Obamas: Generous or Not?

Here's a post detailing what the Obamas gave last year (it was part of their tax records). It's a long list full of top-notch charities. In all, the President and First Lady donated $329,100 of their $5.5 million in income to charity. They also gave the full amount of the $1.4 million he won for receiving the Nobel Peace Prize in 2009 (he didn't have to claim this as income since he told them to give it directly to charity).

IMO, any way you look at it, the first family appears to be generous, so any further discussion is really nit-picky. But no one has ever said I'm not nit-picky, so I'm moving ahead with this post. ;-)

Seriously, I want to know if you think this is a generous set of contributions or not. Here are some things to consider:

• They gave over $300k. That's a chunk of change! They didn't need to give a penny!
• One commenter on the piece linked to above said: "It's good to see him giving but I wonder if his total contributions shouldn't have been greater than ~6% of his AGI? After all, he does not have to pay housing, utility, food, gasoline and myriad of other expenses as most everyone else does, thus leaving him with a far greater percent of disposable income."
• If you add the Nobel prize money to both their income and their contributions, they would have earned $6.9 million and contributed $1.7 million, giving away 25% of their income. Hard to argue that that's not generous.

So, what's your take on the issue? Any thoughts on what the first family gave this past year?

Comments

[Investor Junkie]

Yes much more than Biden. Though Democrats overall give less than Republicans (this is a fact).

[Cheapskate Sandy]

Yes, they were generous. Donating the entire Peace Prize alone was generous and the additional money donated is icing on the cake.

[Budgeting in the Fun Stuff]

I'd consider donating 6% generous and 25% very generous.

[Matt]

No comment on donating because that is a personal decision.

Still having 5 mil in income for ONE year after donating, I will never make that in my life time. 5 mil divided by 40 years is $125k a year.

Remember the woman in the bible who gave the small pences , that was all the money she had, she gave the most.

[jim]

"Though Democrats overall give less than Republicans (this is a fact)."

The difference is religion not politics. Religious people give more than non-religious. (A lot of it goes to their own church) Republicans are more likely to be religious than Democrats. Religious liberals give as much as religious conservatives.

[Johnson]

He gave a pittance before he was in the public eye - the fact that he's giving more now, knowing his returns are public, means nada to me

[Julie]

@Johnson,

Where can one find what Obama gave away before he was president?

[Marc]

http://taxprof.typepad.com/taxprof_blog/2008/03/obama-releases.html

Obama's pre-senate charity.

I am not impressed when giving is so obviously political.

[LotharBot]

If I were to evaluate generosity (in general or in this specific case), I'd need to know more things:

1) what are the long-term habits? Is this somebody who regularly gives 6% (or 25%) of income, or someone who regularly gives nothing but gave a lot this year, or someone who regularly gives 85% but gave less due to special circumstances?

2) is it a pure gift, or are there side-effects to consider? For example, is "giving" to a political organization that will be doing grassroots (or astroturf) campaigning for you or your party really a gift? Is the gift buying them something they'd otherwise have to pay for?

3) is the total reflected in the tax returns accurate? Not all giving is tax-deductible, and not everyone itemizes. So, for example, low giving numbers from previous years might not be accurate either.

[Darin H]

Wow Marc, those numbers are surprising. Just over $10k TOTAL while earning more than $200k per year for a five year period.

[The Biz of Life]

The Obama's have gotten much more generous since he decided to run for President. The Biden's are still pretty stingy. But it is a free country. They can do what they want.

[Patrick]

To be fair to our President, it's worth noting that until his first book sold well, the Obamas probably did not have a lot of cash on hand. Harvard Law School costs money, and becoming a community organizer after graduation pays off the loans a good deal slower than going into corporate law.

As this website has discussed, living in a high cost-of-living city can make you house rich but cash poor, and they lived in Chicago. I also believe they maintained two residences in DC and back home for some time to make his Senate election less disruptive to his daughters' lives.

If the Obamas gave only $10k over a 5 year period on $200k, were they perhaps paying down family debt? Isn't that something the readers of this site laud when others do it? What about flying four people to Hawaii to visit family? Isn't part of the reason to be good stewards of personal finance to invest it in building family bonds?

My family is 650 miles up the eastern seaboard from me. Seeing them is a minimum $500 to $1000 enterprise, and my infant son flies for free. We certainly would give more to charity if it cost less to visit family. Is the time my son spends with my widowed mother worth the opportunities given up? Most definitely.

All I ask is that while the political views of most readers of this site and its publishers are clearly to the right, I would ask that you not unfairly judge the Obamas on an incomplete picture of their finances and generosity. The truth is, regardless of what you think of Obama politically, his temperament as a man, a husband, and father is nothing if not conservative in the sense that I think most men here would identify with.

[MyFinancialObjectives]

I'd like to know what organizations he gave them to.. Like LotharBot stated, he may have "given" to a political organization that may just be doing beneficial things for his campaigning. You never know with politicians, you really never know!

[Pop]

Just to clarify, the President does have to pay for his own groceries and basically any other food he eats in private. But it's true that he doesn't pay for business-related meals or food at public functions (which is a lot).

[Sarah]

He may have free housing in DC, but unless he sold his Chicago place, I'm sure he's still paying for that.

[Mike Hunt]

Interesting in light of the fact that part of Obama's tax increase in 2011 on the 'rich' is to limit the deductibility of charitable contributions. In other words it used to be that in the 35% tax bracket you can give to charity and the income comes 'off the top' of the 35% bracket, whereas the new plan is to increase the top bracket to 39.8% and limit the charitable giving to a 28% bracket of deductibility.

So I wonder if he gave the nobel prize money if he were to have won it in 2011, would he also have to cut an additional check to Uncle Sam.

Considering Obama could be labeled as somebody who gives when in the political limelight, I find it strange that he supports tax policies that disincentivize charitable giving.

-Mike

[MasterPo]

Considering the Messiah-N-Chief doesn't have to pay for housing, food, transportation, energy, utilities, insurance, security, repairs, etc. 6% is a very poor showing in MasterPo's opinion. Yet we, Johnny Q. American Public, are told constantly that we are "greedy" for not wanting to part with more and more of our hard earned incomes.

And even more so, "the rich" - those like him who make over $250,000 (if that is still the figure in play these days) - are super evil and greedy!

Practice what you preach.

Not racist.
Not violent.
Just no longer silent.

[StL Pastor]

It is interesting to think about the definition of generous. On the one hand, this year at least, the Obama's gave a significant percentage of their income to charity, which is good.

However, I definitely lean toward Matt's interpretation of generosity. Generosity means giving even when it is an inconvenience, and I think that as one's income increases, the percentage of one's income that you should give to charity increases as well (this is how I'm trying to live as my family income increases over time, and I admire how FMF has led the way on this). Since the Obama's can more or less print money from this point forward (being an ex-President is a stunningly lucrative gig), he could give away almost all of his income and still be set for life. From that perspective, he's got a long way to go until he is really generous.

As a lefty myself, I'd be happy to see him give more, but I am also glad that he's trying to raise taxes on people in his tax bracket, so as to strengthen the social safety net for all Americans.

On a completely unrelated note-On charitable giving deductions. If you give 1000$ (nice round number) at a 35% bracket, you save yourself 350$ in taxes, thus you gave the equivalent of 650$ of your income. Under Obama's plan, If you give 1000$ you save yourself 280$, thus giving the equivalent of 720$ of your income to charity. So, if you can only afford 650$ of income loss, you would give only 902$ to charity (saving $250 in taxes)-roughly a 10% drop from the charity's perspective, which would be a pretty big deal. I see the argument-why do the richest people get rewarded the most for giving to charity, but I'd hate to see what that would do to charitable organizations.

[Richard]

$ 1.4 million for winning the Nobel Peace prize? Boy,if that's not the definition of "unearned income" I don't know what else is.

[Todd]

Patrick - if your interpretation that "most readers of this site and its publishers are clearly to the right" means those that accept personal responsibility, than include me in that group.

For a self proclaimed Muslim, er I mean Christian, it doesn't look like Obama is tithing a gross 10%. I think Marc's link provides a clearer picture on his charitable donations over the last few years. Pretty sorry if you ask me.

[Holly]

Patrick, thank you for a very thoughtful post. I agree whole-heartedly.

And according to several different accounts that I read during the campaign, the Obamas were in significant debt (school loans) until his book began to sell. They were then able to pay off all of those loans...and, it seems, start diverting more of their income to charity. If I were in debt or paying down loans, I would be very minimalistic in my charitable giving as well.

[InCalifornia]

Yes, found Patrick's comment insightful. Believe they were generously giving while they were making less and they are way way generous on the last return. Not many can contribute 25% of their income.

[Sarah]

I have to say I'm disappointed in the tone of some of the comments. Regardless of your personal feelings towards the President or his politics, I don't see how "Messiah-N-Chief" and "a self proclaimed Muslim, er I mean Christian" could possibly add to the conversation. Its an interesting post with some interesting and insightful answers, but when people pepper their responses with things like that it detracts from the whole conversation.

[FMF]

MyFinancialObjectives --

Click the link in the post -- it details all the organizations they gave to.

[RSD]

I'd say he is very generous, especially with my and my children's money.

[billyjobob]

Many of these postings seem to reflect the posters political preferences, not what they really think about how generous an individual has been.

I have no idea what the answer to this question is, but I am wondering... how does that stack up to the Bushes?

[jimmydean]

Anytime you have an article mentioning the worst financial president since jimmy carter, you are going to get "political preferences." By the way, who are the Bushes?

[billyjobob]

Whoops ...my bad jimmydean. A bush is a horticultural woody plant. Shorter than a tree and usually has multple stems.

George Bush....how much does he give?

[ParatrooperJJ]

Just to clarity, while the First Family does not pay rent, they are billed for their food with the exception of official state dinners.

[David C]

After all of the bailouts, he could have claimed "I gave at the office".

[Anon]

Personal opinion on the question that was posed: Yes, anyone who gives millions is generous.

@Sarah -- Completely agree, some of the comments are getting very ugly and have nothing to do with the question.

This type of behavior and division on BOTH SIDES is what has deadlocked our political system. Instead of being pragmatic and getting things done for the people, they decide to be in a perpetual state of campaigning. It is disgusting and unsustainable, and I think we'll see some big changes in the next 0-8 years both in terms of representatives, but also how the system works. I don't see how so little can get done. There are many things everyone can agree on: why not just pass them quickly as individual bills and cut the B.S.?

I am now done with my rant. I apologize, but seriously folks, let's grow up and leave the rhetoric to the politicians.

[BenC]

@Todd, @MasterPo, @RSD
"Judge not, that you be not judged. For with the judgement you pronounce you will be judged, and with the measure you use it will be measured to you." Matthew 7:1,2.

@Sarah, @Patrick, thanks for your comments. I really appreciate them.

[MikeS]

Giving anything is more than most people give. Personally, I don't care for President Obama's policies. But kudos to him for giving money.

I don't give money, but I give my time. Does that make me any less generous because I don't give thousands or millions?

[Sarah]

@MikeS - I agree. There was a time period when I was very strapped for cash, but volunteered about 6 hours a week through big-brothers/big-sisters. If you look on my tax return you may see a little of that (1/2 of the costs of our activities together - which generally were relatively inexpensive) - but the time commitment was huge. If you consider a 46 hour "work week" (adding the extra 6 hours for volunteer) - this accounts for 13%. Would I have been more generous if I had taken that 6 hours and been paid for it, but had donated the money earned? There are a lot of things which go into giving, and not all of it is reflected in tax returns.

[Todd]

Sarah - When I made the Muslim, er Christian comment, I was making light of Obama's slip ups in which he discusses his muslim faith... I thought these instances were well known. My only point that I was trying to make (other than my failed attempt at humor) was that he is not paying a full tithe on gross earnigns (his 6% contribution vs. 10% minimum for a tithe).

http://www.youtube.com/watch?v=iQqIpdBOg6I

BenC - The judge comment? Come on that's weak. I was asked "So, what's your take on the issue?" and provided MY opinion. No judgement.

[Sarah]

@Todd - those are well known, but some people perpetuate them to try and make it seem as though the President may actually be a "secret Muslim". I apologize if that is not how you meant it, but that is how I initially read the comment.

[Stephan]

This isnt supposed to be a political blog, and it really adds nothing to the conversation when you bring your politics into play. If Obama or any other man wnats to donate, no matter how little, good for him. Its not a requirement, its his choice to do with the money he earned what he wants. This idea of giving away your money, especially if you dont have alot, is very much unique to this country. I dont understand why anyone who hasnt paid of their mortgage, saved for college, and has no other debt would be donating at all. just my opinion!
Preferred Financial Services

[guinness416]

"This idea of giving away your money, especially if you dont have alot, is very much unique to this country"

What?

[Apex]

Giving 6% is probably pretty good for most people in govt. Certainly it's a decent amount of charity. I am not sure I would call it generous but I would certainly not deride it as stingy.

As to the 1.4 million from the peace prize I suspect he had to give that away. It would not look very good politically if he didn't especially as there was a lot of incredulity at the award being awarded to someone who had been president for less than a month at the time of the announcement.

Theodore Roosevelt and Woodrow Wilson were the other two sitting Presidents to receive the award and Jimmy Carter received it in 2002 well after leaving office. Roosevelt and Carter both gave the money away. Wilson kept it in a Swiss bank account and is not remembered well for doing so. Thus I don't think there was much chance that a reasonable person would want to keep that money.

[Morgan]

One difficulty with this analysis is that it only looks at cash donations. What about the value of time and the opportunity costs of public service? The president could have earned substantially more in private practice than he did as a community organizer, senator, and even president. Instead of taking the money, he donated his time and effort (forgoing substantial earning potential) to charity as a community organizer, to the state of Illinois as senator, and to the service of the nation as president.

It boils down to the fact that cash charitable donations are not necessarily an accurate measurement of a person's charitable contributions. Donating one's time, effort, and expertise (for example, as a lawyer doing pro bono charitable work) can be vastly more effective forms of giving, but they don't show up on your tax returns.

[Sarah]

@Morgan - agreed - my husbands graphic design company does probono work, but you are not allowed to claim deductions for "services donated" only "goods donated"...

[StL Pastor]

Stephan,
giving is a pretty core part of most religious traditions (I'm most familiar with the traditions in Christianity, Islam, Judaism, and Hinduism, which all insist on charitable giving, and make up well over 65% of humanity). I acknowledge that Europe doesn't currently have a robust tradition of charitable giving, because of the really significant social safety net (it is the government's job to take care of the poor-but America does a poor job of this), but many other countries have a strong tradition of care for those in need.

[Deacon Bradley]

No comment on the amount, but what about the method. It seems pretty clear that the Obama's think the government is the most efficient means of helping people. Why wouldn't they give all that money to Uncle Sam instead?

[Stephan]

I understand the caring for people in need, but why would you sacrifice your own future? Its dumb, if you can afford do it as i regularly do when i get a christmas bonus check, but to honestly budget it into your yearly budget regardless of your financial situation is naive.

[MasterPo]

BenC - What a person gives or doesn't give is none of anyone else's business. If they give for faith reasons then it's between them and their G-d.

In MasterPo's opinion this article is a waste of bytes, unless the point was to cause heated discussion (mission accomplished).

It is DISGRACEFUL for *anyone* to make judgement upon someone else by comparing what they earn or have compared to what they give to others. It is not for any mortal to draw a conculsion of such.

The only saving grace of this discussion is the fact that Obama and his high priests - I mean administration - seem to forever be telling the American people that we dont' give enough, that "the rich" are "greedy" for wanting to keep what they have and not share yet - as pointed out above - the Obama's themselves give less than 10%.

Practice what you preach is another good saying.

[Ryan@TheFinancialStudent]

These comments are very disappointing.

Using those terms like "messiah" "high priests" are so smug and ignorant. Exactly what's wrong with politics. What's really sad is that I'm not even surprised since I know this is a somewhat religiously themed blog. I'm not trying to be anti-religion (I've been brought up Christian myself), but I've noticed that the most vocal Obama haters always appear to be fundamental, white, and angry Christians. What they're angry at I'm not quite sure - considering taxes went down for 95% of Americans.

Just a thought - is it fair to look at percentages? I mean 6% of the Obama's (or any wealthy American's) income is way more than 6% of what an average teacher or police officer makes.

[Apex]

In response to ryan and others.

It is interesting that when it comes to personal giving there are comments being made that suggest we should not look at percentages and that the rich give a whole lot more in actual dollars so 6% is actually a very large amount.

But when talking about taxes the rich already pay a much higher percentage of tax which results in a vastly higher actual dollar amount and yet we are repeatedly told that the rich are not paying their fair share.

For anyone who is holding both those positions at the same time, you might want to consider the logical inconsistency of such thinking.

[Ryan@TheFinancialStudent]

Apex,

Giving is 100% voluntary. Taxes are not. I just don't think someone should be saying "Ah, they "only" gave 6% when that number is actually quite large.

The top tax bracket used to be in 80% range. Yet, there were still plenty of millionaires and wealthy people. Now the top is around 40%. And the middle class is squeezed. Earnings have not kept up with the cost of living or inflation.

Is it fair that the richest Americans have to pay more? Maybe not. But I don't see another way to reduce the deficit.

[MikeS]

@Ryan, I've got another way to reduce the deficit. How about not spending so much? Instead of increasing income, how about reducing what is spent? Works in personal finances, I see no reason it can't work at the government level too.

[Apex]

@Ryan,

I don't care what is voluntary and what is compulsary. That wasn't the point. If you would judge what someone should contribute in taxes based on their ability to pay and requiring a higher percent of them the more money they have, then why would you judge that same person's generosity based not on their ability to give but simply on the total dollar amount given and what a gift of that size could do? It is logically inconsistent. If Bill Gates were to give 300K to charity would you judge that to be generous? Obviously the Gates foundation is very generous, but I trust you see the point. I am not saying whether you should judge by percent or by dollars. I am just pointing out that if you judge taxes by percent and giving by dollars, you are holding inconsistent standards.