10% of your earnings to charity?

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Three of the five magic circle firms publish corporate social responsibility reports, outlining, among other things, their charitable giving in terms of time and money. According to these reports, and where figures were available, in 2009/10, Linklaters donated £2.5m to charity and Clifford Chance £2.4m.

Over the same period, Linklaters lawyers worked 63,750 hours pro bono at an estimated value of £8m; Clifford Chance lawyers 57,071 hours at an estimated value of £17m; and Freshfields lawyers 56,326 hours at an estimated value of £9.5m.

Impressive sums – although modest relative to earnings: Linklaters’ pre-tax profits were £507m in 2009/10, and Clifford Chance’s £350m. Moreover, an average of less than 30 hours of pro bono annually per lawyer might not seem that much to a Metropolitan Police volunteer, who does about 500 unpaid hours a year.

This is a negative interpretation of the figures, of course. Pro bono charities are hugely grateful for the volunteering done by hundreds of lawyers across the City, who give up a few hours of what precious little free time they have. The same cannot be said of most City professionals (and dare we say journalists) with similarly long working hours and associated stresses. Nor does a firm’s charitable giving in any way make a statement about the private donations of its individual lawyers. But, as part of a very successful and very wealthy industry, are City lawyers (and why pick on them, wealthy professionals generally) giving enough?

The BBC ran a story earlier this week about Toby Ord, an academic at Oxford University who gives away everything he earns above £18,000 – the median annual income in this country. His salary is £25,300. The breakdown of his monthly gross income of £2,083 shows that of this, £833 (40%) goes to charity; £468 (22%) goes to the taxman; £416 (20%) goes on rent; £334 (16%) goes on living expenses; and £32 (2%) goes on savings.

Through his Giving What We Can society , Ord and others are campaigning for people to give ‘at least’ 10% of their salary to charity. The society’s website also lists some excellent ripostes to myths about aid, which I would recommend.

This sent me thinking, especially since it’s the season for reruns of A Christmas Carol. Take these proportions and apply them (somewhat haphazardly) to the salary of a senior magic circle partner and the outcome is quite revealing.

With a £1m salary over 2010/11, gross monthly pay would be £83,333. Tax and national insurance would obviously suck up a bigger chunk of this than Ord’s pay: £40,940 (49%). But if the same proportions as Ord’s go on housing (£16,667 at 20%), living expenses (£13,333 at 16%), and savings (£1,667 at 2%), this leaves 13% of salary for charity: £10,833 per month, or £130,000 per year.

Clearly, this is assuming that a lawyer earning £1m a year spends more than £438 a day on ‘living expenses’, £200,000 a year on rent or a mortgage, and saves comparatively little. But hopefully you get the gist.

Ord’s Franklin-esque philanthropy is laudable, thought not necessarily achievable by all. But if every high-earning City professional followed his lead, that really would be an impressive manifestation of the ‘Big Society’ in action. I leave you with that thought in the spirit of Christmas, which is, of course, a time for giving….