What is the standard that makes spending money (all or most of it) an act of generosity or altruism, and not extravagance?

The criterion for spending varies according to the condition of the spender and the nature of the expenditure. It is commendable for those who are confident in their faith and patience, like Abu Bakr and Uthman, to spend all their wealth. However, for those who are not like them, it is not. Hatim al-Ta'i was described as generous due to his lavishness and hospitality towards guests. Had he spent all his wealth, his patience would have prevented him from asking people for help. As for the nature of the expenditure, whoever spends a dirham in disobedience is extravagant, and whoever spends a lot in obedience is a benefactor. Allah has commanded moderation in spending, as He states: "And do not make your hand shackled to your neck, nor extend it completely, lest you sit criticized and denuded" (17:29), and His saying: "And those who, when they spend, do not squander nor are they stingy, but are moderate between that" (25:67). The highest form of generosity is altruism (al-ithar), which is giving away wealth despite one's own need for it.