile, he sold the gold watch, which was his father's and his grandfather's, to buy her a set of combs for her gorgeous tresses.
O. Henry concludes "The magi, as you know, were wise men - wonderfully wise men - who brought gifts to the Babe in the manger. They invented the art of giving Christmas presents. Being wise, their gifts were no doubt wise ones, possibly bearing the privilege of exchange in case of duplication. And here I have lamely related to you the uneventful chronicle of two foolish children in a flat who most unwisely sacrificed for each other the greatest treasures of their house. But in a last word to the wise of these days let it be said that of all who give gifts these two were the wisest. O all who give and receive gifts, such as they are wisest. Everywhere they are wisest. They are the magi."
Gary Shilling is President of A. Gary Shilling & Co., Inc. and publisher of INSIGHT.
www.agaryshilling.com
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