Editor's take: 'Tis the season to dig deeply (but not too deeply)
Thinking of giving your bonus away? Sarah Butcher, editor of eFinancialCareers, on why you may be better off keeping it to yourself.
An interesting computer model suggests that altruistic types who engage in acts of random bonus kindness may be doing themselves a disservice.
The model, developed by Cornell University and accessible via the link below, suggests that, in a simple society comprised of altruistic people (eg. bankers who donate part of their bonus to others) and selfish people (eg. bankers who spend their bonuses on second homes and fast cars), the selfish ones almost always take over the world.
If the model is to be believed, giving all or part of your bonus to more needy souls is rarely a good idea. It only makes sense when the benefits of altruistic giving massively outweigh the costs (eg. when everyone knows about it, thinks you're wonderful, and extends invitations to their private islands in the Caribbean). It may also make sense when harsh conditions and rampant disease make befriending others a prerequisite to survival.
Despite last week's tornado, life in London is by no means harsh and bird flu has thankfully yet to make its human-to-human debut. For altruism to pay off, therefore, its benefits need to increase considerably.
At the top of the scale, there are signs that this is already happening - courtesy of the kudos that comes of gross displays of public magnanimity.
Last May's Absolute Return for Kids (ARK) fundraising dinner, an event organised and attended by hedge fund managers, raised 18m as attendees battled to give away gargantuan sums. "The ARK dinner is a form of giving as a competitive sport," says David Charters, former banker-turned founder of charitable award-giver the Beacon Fellowship. "It's becoming almost the case that you haven't made it unless you're engaged in something philanthropic."
But if it's done to less public applause, what reason does anyone with a half-decent bonus have to follow in the footsteps of Bill Gates, Warren Buffett and wealthy hedge fund managers who give their money away? As things stand, not much.
And as things stand, not many of you are tempted. According to the poll we ran on eFinancialCareers.com over the past two weeks, 31% of you said you can't afford to give more than 10% of your bonus to charity. More than 50% plan to give nothing at all.
For the 19% of you who said you may consider giving a proportion away, the rule of thumb appears to be to make sure that the benefits of your generosity are clear (and public approbation maximised). If you want us to shout about it on your behalf, let us know.
