• Posts
  • RSS
  • ◂◂RSS
  • Contact

  • What Discount Rate do we Apply to Giving?

    August 24th, 2010
    giving, house, money  [html]
    Giving $1000 to oxfam today would be better than giving $1001 in a year, but $1000 today would probably be worse than $2000 in a year. I'm not sure what the transition point is. $1050? $1100? $1500? There is some amount, which really is the same as an interest rate, at which it would make more sense for us to invest the money and later give to oxfam than to give to them now. The more effective we think oxfam is at creating structural solutions that continue to help people without additional spending, the more important it is to us to give money sooner, and the better an investment would have to be to induce us to chose it instead. Their community finance programs, when working effectively, let people start small businesses and get out of poverty. This affects not just them, but their children and community. So there definitely needs to be some discount rate, because money spent now can have lasting effects.

    In considering buying a house, we might defer giving for a while until we've paid off the mortgage. If so, we'd charge ourselves interest on the money we were delaying giving to oxfam. How much interest would that be? If it would be at a rate higher than the current mortgage rate, we would do better to take a longer mortgage (30 year), make just the minimum payments, and give away as much as we could. So what we choose for this discount rate matters some. It also matters because if Julia thinks we chose the rate incorrectly then she might either resist or encourage delaying so oxfam can get more money.

    I have no idea how to decide what a good discount rate is. Julia's not sure either. I could ask oxfam.

    Comment via: facebook

    Recent posts on blogs I like:

    Fireside Friday, November 27, 2020

    Hey folks! Fireside this week. A bit of a change-up in terms of the coming attractions. I had planned to start “Textiles, How Did They Make It?” next, but I want to do a bit more reading on some of the initial stages of textile production (that is, the pr…

    via A Collection of Unmitigated Pedantry November 27, 2020

    Building Depth and Window Space

    How much window space does an apartment need, relative to its area, and how does this affect building style? A fascinating post from about a year ago on Urban Kchoze makes the argument that modern North American buildings are too deep – Simon calls them o…

    via Pedestrian Observations November 27, 2020

    Thoughts you mightn't have thunk about remote meetings

    Welcome to this week's edition of "building a startup in 2020," in which all your meetings are suddenly remote, and you probably weren't prepared for it. I know I wasn't. We started a "fully remote" company back in 2019, but …

    via apenwarr November 23, 2020

    more     (via openring)


  • Posts
  • RSS
  • ◂◂RSS
  • Contact