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Karmically Speaking

Karmically Speaking

Let’s explore one of the most sensitive subjects in personal finance:

Charitable giving.

What people give to charity and who they give it to provokes intense personal feeling. I am not going to tell anybody what to give and who to give it to. I have one message to get across here, and I am going to save it for the second half of this piece.

If I were running for president, and you got a hold of my tax returns, you might say that I do not give very much to charity. Relative to most people running for president, I probably give a bit less. Relative to the rest of the population, I am probably average or a bit below average.

For years, I have given heavily to my high school and the gifted and talented camp where I met my wife. In middle age, I am rethinking my charitable giving. My high school seems to be going a direction I don’t entirely agree with, and frankly, the gifted and talented camp doesn’t need my money—especially when you consider who some of its alumni are.

So I have been thinking long and hard about what causes I really care about. If I am being honest with myself, I care about animal welfare programs more than anything else. My wife and I have said that if we won the lottery, we would Google every cat rescue and cat shelter in the country, and start mailing out $10,000 checks.

Nonetheless, my wife and I have the gifted and talented camp in our will. If we get greased by a cement truck, the gifted and talented camp is going to get a big slug of money.

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I am not currently a member of a church. For years, I attended Episcopalian services, but I discovered that the South Carolina brand of Episcopalianism was a bit different from the Connecticut brand of Episcopalianism, and I was turned off by it. Probably just cultural differences.

My mortgage payment is pretty small and property taxes around here are cheap. I do not have a high cost of carry. Plenty of free cash flow to give to charity.

But I don’t. Why not? Am I a CF?

The Magic of Compounding

Lots of people out there (perhaps reading this newsletter) give 10% or more of their income to charity. That makes me uncomfortable, for the following reason:

It’s good to give some now, but you can give more later if you invest it and let it compound.

Listen to me carefully: we all like to do good in the world. It feels good to do good now, but if you wait, you can do even more good later. A form of delayed gratification, if you will.

Examples of this abound. Like Warren Buffett, who in his nine decades hasn’t donated much (relative to what he makes). But he’s going to give it all away in a giant lump sum at the end.

Bezos is doing something similar. Earlier this year, he sold a significant chunk of stock for the first time ever to give to charity. But not until he was already worth $150 billion.

In my career, I have run into people who are generous to a fault. They give so much, there is not much left to invest. They don’t care, because this is what they want to do.

It is difficult to explain compounding to these people. Generally, I don’t try.

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Most people give heavily during their peak earnings years, when they should be accumulating wealth. And then there is not much to give at the end, when they should be decumulating wealth. What is left usually goes to the kids.

I think it is better to give more sparingly during your peak earnings years, invest wisely, then give it all away at the end, like Warren Buffett.

My wife and I plan on flying first class plenty when we are in our 70s, but trust me, there are going to be some happy cats out there when we pass.

Give the Gift of Time

I have always thought that giving money is a poor substitute for giving time. Giving time is better than giving money. Getting personally involved in your charity is where it’s at. I have always been a bit uncomfortable with writing a check and absolving myself of further responsibility.

For someone like me, a man who has money but has no time, time is way more precious and valuable than money. It is the most valuable commodity.

Last week, a pilot friend of mine wrote me about teaming up to participate in a charity that transports animals by plane from crowded shelters (where there is no demand) to empty shelters (where there is high demand). We’re going to see if we can make it happen. I can spare a Saturday to save 10 cats.

Point is, there are a lot of different ways to be generous. Let’s try to be smarter about it.

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Wayne Smith III
Oct. 9, 2018, 12:31 p.m.

Interesting article - thanks.  However, the Apostle Paul said in Philippians 4:16-18 “for even in Thessalonica you sent a gift more than once for my needs. Not that I seek the gift itself, but I seek for the profit which increases to your account. But I have received everything in full and have an abundance; I am amply supplied, having received from Epaphroditus what you have sent, a fragrant aroma, an acceptable sacrifice, well-pleasing to God.”  What Paul is saying is that when we give, we are in effect laying up treasures in heaven, for us to enjoy for all eternity.  I doubt that giving money away at ones death will count for anything for the giver.  They are saying, God, since I am now dead, I have no need for this anymore, so you can have it.”  I doubt God is tickled by such generosity.  I am confident that Bezos and Buffett, assuming they get to heaven, will be working for the widow that gave her only two mites!

Kishore Sakhrani
Oct. 8, 2018, 11:22 p.m.

“It’s good to give some now, but you can give more later if you invest it and let it compound.”

Your comment only makes sense if the goal is to maximize the amount available for donation but that’s only one side of the equation.  What would you do if you knew that the donation you give now would be able to alter the trajectory of a kid’s life, or even if it saves a life. In both instances, the ‘benefit’ is long term and continuous, and most likely, would exceed the benefits of compounding.

Unless you’re a Bezos, Buffett or Gates, where your charitable giving could move the needle on a global issue, delaying a donation now doesn’t make a lot of sense.  Just because you can’t easily measure the benefits of a current donation to a charity doesn’t mean it doesn’t exist.
Oct. 8, 2018, 7:04 p.m.

Sorry if this is a dupe posting: I was not logged in the first time.

You make an interesting point, as always, Jared.  My view is:  The reason to give now is that I want to change the world I live in now.  I want to reap some of the benefits of making the world a better place while I am still alive.  You are right: the world would benefit more if I waited to give until after I am gone, but frankly, I don’t care.  I want to enjoy the better world while I am still here to enjoy it.  My descendants will have to make the world better for themselves.

Thanks, as always, for telling it as you see it,

John Porter
Oct. 8, 2018, 6:23 p.m.

Jared: I just can’t add to Joe Kimball’s comments other than to say “hear, hear”. You cannot outgive the Lord. I shudder to think about the families, the children, their educations that we benefit if my wife and I were to save it all up and give at death. Love you as much as always and that’s why I share this truth. Give sacrificially. It will change your life.

leighton naff
Oct. 8, 2018, 4 p.m.

Agree to a point.  Smaller charities and their recipients can use the donations immediately and sometimes, the donations keep them on their feet as they grow. Specifically you mentioned animal charities and I can think of two I have helped over the years that you can really see your dollars at work. Down the road (40 yrs) the trust can do it’s work.

Oct. 8, 2018, 3:53 p.m.

As you say, you need to be involved with what you want, not what others want.  With that said, we are cat people, but we donate to those charities that deal with people—-especially young people.  To each his own.  Like you, I did not contribute much when I was younger, other than some of my time.  As our earnings grew, we began to donate and also created a charitable trust (actually took a large bonus I received and put it into the charitable trust).  It grew over time, allowing us to make donations from it towards the end of my career, and, better yet, we have been able to keep our level of giving since my retirement without impacting the initial investment balance—-of course, a market correction could impact that.  This approach is sort of a balance between giving while earning and letting money grow in an investment.  Unlike the recent Bloomberg article on Charitable Trusts and abuse by the wealthy, they’re also a good instrument for those who aren’t exactly wealthy.  I enjoy your articles from your view of the world.  Les

Susan Middleton
Oct. 8, 2018, 3:16 p.m.

I’d like to think that giving now also can compound.  If your donation helps someone become a more productive citizen than they would otherwise be, isn’t that a form of compounding?

Peter Hansen
Oct. 8, 2018, 2:42 p.m.

Agree wholeheatedly about animal welfare, but suggest you give priority to wild animals over domestic pets. Wild animals are disappearing at a fast rate, while we will always have domestic pets.

As far as the value of giving now, versus letting your capital compound over time until the end, consider the time value of wild environments which are decapitalizing (vanishing) at an increasing rate. A $ invested today may be worth $10 ten years from now. Think of orangatangs in Borneo, elephants in Africa, tigers in India, macaws in the Amazon, etc. If we don’t act to preserve wild spaces now, there will be little left to show your grandchildren.
Oct. 8, 2018, 2:33 p.m.

Now I get your comments about family (3rd May). You love cats. What are the names of your cats? I love cats. I have four myself. There are many cats in Africa who need your help today. Don’t delay. Oh, & please send pics of your feline family.
Oct. 7, 2018, 11:52 a.m.

Give now?
Give later?

My wife and I choose to give now.

Why now?

There is “need” now.

There will be “need” in the future as well.

The point is to Give.



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