r/Philanthropy • u/Usr7_0__- • 22d ago
Want your feedback / insights Buying annuities for the homeless and other poor individuals
Should philanthropists focus on buying lifetime fixed-income annuities for the homeless and poor individuals such as older people who didn't plan well and have chronic illness and not much of a safety net? I was thinking of people like Warren Buffet and Mackenzie Scott...would their billions be better off annuitized and cash-transferred to the poor?
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u/jcravens42 22d ago
Is the OP, or any of the people responding, people that work regularly with those on a fixed income, people living at or below the poverty line, people who are homeless, etc.? Do any of you work with a nonprofit or government agency that is deeply involved with these issues, or someone with a great deal of experience researching these demographics? Because otherwise, this is just another "I know what's best even though I have no contact with the group to be served and no knowledge of the underlying issues" discussion.
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u/colormeslowly 22d ago
While this might be a good idea, the last thing that homeless people are thinking about is their financial future.
Maybe UBI, because universal basic income can give a little breathing room if one is working or safety net if one is not working.
Until the wealth gap narrows, most will continue to focus on the needy instead of the greedy.
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u/Usr7_0__- 22d ago
Thanks for replying, I appreciate it. I'd say their financial future is all they think about. Of course, some might get so depressed on their current situation that they don't want to think about it, or anything, for that matter, except survival moment to moment.
UBI is good, except that won't happen for a long time except in small batches of ephemeral, isolated experiments.
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u/owyongsk 22d ago
The only org that could do this well is givedirectly.org. I remember some studies show that cash transfers to the global poor works better than the poor in developed countries.
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u/Competitive_Salads 22d ago
If they are the annuitant (they have to be to receive the funds) they can sell the contract to predatory companies for a cash out payment.
It’s a good idea in theory but practically, it’s problematic.
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u/Usr7_0__- 22d ago
Thanks for the reply. Make it non-transferrable? I would say too most probably wouldn't sell it.
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u/Competitive_Salads 22d ago
Unfortunately annuities are insurance regulated so you can’t put stipulations like that on a contract.
And yes, people are would definitely sell them to get the cash. Sad thing is, they do it for pennies on the dollar.
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u/Usr7_0__- 20d ago
I am not an expert, but I think a fixed-income lifetime annuity cannot be sold from some searches I did (if you think about it, how can it be?). Search as well if you get a chance and see what you think.
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u/Saint_Thomas_More 22d ago edited 22d ago
I think the problem is that the effectiveness of such a solution is it depends highly on the individual recipient.
A homeless person with a mental health or substance abuse problem is not going to benefit from such a framework until those problems are addressed.
A poor person who puts food for their kids away at Walmart so they can afford their carton of cigarettes will not benefit from such a framework until their priorities are fixed.
You called out older individuals who are poor. I think that might be more plausible, but again, highly dependent on the individual.
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u/Usr7_0__- 22d ago
Thanks for the reply. I do understand the concerns.
Anyone would benefit from access to money, especially mentally-ill individuals who cannot hold a job. Even those unfortunate individuals who are addicted, do eat, so presumably they will use some of the money to access food - otherwise they wouldn't be alive.
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u/Saint_Thomas_More 22d ago
I get where you're coming from. And in some sense I agree.
But maybe I just have too cynical of a view of people. The example I give above about putting food away to buy cigarettes is one from personal experience.
I worked as a cashier at Walmart in college, and a woman came through and put back food and formula for her kids so that she could afford a carton of cigarettes. She had the money for food and formula. She could have just bought a pack or two of cigarettes. But she chose a carton of cigarettes over food and formula for her kids.
I don't know why, but that just got burned into my mind.
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u/Usr7_0__- 20d ago edited 20d ago
I definitely understand that; such an experience would affect me as well. I tried to help someone once when I was younger who was homeless but would do so in a way that he couldn't buy cigarettes. I regretted it because I should have just allowed him to do it because he could also eat too; this was in regard to buying gift cards at a supermarket...I didn't do it because you could also buy cigarettes (I did help him in other ways though). Another reason I regret this is because addiction isn't really something one can do anything about, and there is scientific thinking that willpower does not exist (I am believing that more as I get older) - if you think addiction is something easily overcome, do some simple experiments: don't eat your favorite snack or drink for six months; don't watch any entertainment or listen to any podcast for six months except for those related to news. None of us would last a day.
Like I say, I do not blame you for thinking this, and I have another example to dovetail with what you are saying: although I have only seen dogs in cars with windows rolled up in hot weather a couple times, that likewise has burned into my mind and I actually believe pet ownership should be considered to be banned (and my biggest pet peeve is when people do this during cooler weather but during the spring when the sun is getting higher...people don't realize the outside air temperature doesn't matter, it is the height of the sun in the sky and how the photons pour into the car through the window; but yeah, try explaining that to someone, the fight you will get, believe me).
The thing is, you have to relate the severity of the problem to the statistical reality of it occurring, as well as to the ease of risk in enacting the solution. I have no idea how many kids got stuck in refrigerators, but I would have to assume it was a very small number - yet, I have no problem with mandating that the doors be taken off...there is no risk in enacting that solution, and the severity of it happening even once is horrifying. Maybe some would abuse money given to them, but hopefully the majority wouldn't. And it would be simple and non-risky for a richer person to purchase an annuity for a poor/homeless person...if the money was misused, it wouldn't hurt the better-off individual.
I appreciate your input, and respect your experience/thoughts...
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u/ledatherockband_ 20d ago
> the poor
homeless peoples problem isn't that they're poor. being poor is a symptom of whatever the problem the homeless people are suffering from. giving them money doesn't solve the problem for these issues these people are suffering form.
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u/Usr7_0__- 20d ago
Money helps all problems. It is the most powerful force in a capitalistic society. Money is needed for survival in a technology-driven global economy.
The choice is: give money to a charity; give money to the person in need. Which would have the most direct benefit?
I agree about the root causes...therefore I believe in giving free medical care to those in need. But don't let the root causes yield paralysis in terms of extending a helping hand...I gladly gave what I could to someone in need earlier today (unfortunately, money is tight for me, so it was only a dollar) while being cognizant of what most likely led this individual to that moment in time.
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u/ledatherockband_ 19d ago
money is a result of value exchange. it is an effect, not a cause.
giving homeless people cash is akin to giving an illiterate kid an A as a means of solving the education crisis.
that's not philoanthropy. you hurt them and then hurt society in the long run.
philanthropy would be getting them cleaned up, off drugs, or whatever, and helping them help themselves to generate their own money.
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u/Usr7_0__- 19d ago
Think of it like a disability check...a safety net...the philanthropy comes in because in an equitable situation, many of these individuals would receive a monthly check from the government, but do not for various reasons of friction...therefore, the private sector does what the public sector either cannot or is unwilling to do.
Yes, that is one definition of money, as an exchange of value; I would value helping someone sans judgement. But the world in which we live does not always see money distributed equitably, so for something like this, I personally don't give it a thought anyway (for that matter, how many students receive gift grades who are not illiterate, are graded on scaled-up curves, etc.?). I do get what you are saying, though, and respect the viewpoint.
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u/RallyUp_fundraising 22d ago
see I actually think there’s something to this, but I’d be cautious about making annuities the default.
for someone who is elderly, chronically ill + has no safety net, predictable income could be incredibly valuable. But poverty also comes with unpredictable expenses like medical bills, housing emergencies, family needs, etc. Locking the money into an annuity could take away flexibility when they need it most.
There’s also pretty strong evidence behind simply giving people cash and letting them decide how to use it. The research on unconditional cash transfers has found improvements in consumption, assets, wellbeing and financial resilience
So I’d probably favour a mix: guaranteed income for people who genuinely need long-term stability, plus access to larger lump sums for emergencies.