Donating à la carte

Donating à la carte

Decisions are hard. Especially when the outcomes are important, the options are numerous, and relevant information is hard to find.

For many everyday decisions (where to eat, what clothes to wear, what to do tonight), I have a pretty good idea of what I can do, what I’d like to achieve, and how likely I am to do so. And despite most of these decisions being largely inconsequential I still consider them in great detail. I assume others are somewhat similar to me, delicately wasting their processing power on life’s minutiae.

Yet, of all the choices we make, one of the most impactful seems among the least rationally considered: donations.

We can donate to almost anything, anyone, at any time. But do we consider the options available before giving? And if so, how are we to weigh up the pain of a malnourished child to the impact of a polluted river; the needs of our local lifesaving club to the suffering of 100 battery hens; climate change to the housing needs of a woman escaping domestic violence?

We’re so overwhelmed by the immense number of possibilities that we often yield to impulse, emotion and social pressures. But these decisions deserve our most careful consideration. We have the power to change the status quo. And to ignore this is to choose to do nothing.

Thanks to the interwebs it’s now as easy to support locally as it is to support (almost) anywhere else in the world. So, we can cast as wide or as narrow a net as we like when looking to get behind a cause.

 

Modelling donations – a menu of causes

The model below presents the main options available for donations. Its aim is to help us make more conscious decisions, and explicitly remind us of what we’re ignoring.

 

Using the model – 2 paths to better donations

The model can be used in two ways:
1. Proactively – help guide your thinking when deciding on a cause, and
2. Re-actively –  recognise when a charity focuses on a particular group at the expense of others.

 

Method 1 is great for clarifying your personal values and systematically prioritising the areas you’d like to support.

Hypothetical example 1: the proactive method
I could start by acknowledging that I care more for people than animals and the environment. Then, I explicitly recognise a desire to help the local LGBTIQ community. Lastly, wanting to have an immediate impact, I support a charity which focuses on providing every-day services. This gives me the following combination:

Using the model as such can help articulate what I’m after, and find a charity which provides the desired service. If all charities were classified using this framework, then I could easily find an organisation to suit my needs.

 

Method 2 helps remind us of all the things we could be supporting before choosing a particular charity. When donating to a cause, we are implicitly choosing it above all others. The mapping exercise, i.e. explicitly acknowledging what we are focusing on, may highlight an excluded cause which, when considered, we find more worthy.

Hypothetical example 2: Check yo’self

If I’m a long-time supporter of an organisation sheltering dogs, it’s easy to continue doing so by focusing on the wonderful work the organisation does, and feeling great that I could help. However, by mapping their work to the model, I am forced to recognise there are many other animal species in need which I am implicitly ignoring. In fact, others’ need may be greater (either through the amount of cruelty experienced, or the sheer number being subjected to it); for example battery hens or caged pigs. With this realisation I can re-examine my values and act accordingly. If post-introspective I recognise I care more about the suffering of battery hens, then I can go back to Method 1 and better align my donations to reflect my values.

 

The Four Dimensions of Donations

The model has 4 main dimensions (with the key one broken down into subcategories)

1. The who (including ‘which subcategory’)
This helps differentiates between people, animals or the environment. Each of these key categories is broken down into further subcategories. For example, people can be dissected by religion, or sexuality, or age; animals by species; and the environment by ecosystem (rivers vs rain-forests vs oceans vs desserts, etc.).

2. The where (place)
This helps dictate the place and spread of the donating net. Are you interested in all specimens in the world equally, or do you have a particular attachment or concern over a region over all others?

3. The what (aspect)
Within each category there are different aspects which can be improved or supported. For people, helping improve health or education are pretty central, but there is also work done to support the arts, local sports clubs, churches or world peace. Animals and the Environment also have specific aspects which can be targeted, and these are presented in the model.

4. The how (support)
The how differentiates the different types of work which can help your cause. Should we act now, educate, try to change the decision makers, or continue researching to find better solutions? For example, if you want to help the world deal with climate change, would you prefer to support an organisation providing immediate direct work (e.g. decreasing emissions now) or should more funding be provided towards research in the hope that we discover a more efficient solution in the near future?

By combining the four dimensions, you can have a much better understanding of how you would like to help.

 

The why

The model does not cover how we do or should decide which box to focus on. That will form another post, hopefully in the near future. But the aim for now was to raise awareness to the breadth of work available, with the hope that before making quick impulsive decisions, we consider what we can do, and hopefully do more with what we give.

 

To be improved…

It goes without saying that this model is probably missing a whole bunch of stuff. So please let me know what’s missing so I can update it as we discuss.

Updates:
1st: Indigeneity and migrant status – from our UN correspondent! (How did I miss them?)
2nd: Biodiversity – Thanks Ms Sabrewing
3rd: Circumstance – From a recent dinner discussion, mentioning “Legacy”

 


The following documents were used in the development of this model:

NGOs
Guidestar: http://www.guidestar.org/NonprofitDirectory.aspx
Charity Navigator: https://www.charitynavigator.org/index.cfm?bay=content.view&cpid=34
Government organisations
UK – http://www.legislation.gov.uk/ukpga/2011/25/contents
USA – https://www.irs.gov/pub/irs-pdf/p4220.pdf
Australia – http://australiancharities.acnc.gov.au/

 

Helping all – UK’s distribution of public funding

Helping all – UK’s distribution of public funding

Redistribution of funds through tax can happen in one of two main ways:

  • you collect more from the rich than the poor and give everyone an equal share, or
  • you collect the same amount from everyone and distribute more to those in most need.

Gov Exp 1

 

But how much is the UK doing of either?

In short, relatively nothing on the first type of distribution, and not a lot on the second.

I say relatively nothing as households across the UK pay roughly the same percentage of their income on tax, no matter what their income. Obviously, those with higher incomes pay larger amounts, but as a proportion, it is not greater than what the poor pay.

On the second type, while the Government does provide greater benefits to the poorer sections of the community, the difference between benefits to the poor and rich is not way near as large as many would have you believe.

 

Collecting more from the rich

As discussed in a previous post, the amount of tax paid across the community is pretty much the same, relative to their income. So, while the rich contribute the most, they contribute the same percentage of their income that the poor do (when including income tax and indirect taxes).

 

Are we distributing more to the poor?

According to the latest UK Budget papers, the UK Government will spend roughly “£772 billion in 2016-17”[1].

The budget gets spent as follows:

  • £517 (67%) on services consumed by individuals, e.g. health, education, social security
  • £168 (22%) on untargeted national stuff, e.g. defence, paying debts, public order
  • £87 (11%) on services which may or may not support some over others, but it’s harder to ascertain its distribution, e.g. agriculture, industry, employment, transport

For the purposes of this post, I will ignore the 11%, as I can’t find reasonable distribution analysis, and what’s 11% anyway.

Gov Exp 11

So, how do targeted services get dispersed across the income groups?

Health

Health accounts for 19% of all UK Government expenditure, with the average household in 2013/14 consuming around £4,200 in services.  While obviously not every household consumes the same amount, the difference across income groups is surprisingly small.

Gov Exp 2

That’s to say, households from across the various income groups in the UK consume just over £4,000 worth of health services. Those with the lowest and highest incomes appear to consume slightly smaller amounts.

 

Education

Consumption of education services does vary. In 2013/14, the poorest 3 deciles consumed just over double what the richest 10% of households did.  This difference, however, appears to be largely driven by the number of students in the house, rather than their income.  Students (from primary school to university) are twice more likely to live in the poorest 30% of households than in the richest 10%.  After adjusting for number of students per household, education expenditure is remarkably similar across the income ranges.

Gov Exp 3

(As student estimates are rounded to 1 decimal place, the estimates graphed include an unrounded range, e.g.: the poorest households have 0.7 students per house, but are graphed from 0.65 to 0.75)

 

Social Protection & Personal social services

Unlike health and education, social protection and personal services are targeted based on income. But even these payments are possibly less lopsided than is expected.

The poorest half of the community receives 80% more than the bottom half. While the average household receives £6,000, the 2nd and 3rd poorest received the most, at £9,000. The richest and second richest deciles, on the other hand, received £2,400 and £3,500 per year respectively.

Gov Exp 35

 

When you add it all up

Other than social security, which is mostly targeted at the lower middle class, the majority of government spending is spread out quite evenly across the income groups. The end product, being one that while leaning towards supporting the lower middle class, provides a relatively equal distribution.

Gov Exp 4

*not including 11% spent on Agriculture, Transport, Industries, etc.

 


Sources

[1] https://www.gov.uk/government/publications/budget-2016-documents/budget-2016

http://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/datalist?filter=datasets

Parliament photo by : luxstorm – https://pixabay.com/en/users/luxstorm-1216826/

More charity at home, less in Parliament House

More charity at home, less in Parliament House

While Australians are increasing their personal donations, as a country they’ve been giving less and less to foreign aid.

Charity vs ODA

Is this suggesting a misalignment of sentiments between the community and its leadership? Is there a growing desire to support those closest to us, donating to support local causes, while diminishing our desire to help those abroad?

The period graphed included 9.2 different Prime Ministers so it’s hard to pin point the blame the Australian Government’s diminishing willingness to fund foreign aid. And while the coloured timeline suggests that upon winning office Labour increases and Liberal decreases Australia’s Official Development Assistance, the overall picture is clearly trending south. So much so, that Foreign Aid didn’t even rate a mention during the 2016 election campaign.

Australia’s generosity, as individuals and as a country however, leaves much to be desired.  Australians donate around 34 cents for every $100 earned, and the country spends $1.30 in foreign aid for every $100 spent in the federal budget.

But if charity is starting to take off at home, there’s hope it may influence the political agenda.

 

 


ODA vs Budget not ODA vs GNI

The graph shows foreign aid expenditure as a percentage of the total federal budget.  Most analysis compares foreign aid to Gross National Income (GNI), with governments stating they’re aiming to reach 0.5%. However, as suggested by Angus Barnes[1] the federal budget, which is within the government’s control, is “a more appropriate denominator”.

Either way the line is almost identical, with the only difference being magnitude – 1% of budget is roughly 0.4% of GNI.

 


Sources:

[1] http://devpolicy.org/the-odagni-ratio-does-it-truly-reflect-a-governments-commitment-to-aid-20130521/

http://dfat.gov.au/about-us/publications/Documents/statistical-summary-2013-14.pdf

http://www.budget.gov.au/2009-10/content/ministerial_statements/ausaid/html/ms_ausaid-10.htm

Australian philanthropy improving, yet miles behind

Australian philanthropy improving, yet miles behind

Australians are donating more money than ever.  Based on ATO data, tax deductible donations have increased from as $58 million in 1979 to a $2.6 billion in 2014[1].  This equates to an almost 4-fold increase in donations as a percentage of income. That been said, donations still amount to a tiny percentage of income.  On average, Australians only donate 0.34% of their income. That’s 34 cents for every $100 earned.   Also, while the percentage contributed increased steadily from 0.1% in the late 1970s, it seems to have plateaued over the last decade.

Increasing donations Australia

These figures make Australia look like the scrooge of the Anglo-world.  America’s philanthropic culture sees them donating 10 times as much as Australians do as a percentage of their income. The UK donates 8 times more, Canada 2.5 times, and NZ donates 50% more[2].

Anglophone world donations

(I compared Anglo countries as it was easier to find data online, and also due to the strong cultural aspects of philanthropy.)

According to analysis by the Fondation de France[3], British donors are the most generous in Europe.  But based on their measures of comparable concepts, other wealthy Europeans donate around half what the Brits do, which makes it around 4 times what Australians donate.  “Philanthropy in Europe” also suggests that countries with high taxes have lower individual contributions. High taxes suggest the government is looking after the needy, and thus individuals don’t have to.  It further highlights countries where tax revenue amounts to over 40% of GDP (such as France, Belgium and Italy) having lower donor participation. Yet, Australia’s tax burden is around 25% of GDP[4] and Australians donations are so miserly they round down to 0%.

No matter how many kilometres people run, bike or walk, nor how white, black or pink their ribbons are – Australians donate less than a deconstructed latte a week in $ terms.

Let’s hope they at least donate to the right causes.

 

Who are the givers?

While donations came from across the community, the super-rich gave the lion’s share.  Those with a taxable income over $1m (the top 0.1% of earners) gave 13% of all donations[5]. Those over $250k (the top 1.3%) gave 26% of all donations, and overall, half of all donations came from the top 15% of earners, those with a taxable income over $90k.

Who donates

On the other hand, while the lowest earners (under $6,000) donated small amounts, they gave by far the most as a percentage of their income, donating almost 5% of their income. This seems to be somewhat driven by retirees who may have low incomes but potentially amounted large wealth.

The middle and upper middle classes ($40k to $150k) contributed the least as a percentage of their income (0.25%).

 

 

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Reply to 1st comment:


Sources:

[1] Table 1:  https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-statistics/Taxation-statistics-2013-14/?page=4#Individuals_detailed_tables

[2] USA: Table 2.1https://www.irs.gov/uac/soi-tax-stats-individual-statistical-tables-by-size-of-adjusted-gross-income

UK: Table 2.6 – https://www.gov.uk/government/collections/charitable-donations-and-tax-reliefs-statistics

Canada: http://www.cra-arc.gc.ca/gncy/stts/t1fnl-eng.html

New Zealand:  http://www.ird.govt.nz/aboutir/external-stats/revenue-refunds/donation-rebates/

[3]https://www.fondationdefrance.org/sites/default/files/atoms/files/philanthropy_in_europe_2015_0.pdf (section D)

[4]https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP

[5] Table 3: https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-statistics/Taxation-statistics-2013-14/?page=4#Individuals_detailed_tables

 

 

Rental struggles

Rental struggles

Australian renters spend 23% more of their budget on rent than mortgagors on loan repayments.

Following from a recent post, this further shows that renting stings more than home-loans, and Australian Governments need to focus more on rental affordability than on those trying to enter the housing markets.  Yet the conversation hardly mentions them.

REnt by quintile

The average Australian renting household spends 22% of their weekly expenditure on rent, while those repaying a home-loan only spend 18% of their weekly bucket.  The analysis, based on the latest (but slightly outdated) ABS figures from 2009-10, shows the difference is more pronounced in the higher income brackets.

The difference is even greater among households whose main source of income is Government pensions and allowances. Aged Pensioners who rent spend 4 times more on rent than mortgagors do on repayments.  Renters relying on unemployment benefits spend 30% of their weekly expenditure on rent, while mortgagors spend half that amount (16%) on repayments.

REnt by pensioners

So, it’s pretty clear that households struggling with housing costs need help to pay their rent, not to continue to amass wealth while chasing the “Australian dream”.

For all the support, subsidies, and attention paid to first home-owners, Australia is in a great place to ensure no one goes without housing. And renters appear to be at the heart of it all.

 


Sources:

6530.0 Household Expenditure Survey, Australia: Detailed Expenditure Items, 2009-10

65300DO001_200910 Household Expenditure Survey, Australia: Summary of Results, 2009-10

Too many cookies in the education jar

Too many cookies in the education jar

Much is being said of the government’s support of private over public education of late. Last week was accentuated by the Private school, public cost report suggesting private funding will soon overtake public, with other opinion pieces echoing its sentiments.

According to the research based on MySchool data, Government support for private school is growing at twice the rate of public schools’ support.  This, however, is only true if you focus on the last 6 years.  The complete opposite trend was true for the 5 years prior. While MySchool data is only available since 2009, the Productivity Commission’s Report on Government Services goes further back and shows a different trend over an extended timeline¹.

Growth in backing 2 by 5 yearsThe report’s major strength is that it compares a finer slice of the community, focusing on schools with similar socio-economic backgrounds. This removes the effect of funding allocations based on need, which the government currently follows. Seeing as public schools disproportionately service poorer areas, using PC’s rough average (as I did) overestimates the difference in funding as the population serviced by private schools is generally cheaper to support. Unfortunately, the complete MySchool data is not easily available online, so my analysis is restricted to aggregate data and misses this finer level investigation.

However, while I suspect the difference is smaller than that suggested by the PC analysis above, the trend over the 11 years is likely to be the same.

Surprisingly, it’s not only Federal Governments whose support increased faster for private schools over the past 6 years.  State Governments increased private schools funding at 2.6 times the public schools’ rate between 2009 and 2014, with all but NSW and SA increasing support for private faster than for public over that period.  Northern Territory’s private school support grew at almost twice the rate of their public school support.

Growth in backing by sector

Growth in Federal Government’s support has been relatively even over the same period, with private schools funding growing 18% faster than public.

Growth in backing

(N.B.: All analysis is conducted on figures adjusted for inflation.)

The main reason for private schools outpacing public schools is that Federal Govs have increased school funding faster than State Govs.  Over the 6 years in question, State Government funding on average increased by a miserly 4%, while Federal Governments increased education support by 25%.  As Federal support private education more than they do public (as a base rule), their increase ends up largely in private coffers.  Even if Federal grants increased equally across both sectors of education, private schools would win.

This does not excuse the recent growing support for private school funding, but suggests that perhaps our current funding models are too complex and compartmentalised to understand how each lever impacts individuals and/or the entire system. We have too many jars, and too many types of cookies in them. Whether on purpose or misfortune, this often leads to undesired results, like the examples mentioned in the Private school, public cost report, where some private schools receive more funding than their neighbouring public educators.

As long as private schooling is legal, governments need to ensure they are adequately funded and this means continue funding for private education. However, the upper echelons of private education should not be taking resources away from those who need it most.

Education policies should be about more than funding, i.e. how the funding will be used, but perhaps there is room for one overarching policy, not about how much funding will be allocated, but how the cookie factory will be better and more equitably managed

 

 


[1] Following “Private school, public cost” methodology, public funding is multiplied by 0.85 to remove User Cost of Capital.

It’s not the size of your budget, but how you use it that counts.

It’s not the size of your budget, but how you use it that counts.

Education policy discussions focus almost exclusively on funding, and this election carries the stench of a pissing competition. However, based on OECD PISA findings there is no link between spending and outcomes, and more so, increased funding over the past 10 years has not shown improvements in student achievements¹.

Even if this weren’t the case, Australia is already among the top spenders in the world, with continuous funding growth going back decades.

School funding appears to only improve achievement up to the point where US $50,000 (ppp) is spent per student over the course of their schooling. Beyond this amount, spending does not seem to improve outcomes. Australia already spends double this amount, and is only surpassed by six countries. Of these six, only Switzerland performed better in PISA 2012.

(The following graphs are sourced from the OECD’s PISA:  
What Makes Schools Successful? Resources, Policies and Practices – Volume IV Publication)

PISA Spending

Much like Australia, most OECD countries increased expenditure in education in the period 2003 to 2012, yet the majority did not find improvements in student outcomes, with many (including Australia) going backwards.

PISA Spending increased

So perhaps it’s time we elevate the conversation from “my education budget is bigger than yours” to “this is how we’ll improve education outcomes, and here is all the research which makes us confident it’s the best way to invest the public purse”.

The current discourse gives the impression that education is under constant attack. However, school funding is ever increasing.  Public schools receive around 15% more per student now than they did 10 years ago (adjusted for inflation). Taking a historical view, public schools are now funded at twice the rate they were in the mid-90s and four times the rate of the mid-70s².

This is not to say that funding doesn’t need fixing, but I doubt it’s a case of needing more, rather better investment and distribution; for decisions to be made based on evidence, not political persuasion.

“What do we want?”

“Evidence based policies!!!”

“When do want them?”

“When they are good and ready, and the research is robust.”


[1] https://www.oecd.org/pisa/keyfindings/pisa-2012-results-volume-IV.pdf

[2] http://www.abs.gov.au/Ausstats/abs@.nsf/0/A75909A2108CECAACA2569DE002539FB?Open & http://www.pc.gov.au/research/ongoing/report-on-government-services/2016/childcare-education-and-training/school-education & http://www.abs.gov.au/ausstats/abs@.nsf/mf/6401.0

Funding a safety net for private education

Funding a safety net for private education

Private education allows parents to segregate their offspring based on various socio-economic boundaries.  It limits kids’ socialisation across the wider community, and diminishes awareness of how others live. I don’t believe private schools help create a better society, and it should cease to be a legitimate option.

However, while parents are allowed to send their kids to private schools, it is the government’s responsibility to ensure these are adequately funded to provide a standard level of education.

I usually sit on the anti-paternalistic side of the fence, but I also don’t believe children should suffer due to their parents’ bad decisions. So, much like enforcing vaccination, I think the Government should support private schools to provide decent education.

It may surprise many to know that Australian private schools have less money per student than Government schools ($15,500¹ vs $16,177 in 2012-13²).

While funding for Government schools is relatively evenly spread³, private school funding ranges widely depending on the school and its community.
When picturing private schools, many imagine the top echelons of elitism.  Pompously dressed kids hopscotching their way to Scotch College, Xavier or Sydney/Geelong/Brisbane Grammar.  These do possess much higher budgets than public schools, and should potentially lose all subsidies.  But for every Scotch kid sipping their single-origin soy-latte for morning-tea there are numerous Penola Catholic College and St Bishoy Coptic Orthodox College students boiling their International Roast.  These less famous private schools make up the majority of the private student population.

In 2012-134, the average private contribution to non-government schools was $6,574 per student.  Unfortunately, the MySchool website does not facilitate broad research as not all information is easily available in one dataset5 (figures have to be searched one school at a time), so studies on this is difficult.  However, by cherry picking some obvious cases, private contributions (fees, charges, parental contributions and other private sources)  range from $1.5k to $37.3k (Our Lady of the Sacred Heart Thamarrurr Catholic College NT and Sydney Grammar School being the examples). Seeing as the average is just under $7k, there must be way more schools like Thamarrurr’s than Grammar schools (in funding terms). Without government funding, the majority of private schools would have less than half the $ per student that state schools have.

School funding by decile

While the likelihood of attending a private school increases with socio-economic standing, 22% of students from the lowest socio-economic decile attended a private school based on 2011 Census data.  And over a third of “middle class” students (deciles 4 to 7) attended these schools too6.

While attending private schooling is a choice, it’s usually (I assume, don’t have the figures here) a choice made by the parents, not the kids. Kids whose parents make bad decisions probably already suffer enough through other means. At least their schools should be adequately funded.

Private school fees can be exorbitant, but most people aren’t aware of the amounts spent on public education, so the fees we hear about are hard to contextualise or compare.

In 2013-14 Australian Governments provided $16,177 per student to public schools.  This funding was also topped up by parental contributions and other private sources. While fees and extra funding in public schools may not be as much as private school fees on average, they can amount to considerable figures.  One example found by searching in wealthy areas is that of Auburn State High School, in the Western Suburbs of Melbourne7, which accumulated over $4,000 per student from private sources.

{As an aside, the examples above show how public schools in wealthy areas (e.g. Auburn) have greater private funding (on top of greater government funding) than some private schools (e.g. Thamarrurr in the NT).} 

By sending their kids to private schools, parents default on ‘full government assistance’. Government contributions to private schools bring the average funding up to almost public school levels.  The current federal government funding model for private schools takes into account the socio-economic situation of the students’ families. Schools with high socio-economic students receive as little as 30% of a “full government funded student”, and schools with low socio-economic student receive as much as 70%.  It could be argued that the current funding model is not targeted enough.  Rich schools should receive 0%, and poor ones closer to 100%.

Having said all that, this is trying to deal with a sub-optimal situation.  Better still would be to remove the possibility of kids attending such establishments, and ensuring all students get the education they need, without segregation by religion, social standing, or any other way in which you want to cut society.

 


[1] Derived from https://www.aisnsw.edu.au/Publications/Other/Documents/ISCA%20Snapshot%202015.pdf & http://www.ncec.catholic.edu.au/resources/publications/353-2013-annual-report/file

[2] Latest comparisons freely available.

[3] Funding for schools differs according to the needs of the students attending, but the range is a lot smaller than private school funding.

[4] Latest freely available.

[5] Despite Federal Government having a policy of “open data by default”.

[6] This analysis uses the SEIFA Index of Relative Socio-economic Advantage and Disadvantage (IRSAD).

[6] This might be the topic for another post.