By Kevin M
Is it OK to give money to charities and religious institutions if you owe money? This isn’t just a question for people of faith (which I am myself) but for anyone who gives charitably and is in debt at the same time.
I recognize that there are different kinds of debt, and even different types of giving, so it’s hard to be general with an answer to this question. But I think that—at a minimum—giving needs to be considered in light of the different types of debt.
Generally speaking, there are four different kinds of debt that may have an impact on our giving:
Secured loans. This includes any debts that are secured by tangible property, like mortgages or auto loans. My thought is that since they’re secured by assets that we own and that we’re expensing over several years, you can give without consideration to the fact that you owe on them. Generally speaking, they’re debts secured by assets that are worth at least as much as the debts themselves, and thus offset—no problem with giving when you owe this type.
Unsecured loans. This is usually comprised mostly of credit cards, but in the current economic environment, it could just as easily include the unsecured portion of secured debt where the collateral asset—the house or car—has fallen in value to something less than the amount owed. And this is where the question of giving when you’re in debt starts to become a legitimate issue. These are pure debts, meaning money you owe but there’s nothing behind them but your promise to make good on them.
Student loans are unsecured debt as well, but that’s too messy even for this discussion; we’ll just leave it out of the mix.
Money owned to other people. If giving while you owe substantial amounts of credit card debt is an issue, it would be even more so if you owe money to other people. The best way I can sum up the dilemma is with a question: how would you feel if a friend or family member owed you a substantial amount of money, and was giving money to their favorite charity?
Defaulted obligations. This would include past debts that you haven’t been paying on long enough that they go to collection or judgment. They can be a few years old, or old enough that we might even prefer to forget we have them. Medical collections are in this group, as are back taxes owed to the IRS or other tax authority. These are the debt types that are super sticky for the would-be giver—do we have a moral, ethical or faith based reason to honor these before we give to any charity?
Different kinds of giving
I want to differentiate between three types of giving:
- Money gifts to institutional charities such as recognized national and local charities, houses of worship, and faith based- and political-organizations,
- Gifts of your time and effort to organized charities, and
- Monetary gifts (or time and effort for that matter) to PEOPLE who you know who are in need.
Now I want to make it clear that giving your time and effort to charities is a perfect way to give when you don’t have money to offer, and making monetary gifts to people in need is part of being human. The type of giving I’m calling into question is the first one—money gifts to recognized charities. Should we be giving to these organizations if we owe money elsewhere?
What are your thoughts on giving to charities when the giver is in debt? I’ll take a stab at some positions for or against:
- We have an obligation to give—regardless of our financial situations
- If I owe money and I give to a charity, I’m really giving the charity someone else’s money
- There will always be the poor and the needy, and I’ll always have debt, so I should give anyway
- If having debt is a reason to NOT give, in theory you could stay in debt forever—even borrowing to pay for your own excesses—and therefore never give to anyone
- As long as a person is paying their debt on schedule, there’s no reason not to give, regardless of the type of debt owed
And here are a few questions that pertain specifically to tithing—for those of you who aren’t believers, you can sit these out…
- Do you give out of your income, or do you give out of your assets?
- If you have $1 million in investments, but only make $50,000, is giving 10%–or $5000 per year—a true tithe?
- Since a tithe is based on your increase, and not specifically on your income, should you give based on increases in the value of stocks, mutual funds or retirement plans that you own?
- Is your tithe based on your net income after taxes, or is it on your gross income before taxes?
Want to take a stab at any of these positions or questions?
I can’t comment about tithing from the growth of one’s assets, but i do know this – There’s a value to your time. If you give 4 hours per week of your time, you are giving more of yourself than the million dollar earner who gives “only $10K/yr”
If you get your self out of debt, you will be in a better position to increase your donations over time, and your lifelong giving will be better for the fact that you’ve gotten out of the rathole of debt.
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Joe – I completely agree on getting out of debt to be a better giver. Debt is a form of bondage that keeps us trapped right about where we are, and it means someone else always has a priority lien on our income and assets.
Giving time takes care of the dilemma of potentially being generous with someone else’s money.
Personally, I think that we should divert most of our money to debt repayment. By borrowing money we put ourselves into bondage and we are now under obligation to repay! As Joe Taxpayer said, once we are out of debt we will be much better givers and can be a blessing to many more people.
My wife and I recently reduced our giving in order to funnel more money into debt repayment, and I believe that we are honoring the Lord with that decision.
I don’t believe that paying a tithe of our income is something that God requires of a Christian today, although (until recently) I always gave at least a tenth of my gross salary. However, if someone desires to base their giving off of a percentage of their income, I believe that it should be off of a gross amount. Then you don’t have to worry about giving from your tax return or increases in the value of your assets (unless you ultimately sell them).
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Khaleef – I agree, it may be that the best thing we can do to apply our faith is to get out of debt. At that point giving becomes a pure play without any strings attached and we’re not beholden to anyone (aka, “serving two masters”).
BTW, I’ve come to agree with what you say about the tithe. You can do it, and it honors God, but I don’t think it’s required post-Old Testament in the strict sense that it’s often portrayed.
.-= KevinM´s last blog ..Should You Give Even If You’re In Debt =-.
Maybe I’m way off, but I think if we come to God and say, “I’ve been wrong with the way I’ve handled my money, I want to turn that around. I am committing to giving you x% to the church while I try to pay off debt and I trust in you to provide for me so that I can get out of debt quickly because I want to give more once I am out of debt” – I think that is a very appropriate, humble and honoring way to handle it.
.-= Jason @ Redeeming Riches´s last blog ..What’s Wrong with the Modern Personal Investing World =-.
Jason – I don’t think there’s a right or wrong answer here. I think God would honor such a promise, but He’d probably also honor one like, “I’ve been wrong with the way I’ve handled my money, I want to turn that around. I am committing to paying off my debt to get out of bondage so I can begin tithing”–as long as it’s intentional.
But a lot depends on the type of debt too, and the status of it. If you owe a friend or family member money that you aren’t paying on regularly, but you’re giving to the Church there might be an issue. I’m thinking of this along the lines of Matthew 5:23-24:
“Therefore, if you are offering your gift at the altar and there remember that your brother has something against you, leave your gift there in front of the altar. First go and be reconciled to your brother; then come and offer your gift.”
.-= KevinM´s last blog ..Should You Give Even If You’re In Debt =-.
Great questions-like you said, every situation can have a different answer.
Depending on the debt you’re carrying, you have to weigh giving money. If you have student loan debt and you’re paying on schedule, then I feel fine with giving monetarily. If I owe family or friends money, I would pay them before giving to a charity. I think that donating your time while you’re getting out of debt can be beneficial.
It may open a door for you to give more to a cause that you feel passionate for.
.-= Elle´s last blog ..Stay on Top of Your Bank =-.
Let’s not get too legalistic about tithing. Even the 10% number is simply a number, and to get into the minutia of accounting (should we tithe from EBITDA, or normalized earnings or assets or whatever), seems to miss the point.
C.S. Lewis wrote:
“One mustn’t make the Christian life into a punctilious system of law, like the Jewish, for two reasons. (1) It raises scruples when we don’t keep the routine. (2) It raises presumption when we do. Nothing gives one a more spuriously good conscience than keeping rules, even if there has been a total absence of all real charity and faith.”
The real issue is–which requires far more thought than knocking a zero off your income and writing a check–”Does my giving reflect the spirit of Christian charity and faith?”
In the context of giving while in debt, the question would be are we treating our creditors with the proper spirit of charity.
Elle – Absolutely, it’s not a one size fits all. Giving to charity can become a way of defining ourselves in our own minds, but it can’t be totally divorced from our overall financial situations. Sometimes the best thing we can do for others is clean up our own house–financially speaking. Absent the burden of certain debts, our minds, hearts and checkbooks are free and clear for higher service.
Jeremy – I comletely agree. When we try to reduce Christianity to a 12 step plan we’re traveling on very soft ground. Christianity is about faith, and a set routine–as comfort zone friendly as it may be–has great potential to pull us in the opposite direction.
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Hey Kevin, you hit a sweet spot in my mentality. I believe that the more you give, the more you will receive. Fundamentally it doesn’t make sense, but it’s true. Possibly our subconscious gets the warm and fuzzy feeling, thus propelling us forward to strive for more? At any rate, we have an obligation to help the less-fortunate.
Great post! Thanks!
.-= Bradley Gauthier´s last blog ..Congratulations- You’ve Won the Ovarian Lottery =-.
Thanks for weighing in Bradley. I agree with what you’re saying, and what others have as well. What I’m doing with this post however is asking the question “are there times and cirucmstances where giving may not be morally or spiritually the right thing to do?” It makes for interesting discussion, doesn’t it?
As some have mentioned above, I don’t subscribe to a legalistic view of this, but one based on careful prayer and consideration. In the past when I’ve been in debt I still tithed as I felt called to do that. I always found that God provided for us and allowed us to meet all of our obligations – including our giving.
I think when it comes to tithing, its an individual thing. Its how you relate to your God. What do you value more, worldy wealth or giving God what is his. Its a very confusing theory because you have to evaluate the situation closely
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The answer for me is: absolutely. But the way you give can vary depending on your situation. Time, goods, food, or money, the Lord doesn’t mind as long as you are giving to your fellow man.
Jesse – I completely agree. Time, goods, food, money–it’s all giving. I think for the debtor, this may be the way to go rather than giving money.