Tithing and Investments

Here are some questions I recently received from a reader:

Have you worked through the details of tithing and investments?  Specifically, I'm wondering how to treat non-taxable (or tax-deferred) investment income, such as dividends in a 401(k). I and my wife are big believers in tithing on gross income, including whatever we contribute to IRAs and the like.

Also: When it comes time (not any time soon) to draw retirement funds, do we tithe on contributions, gains, or both?  Is that double-tithation (couldn't resist)?

These are good, practical questions and I know different people handle them differently. Here's what I do:

I use Quicken, so it accounts for all sources of income -- from my job, side income, dividends, interest, etc. and includes both taxable and non-taxable accounts. I keep watch on what Quicken lists as the total income for the year and make sure my tithe is 10% of this number. So yes, dividends and capital gains distributions for all accounts, including non-taxable/tax-deferred investments, are included in this number.

The second question is a bit more difficult, because it will be hard to sort out. If you do what I do above, then you've already tithed on the initial contributions to the accounts as well as any subsequent dividends and capital gains. So all you "owe" as you withdraw the funds is 10% of the gain on the contributions/dividends/capital gains. There are probably several ways of figuring this out (I'm not at that point yet), but here are a couple I think will be likely for me to use:

• If you know the cost basis for all your shares and you know the current price, you can figure out the increase and tithe on that. For instance, if a stock has a cost basis of $30 and is now worth $50, then your tithe when you sell it would be $2 (10% of $20.)

• You could simply tithe on everything you withdraw. Yes, this would be "double-tithation" on some of the funds, but it would certainly be easier to calculate and track. We always give offerings above our tithes as well, so we would consider these amounts both tithes and some extra offerings.

In the end, if you're trying your best to figure out 10% and your heart is in the right place, I think that's what matters to God. I don't think He's up in heaven waiting to zap you if you only give 9.9% of your tithe. Do an honest job of figuring out what you should give and give that amount. In my book, you'll be fine at that point.

Comments

[Phil]

Sigh ... Asking this question and the response means you are missing the point completely and are caught up in Old Testament thinking. There are no scales that God uses to weigh your contributions to the church and when the meter hits 10% you "pass". You don't need to contribute anything to be saved - contributing everything you have is not enough to be saved.

You have been equipped by God with your time, abilities, and money to carry out the Great Commission. Managing those resources towards that mission is what Stewardship is all about. Your comment of "double tithation" shows you simply don't get it. Give what you need to give to carry out the Great Commission. Hone your abilities towards that purpose. Act when you need to act.

The danger behind rigorous "tithing" is that when you achieve 10.00% (how ever you calculate that ratio), you might think you're done or have somehow satisfied God's requirements. No one can act in any way or to any degree and satisfy God's requirements. That's what grace is all about. Generous giving and working towards the goal of the Great Commission with all that is entrusted to us - that's our response to grace.

[garyatk]

Sure, God has set laws that tell us what we should give back to Him as a minimum. But He wants us to acknowledge the fact that He has given us everything we have and what is important is how we use it, not how much I get. Once we truely look at our stuff this way, we will no longer have to get out our calculators and Quicken to figure out how much we should give back to God. Once we become content with what He has given us we will no longer waste our time in the pursuit of more, more, more. One of the blessings that He has given us as Americans is the ability to become financially free to pursue a career working for Him and His kingdom. Unfortunately too many of us give into the temptation to aquire more than we need. This keeps us from investing in true wealth in Heaven. You shouldn't need Quicken to figure out if you have invested adequately in Heaven. Just ask God. He loves to talk with us and lead us in our decisions.

[Jake]

One thing that I like to recommend doing is to transfer appreciated stock to a charitiable fund or your local church. For instance, let's say you have $1000 cash and you have an appreciated stock that you bought for $500 and is now worth $1000. You can do a few things.

1. Give the $1000 cash to the church and take the tax deduction. Then sell the stock and pay 15% on the $500 gain ($75) and pocket $925.

2. Give the stock to church, take the full $1000 tax deduction and pocket the $1000 cash.

3. Sell the stock, pay the tax and give $925 to your church. You can then only deduct $925 on your taxes.

As you can see, option 2 is better, not only for you, but for your church. I'd rather give my church the money that to Uncle Sam.

[FinanceIsPersonal.com]

From all the preachers and reading in the Word I've done about tithing, it's seen as one-tenth of the net increase you have in wealth, so investment income would count to. Eitherway, God will still love you, so do whatever you want!

[LotharBot]

In Old Testament times, when a tenant farmer reached the harvest time, they were expected to pay 10% of their crop as a form of rent to the landowner. When God instituted the tithe, He was establishing the principle that HE was the landowner.

The 10% amount is not of particular significance. What's significant is, as Phil said, recognizing God as "the boss" and working toward His ends with all that you have. That might mean giving 10.00% of gross income to the church. It might mean giving 2% to the church and giving 35% to a charitable organization. It might mean giving 0% to the church and volunteering at a homeless shelter. Worrying that you might accidentally give more than 10.00% (or less than 10.00%) demonstrates the wrong mentality -- a mentality of righteousness by Law, rather than righteousness through inner transformation.

Give Generously of your time and money, and manage it shrewdly in order to advance whatever mission God gives you to advance. Don't worry about how your contributions stack up against Ancient Near East tenant farmer traditions.

[Sheyenne]

FMF's ideas are the same ones I would suggest. It seems many of the previous commenters try to get around the law of the tithe by saying you are getting caught up in the law and discounting it as a way to try to "buy" your way into heaven. They are right in that payment of tithing or following the letter of the law in any other respect won't get you to heaven. We will never be able to do anything that could repay the debt that the Savior paid for us. He atoned for our sins and that is the only reason we even have a chance of getting to heaven. However, the laws were given to let us have the chance to show our faith by being obedient to His commands. This obedience can help us grow our faith. Paying tithing doesn't get me stuck on the letter of the law. It helps me to remember him and acknowledge His hand in my life and all my blessings. I pay 10% because that is what He commanded. I also give other offerings because I am able and it is another way (of many) to show my gratitude to my Heavenly Father. Paying tithing does not preclude a person volunteering their time, giving to other charities, etc. These things should all be done, not just one or the other.

[FMF]

Thanks, Sheyenne. You said what I would have said -- and saved me a bunch of typing. ;-)

[Brandon Barkley]

I agree that the both FMF and the reader are too caught up on the details. I think that you should tithe on 10% of what you in good faith feel is the right amount. If you are concerned that you are underestimated, bump it up. I mean, if you give $5,000 to the church, does it matter to your conscious if $5,000 was all a tithe or if $4,500 was a tithe and $500 was an additional offering? You should not get caught up on what the "minimum tithe" is, especially if you give in excess of that value already. It is just a waste of time unless you actually are not sure if you have tithed correctly.

I think tithing on investment gains that go directly back into the investment account is probably a mistake though. Even though it may bolster your theoretic net worth, you have not actually earned anything on the accounts until you withdraw the money. If the market has a rally towards the end of the year, you could end up tithing on potential income that will evaporate soon after. Also, in the case of the 401k and IRA, the money you are tithing does not even come from the money in the account. To go back to the farmer analogy, it is like saying that you must tithe extra on your corn because it looks like the soy beans will be good next year. When the soy bean crop fails, where does that leave you? I think the basic point I am trying to make is that you should tithe on withdrawls rather than interest earned while it is sitting in the account. Of course, this advice in my opinion only accounts to investment accounts that are not guaranteed returns. If you get $20 in interest on your High Yield Savings Account, you should tithe $2 if you are working in good faith.

It is worth noting that my advice probably can be taken with a huge grain of salt as I do not currently tithe. I am working towards it, but I am finding it hard to stretch the rest of my dollars when I do so. I will be praying for guidance from God about how to do this better.

[Not-So-Awesome Investor]

What if one investment gains $5K and another investment loses $2K? Do you tithe on $5K or $3K?

[fivecentnickel.com]

Purely fiscal, non-Biblical reponse: Why not just skip the tithe on retirement contributions up front, and then tithe on it when you withdraw? This skips the double-tithation issue, and makes sure that you pay what is "due" on both the principal and earnings.

[FMF]

Nickel --

This is certainly another way that it can be done.

[LotharBot]

"It seems many of the previous commenters try to get around the law of the tithe by saying you are getting caught up in the law"

If you have a problem with my argument, respond to my argument. Don't make insulting assumptions about my motives.

The "Law" of the tithe is a part of the Old Testament Law that has been done away with (note: so are the Ten Commandments. Doesn't mean we should ignore them, only that we should learn from them in an appropriate way.) Paul calls the Galatians foolish for trying to go back to living under the Law after being freed from it. Modern Christians make that same foolish mistake -- we try to live righteously by faith, but we hang on to the Law as a safety net. We hang on to the 10% number derived from tenant farmers thousands of years ago and created to sustain a religious government, and set that up as our target for righteous and obedient living, instead of recognizing the underlying principle: God is in charge of ALL OF IT, and we must use ALL OF IT to serve Him in one way or another. If we fall short of that standard, 10% is not a safe fallback position; it's a worthless gesture. If we don't serve God with everything, we can't use the excuse that "at least I tithed" to cover our butts.

If you are using the tithe as you stated -- as a baseline for giving and as a reminder that it all belongs to God -- then good for you. (For the record, I do too.) But still, getting caught up in trying to be exact in your 10% calculations is the wrong way to approach it. Give generously, and don't worry about accidentally giving 10.01% or 9.99%. Come up with a system that works for you, and don't worry if you end up actually giving 12% or 30% or whatever.

[FMF]

LotharBot --

My thoughts on your comments:

1. "If you are using the tithe as you stated -- as a baseline for giving and as a reminder that it all belongs to God -- then good for you."

This is what I do.

2. "Give generously, and don't worry about accidentally giving 10.01% or 9.99%."

If you re-read my post, I think you'll see that the latter part of this comment is what I say.

3. As I've said before, I'm 100% fine with Christians who say tithing is not for today but view it as the lower level (floor) for their giving. As Jesus did in other areas, He calls us to a higher standard than in the Old Testament. So giving 10% is the baseline and we should be above this.

This philosophy is contrary to this statement in your original comment:

"It might mean giving 0% to the church and volunteering at a homeless shelter."

To me, this is incorrect. If 10% is the floor, then it's the floor. This line of thinking leads many Christians to forsake giving altogether because they "volunteer at church" (maybe working an hour a week as an usher, etc.)

If we truly love God with our hearts, minds, and souls, do you really think it's appropriate not to give Him praise and honor in our finances as well?

[LotharBot]

The Old Testament Law, as a whole, has been done away with -- including the Ten Commandments, the Tithe, and so on. I believe one of the largest issues facing the church today is our failure to recognize that. We tell people they don't live under the Law, but then we tell them to follow the Ten Commandments, except the Sabbath is now Sunday instead of Saturday, and you should still tithe, but in money instead of in grain, and oh yeah [insert list of things church X still considers important from the OT]. And it leads all sorts of people into trying to buy their way into heaven or be saved by works.

We need a more mature understanding. We need to teach people that the Law is really, truly, 100% done away with, and that you are no longer under any obligation to follow any of it, at least not for its own sake. Once that's been firmly and clearly established, then we can look back at the Law and learn from it, understanding the principles it teaches.

In the case of the tithe, the principle it teaches is what you stated in your final sentence: we should "give Him praise and honor in our finances", above and beyond giving 10% to the temple / government. How exactly that plays out might not in any way resemble a traditional 10% tithe being used as a "floor" for giving. We are called to a higher standard, but that "higher standard" need not involve money at all; it need not involve a 10% "floor" at all. For some people, the best way they can honor God is by fulfilling their obligations to their children and by giving generously of their time (none of this 1 hour a week garbage.)

You are right that many Christians will use this an an excuse not to honor God with their finances at all. That's one error that needs dealt with, but IMO it needs dealt with in conjunction with the "trying to live under the Law" error. We can't answer one error by pushing people into the other. We have to deal with both. You MUST honor God with your entire life, including your finances -- but you don't have to "tithe" according to the practices of ancient near east tenant farmers as codified in the Law given to Israel and fulfilled by Jesus.

I have one set of friends for whom tithing, at the present moment, would NOT honor God -- because it would require them to dishonor contracts with their fellow man and to fail to provide proper care for their children, neither of which are godly things to do. But if they get on top of their debts, they can pay them down very quickly and then be in position to give 20% or more to the church. At present, the couple is taking care of yard and secretarial work for the church -- which are worth significantly more than 10% of their income. That couple is most definitely honoring God with their lives and finances without, presently, giving a penny to the church or any other charity*. They're going above and beyond the Old Testament standard without giving actual cash to the church.

It's not a path I'd recommend for everyone, especially not those inclined to look for excuses to be selfish. But for some people, it's exactly the right way to honor God.

.

* Several times, Jesus commends those who are shrewd and who make their King's investment grow for Him. Giving 10% straight to your local church may or may not be the most shrewd use of funds. Giving directly to charity is sometimes more honoring to God than giving to your local church, due to need, management, effectiveness, or any number of other factors.

[FMF]

LotharBot --

Wow, you have a lot to say on this issue, huh? Maybe you should start your own blog. ;-)

I think in essence we have the same basis and belief (love God -- which includes honoring Him with your finances), but I don't think we're going to find common ground on the issue of tithing/giving 10% as a minimum.

[LotharBot]

I do most of my writing at descentbb.net. I don't particularly want a blog; I like the give-and-take of a forum better. But I do enjoy these discussions and hope I'm still welcome to have them here.

We probably won't come to common ground on 10% as a floor, but that's OK. Putting the ideas out there and having people think about them and take ownership of their own ideas is far more important to me than convincing anybody to agree with me.

[FMF]

LotharBot --

Of course you're still welcome. In fact, if you want to write a guest post on your point of view, I'd post it on a Sunday.

[BrianC]

This isn't a jab at either of you, so please don't take it that way... Just a question. Didn't Jesus come to fulfil the law, not do away with it? Just curious what your responses would be.

[DannyG]

So, I thought I would throw my two cents into the fray. I was brought to this discussion because I have been debating whether or not to reduce my tithing now with the intent of paying it on everything I pull out of retirement. I appreciated all the thoughts and comments. But the reason I pay tithing is mostly selfish in that I feel it is for my own good. Knowing I pay tithing keeps me invested in the church and the lord. In a sense, I become a shareholder and a participant, not just a recipient. It keeps me from getting lackadaisical or complacent with my testimony and faith. It forces me to place things of an eternal nature above things of a material and more temporal nature. Plus there is the whole "windows of heaven" thing and the confidence we can have that the lord will provide generously. Oh and fire insurance too (D&C 64:23–25). I like this perspective because (at least for me) it is sustainable over a lifetime. Thanks again for everyone that took the time to comment.

[Nathan]

Thanks for this post. I'm young and fairly new to investments, retirement savings and the like. When It was just a paycheque and a savings account it was pretty easy, just divide by 10.

My thought is that I ought to pay tithing as the spirit directs, and if in doubt, tithe in gratitude anyway. I've never seen a person become poorer by paying too much tithing. In fact I can witness to the promise that there is not room enough to receive the blessings.