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Inflation and Charitable Giving

By Dr. Scott Stripling, Provost and Vice-President of Donor Relations

What is inflation? According to The American Heritage Dictionary of the English Language (5th Edition), inflation means, “A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money.” Historically, in the United States inflation averages about 2.0% annually. When the economy is strong, it dips below 2%, and when the economy is weak, it soars into double digits. Currently, the United States is experiencing 8.33% inflation.[1]

Here is an example of how inflation works. Boo Snodgrass earned $200,000 a year as a CPA in 2021. He received a 1% raise in 2022, so this year he will earn $202,000. However, the value of his 2022 salary is only $186,467.28 due to the inflated cost of consumer goods. In effect, Boo’s spending power will decrease by $13,532.72 in 2022 versus his 2021 spending power. Inflation also erodes charitable giving. When The Bible Seminary launched in 2010, Boo pledged a generous $1,000 annual contribution, which he has faithfully given for 12 years. However, by the end of 2022, inflation will have consumed over a quarter (26%) of his annual contribution’s value. Here is how it happens:

Year % Inflation Value

2010 - $1000.00

2011 3.16 $969.37

2012 2.07 $949.71

2013 1.47 $935.95

2014 1.62 $921.03

2015 0.12 $919.93

2016 1.26 $908.48

2017 2.13 $889.53

2018 2.44 $868.34

2019 1.81 $852.90

2020 1.24 $842.45

2021 4.70 $804.63

2022 8.33 $742.76

Boo’s likely intent in 2010 was to help TBS at a sustained or increasing rate each year. He has probably not considered the idea of a philanthropic deficit or that the intended value of his pledge is cumulatively $1,263.17 behind. Upon reflection on the Apostle Paul’s exhortation to the Corinthian church, “Since you excel in everything—in faith, in speech, in knowledge, in complete earnestness and in the love we have kindled in you—see that you also excel in this grace of giving” (2 Cor. 8:7), Boo might realize that his level of generosity has effectively decreased over time and not trended upward in excellence.

Ancient Israel’s economy experienced fluctuations due to famines and wars, but since the nation did not deficit spend, they did not deal with inflation for the same reasons people encounter it today. In other words, Israel’s kings only spent what they had. They could not leverage projected future revenues. Unfortunately, this is not the case for the United States whose national debt now exceeds $21 trillion dollars. That is $21,000,000,000. Fortunately, the constitutions or statutes of individual states, except Vermont, require them to not spend more than they receive in revenues. A few minor exceptions exist. In recent years, the federal government has pumped trillions of dollars into the national economy. These cash infusions temporarily stimulated the economy, but the long-term result has been inflation. The inflation rates shown above for 2021 and 2022 are staggering. To combat inflation the Federal Reserve raises interest rates, resulting in higher rates for mortgages, auto loans, and credit cards. For example, in 2021 I refinanced my home mortgage at a 15-year fixed rate of 2.25%. Previously I was paying 3.85% for a 30-year note. Today, the 15-year rate is 5.00% and climbing. Additionally, the major stock indices are down about 20% from their 2021 highs. Home values may follow the same trajectory unless the country quickly corrects its course. Suffice it to say, the national economy is teetering on the brink of a recession.

Is there a path forward? Yes, I offer a three-tiered approach for Christians living in challenging economic times.

First, we should pray. Consider the words of 2 Chronicles 7:14:

If my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then I will hear from heaven, and I will forgive their sin and will heal their land.

Second, we should evaluate income and expenditures. Is there an opportunity to earn extra income? For example, my son-in-law works for an energy company, but he builds fences and does home repairs on the side. Through his strong work ethic, he has significantly increased his income and outpaced inflation. Auditing household expenditures usually results in significant savings. Last year I compared insurance rates and saved. This year I moved from cable TV to YouTube TV and saved. Splitting a meal at a restaurant saves money and calories.

Third, we should invest in God’s kingdom in accordance with 2 Corinthians 9:6–8:

Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver. And God is able to bless you abundantly, so that in all things at all times, having all that you need, you will abound in every good work.

I invite you to prayerfully consider your charitable giving and investments in the Lord’s work. Perhaps your generosity is very healthy and demonstrably representative of God’s blessings in your life. Maybe you have some “inflation catch-ups” due or revised giving plans to consider and implement in support of thrilling and life-changing kingdom enterprises like The Bible Seminary. Please join me in growing in the grace of attentive giving. Thank you for your generosity!

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