Apr

10

giving and the gift economy

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Far too frequently I fantasise about winning Who Wants to be a Millionaire? (not the lottery, I understand basic probability). My current thoughts are that with the money I would invest about half of it (maybe pay off the mortgage, the rest probably in index funds). The other half of it, I’d be giving away.

Only about £100k (10% of the £1m) would be heading in a truly charitable direction, with the other £400k being split amongst my close family - siblings and parents. I enjoy giving, and feel that this would be the right thing for me to do.

This leads me to thinking about gift economy. From wikipedia:

A gift economy is an economic system in which goods and services are given without any explicit agreement for immediate or future quid pro quo.

I find this concept really easy to understand. The point is that you give things away. Giving things away gets you more status / karma / brownie points etc, and those are really important, more important than things. In a gift economy hoarding is bad. If you hoard things then you are disrupting the system, meaning that people in need will go without and you will lose your good name (in some sense).

The beauty of the gift economy is that everything that people give has to be received by someone. In this way, as long as everyone pretty much takes part, you don’t lose out.

I’m always struggling to explain gift economies to people because they fixate on how you know that you get back as much as you put in. This is frustrating to me, because part of the whole point is that you probably don’t. But the status/karma/brownie points that you do get are more important as a marker of success than cash.

Gift economies are kind of the opposite of capitalist economies. It seems reasonable that a gift economy works best on a small scale where all participants are connected to each other. It’s plausible that a gift economy only works on a small scale.

As with all types of economies, gift economies rarely exist in pure forms and for all products. The most notable real life examples are found in traditional Pacific Island cultures (dying out somewhat), but they exist in extremely modern cultures - open source software is essentially a gift economy, as is economy of blood donation in the UK. Recently (although it’s not described as such) Trent @ the simple dollar tried to describe the gift economy that exists within parts of his extended family and if you think about it, it’s normal for gift economies to exist inside nuclear families.

This has been my best attempt at explaining what a gift economy is. To a certain extent, there’s a gift economy within my own family (siblings and parents) although it operates partly as a market economy as well. What do you think?

Mar

14

my kiva loan has been repaid - what to do next?

Filed Under giving | 13 Comments

About this time last year I invested in a loan to an Azerbaijani minibus driver through kiva.org. Twelve months later, and the loan has been paid in full and it’s time for me to decide what I’m going to do with the cash. I could withdraw it and invest it in something with a monetary reward, or I could withdraw it and donate it all to charity. I’m going to do neither, I’m going to reinvest it through kiva.

I could invest for monetary reward

Although the entrepreneurs that kiva invests in do pay interest (which may or may not be at a high rate), this interest only covers the cost of running the schemes. One of the reasons that banks don’t lend out microloans is that the cost of the paperwork and collection is relatively fixed, so for a small loan, it eats up all the potential profits. Another reason, is that banks don’t commonly exist in some of the smaller villages as there is enough business there to make it worth their while. This means that the poorest people don’t have access to capital - in a modern capitalist world, they are at a distinct disadvantage.

The reward that I get through investing in kiva is better than money though. I know that I am making a difference, improving the world, and generally fulfilling my purpose for being. I’m not going to withdraw the money and put it into my ISA - which is my default solution for all my spare or windfall money.

I could donate to charity

I donate regularly to charity and am happy to continue to do so. The charities that I support are for causes that I believe are important, and I’m not opposed to increasing my donations. On the other hand, investing with kiva means that my money can be used again, and again, and again. The minibus driver has used the money, and now someone else can use it. And hopefully, in a years time, another person can use it, and so on.

Not everything can be solved through capitalist loans. Not every problem has a business as it’s solution. I’m going to continue to donate money to Oxfam to support their work in overseas development, but I’m also going to support some individuals in their quest to get out of the poverty trap by reinvesting my money in another loan through kiva.

I won’t, I’ll make a microcredit loan

Actually, reinvesting with kiva is pretty easy. It’s more effort to get the money out than it is to invest in a new loan. I’m quite pleased with the results, it’s nice to be able to help people out and treat them as competent and successful business people rather than deserving of sympathy.

If you’ve invested through kiva, what do you think of it? Are you opposed to microcredit for any reason? Let me know your views in the comments.

Dec

5

who will you be donating to at Christmas?

Filed Under giving | 7 Comments

Now that I’ve debunked any anti-charity sentiments that you might have held, who are you planning to donate to this Christmas? So far, I’ve decided to do a couple of things.

Firstly I’m going to give a couple of things to the Salvation Army Christmas Appeal. They are looking for gifts for children under the age of 17 and for the elderly. I’m planning on choosing something appropriate for a teenage boy, as people don’t commonly buy for them, and also for a small baby, as baby toys are easy to pick out.

Secondly, I’m going to be making a donation to Shelter. I may not consider myself to be a Christian, and I am certainly aware that the celebration predates the Nativity, but it seems appropriate to give to a homelessness charity at Christmas when you consider that the story tells of a couple who had nowhere to stay for the birth of their first child. Two thousand years ago that may have been acceptable, but it certainly isn’t now.

I’m sure that you’re all more warm and generous than I am, so tell me about your Christmas charity plans and ideas.

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