Reflections on doing good with lump sums - the retired person's dilemma

bymickofemsworth5mo9th Feb 20197 comments


Many retired people are desperately short of money, while others have too much. I am in the latter group, and the question that concerns me is what to do with the surplus. I have a reasonably generous (final salary) pension, and savings and inheritances which are several hundred thousand (UK) pounds more than I could conceivably need or want. What should I do?

The 10% giving pledge doesn't really work for me for two reasons. First 10% of my (pension) income is too little. I have a lump sum: how much should I give away (again, 10% is too low), and when? Second, there are other worthy types of recipient as well as charities: family, "ethical" investments and social enterprises of various kinds, political campaigns, local organisations, and so on. There are arguments in favour of all of these. How should I balance these arguments?

There must be lots of people in my position because of the generosity of final salary pension schemes, and the rise of house prices which means people get a lot of cash when they downsize or inherit their parents' homes. Effective altruism, from what I can gather, seems to be a movement for the young, and those deciding on a career path. But I think the oldies are important too.

I'll divide my dilemma into three questions:

1. The first is when to make a decision. I think I should give my surplus money away gradually - say 10% a year - rather than giving it all away at one time in the near future. If I were to give it away in one lump sum soon, I might change my mind and decide I'd made the wrong decision. It feels like too big a decision to make now. So I'll give away, or otherwise deal with, 10% of my surplus money each year. 10% is, of course, an arbitrary figure. The other traditional option is to make the decision via one's will. But I've decided I should do something now.

2. The second question is how to divide the money between the types of recipient - charities political causes, social enterprises, family etc. In a more predictable universe I would be able to calculate how effective a particular political campaign or social enterprise would be in achieving my goals. In practice this is not possible, even in principle. The impact of political campaigns or social enterprises is impossible to forecast accurately, even in probabilistic terms, and there can be no objective way of arbitrating between, for example, different groups of sentient beings or time frames. Again all I can do is make an arbitrary choice based on my personal biases. But this time I have no ready number like 10%.

3. The third is the choice of organisations or individuals in each type. One possibility is to go with the idea of GiveWell or a similar organisation distributing my money for some of the charitable donations (say 50%), but I am persuaded that there is a case for local charities or those with which I have a personal connection because these cannot be on the radar of the big charity evaluators. And if everyone did this, and all surplus money were channelled to the "best" causes as assessed by self-appointed experts, I'm not convinced the world would be a better place. A bit, or a lot, of anarchy is needed, I think. Especially if the internet tendency to encourage information monopolies kicks in and everyone consults the same oracle.

Obviously if one charity is clearly more effective than another in terms of clear criteria, then the more effective charity is the one to go for. In these cases analysis is obviously a good idea.

But with some of the other issues analysis does not seem such a good idea. All it is likely to achieve is to delay or prevent any action. This is why I haven't done much so far: over-analysis. There are issues where the uncertainties are too big for any predictions to be meaningful, or where we need to decide whether we want to help people locally, people in poor countries, animals, aliens on other planetary systems (the first philanthropic gesture that comes to mind is a space capsule with some recorded advice from planet earth), now or at some time in the future. This is where we need to appeal to personal preferences. What do I think is the most worthy cause? Given that there is no useful analysis which could be meaningful, I need to make an arbitrary, instinctive decision.

One difficulty with this is that the people who call the shots are the people with the money to spare: the rich. What right have they got to control the agenda? Bill Gates is a billionaire because his start-up struck lucky. Donald Trump is an elected politician, so isn't there a democratic case for supporting the Mexican border wall rather than the Gates foundation's medical work?

I'm determined to make some decisions soon and would be very grateful for any comments or advice. Thanks.