Saturday, April 26, 2008

Charitable outsourcing?

Is there such a thing as "charitable outsourcing"? And if so, what is it?

In the oft blogged book, "The 4-hour Workweek"

the author talks a lot about having others perform low value (and hence low cost) activities for you. The basic premise is to have others perform duties for you that would "cost" you more to perform than you can "earn" doing other activities. If I am a consultant, and can do work for a client at $100/hour, but instead do bookkeeping at $20/hour, that is a net loss of $80/hour. I should instead pay someone $20/hour (or at worst less than $100/hour) to do this for me.

Applying this to your personal life, if you value your personal time at $10/hour, and can find someone to mow your grass for $8/hour (GOOD LUCK!) then you should do that. One key (!!!!!!) hindrance to this method is determining a valid and usable cost/hour for your personal time. Easy to do if you can charge someone else for it, as they determine the value, but less easy if it is pruning the hedges.

Isn't this just another way of recommending "outsourcing". It is. Debate settled.

So then, applying this to charity:
  • Assume you value charitable activities at the rate of $20/hour
  • Assume you value personal time at $22/hour
  • Assume you earn income at $50/hour
The obvious solution is to donate money commensurate to the amount of time you would have spent, and then use the freed up time to either do personal activities or work. If you spend personal time, and it helps increase your professional capacity and hence income rate, you are economically providing MORE value than by donating your personal time.

I have a hard time with this concept though. And many people knock this by saying you should do the charitable activity yourself, and not "pay off your personal grief" of helping others.



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