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  • The Complexity of Donation Numbers

    May 22nd, 2013
    donation_matching, ea
    In talking about donations I'd like to be able to say "I give X%". This is harder than you might think. What does it mean to earn money? Currently I'm paid in a combination of ways: salary, bonuses, stock, benefits. The salary is pretty clear, but stock and bonuses both have a delay built in where I don't get the money until several months to a year after I did the relevant work. It's benefits, though, that are the really tricky ones. For example, there's:
    • Insurance, where my employer deducts some from my paycheck and contributes some themself, and then if I need it I can make claims against it. Medical insurance is the big one, but there's also life insurance and a half dozen others.
    • Incentive funds, where if I contribute something to a fund for later (401k, HSA) then they'll match some part of my contribution.
    • Donation matching, which is kind of like an incentive fund except the money doesn't go to me.
    • Food at work.
    • Housing (at one point I worked a job that included housing).
    If I say that I give X% of what I make, does "what I make" include the amount my employer pays for my health insurance? Does it include the amount my employer spends to offer lunch, even though I would be eating cheaper food if I paid for it myself? Does it include what they contribute to my 401k?

    In sorting this our for myself and deciding how much I should give I have a complex system [1] that I think gives me approximately the right incentives and lets me make the "how much to donate" choice rarely, but this isn't good when talking to people. Saying "X%, with a lot of complex inclusions and exclusions" is much worse than just "X%". But if I just say "X%" then I want to be reasonably sure that if the questioner looks into the details of what I mean by that, they're not going to be surprised or annoyed at me for counting things differently than they would.

    The option I'm leaning towards is to use tax forms. Each year we're already telling the government the amount we earn and the amount we donate, following their rules for deciding what counts. It's weird that this doesn't include things like employer donation matching or 401k contributions which I think of as part of my pay, but maybe it's worth it to make things simpler?


    [1] Roughly: income for a year is my nominal compensation, even if some of it will be received in future years, and even if some of it is in the form of retirement contributions and is kind of inaccessible. Count donation matching and donations in exchange for work only if the money wouldn't otherwise go to effective charities without my actions. Aside from donation matching (which is generally considered a "perk" by employers) this is pretty much what a recruiting person would total up and call your total expected compensation describing a job offer.

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