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The Antidote for Greed
by Alexander Green

Monday, July 28, 2008

 

Dear Reader,

At a conference in Las Vegas a few weeks ago, I participated in a panel discussion called "Libertarian Millionaires: How to Make It, How to Spend It, How to Give It Away."

I shared a couple ideas on making it and spending it in a recent Investment U column. Here are a few thoughts on giving it away.

The English architect John Foster once remarked that the loudest laugh in hell is reserved for the man who dies rich. (Presumably because the decedent had neither the enjoyment of spending it nor the pleasure of giving it away.)

We all know shrouds don't have pockets - and hearses don't have luggage racks. That doesn't mean that giving your money away isn't a challenge.

Most of us struggle to earn a decent amount, spend a reasonable amount, and save and invest a prudent amount. Unless we plan, charitable giving can get short shrift.

Of course, we want to give intelligently. So we grapple with who should get it, when we should give it, and how much we should give.

These are deeply personal questions, of course. And I'm no more certain of the answers than the next guy. Fortunately, we have a couple millennia of wise commentary to guide us.

According to the medieval philosopher Moses Maimonides, for instance, there are eight grades of charity:

1. To give reluctantly
2. To give cheerfully, but not adequately
3. To give cheerfully and adequately, but only after being asked
4. To give cheerfully, adequately, and of your own free will, but to put it in the recipient's hand in such a way as to make him feel lesser
5. To let the recipient know who the donor is, but not the reverse
6. To know who is receiving your charity but to remain anonymous to him
7. To have neither the donor nor the recipient be aware of the other's identity
8. To dispense with charity altogether, by enabling your fellow humans to have the wherewithal to earn their own living

This ladder provides a good gauge of our charitable disposition. If we want to move up, we need only ask how to get started and when.

The answer to the second question is easy. Now. It's a mistake - albeit a comforting one - to imagine we'll start giving when we reach a certain income level or net worth.

Like studying or exercising, giving only becomes ingrained when we engage in it regularly. If you aren't charitably disposed now, becoming rich isn't likely to make you so. That makes it imperative to give along the way.

Most of us already are. According to the Giving USA Foundation, the leading researcher on philanthropy, two-thirds of U.S. households with incomes of less than $100,000 give to charity.

Americans gave away over $295 billion in 2006, the most recent year that figures are available. That makes the U.S. the most charitable nation in the world. And not just in terms of the gross amount given...

According to a recent study by the Charitable Aid Foundation, Americans give twice as much (1.67% of GDP) as the next most charitable nation, the U.K. In fact, Americans give more as a percent of GDP than France, Germany, Turkey, Singapore, New Zealand, and the Netherlands combined.

How much should you give personally? Some say 3% of after-tax income is a good goal. Tithers strive for 10%. The well-to-do often give much more. Ultimately, you must decide.

Mary Hunt, the creator and editor of the Web site Debt-Proof Living, says her family continued to give 10% of their after-tax income to charity even while digging out from more than $100,000 in credit-card and other unsecured debt.

Some financial planners would argue that it's foolish to contribute to charity while paying exorbitant interest rates. Hunt disagrees. She says she could have paid the debt down faster - it took 13 years - but is convinced the donations helped provide the discipline to make her debt free.

She believes in regular, systematic giving, calling it "the antidote for greed."

There are other benefits of charitable giving. Yes, you'll receive a tax deduction. True, it may force you to better manage the rest of your money. And, if your giving is sizable, you may receive public recognition.

All good. But you'll also feel better about yourself and appreciate more the blessings in your own life.

This doesn't require money, incidentally. As Maimonides reminds us in level eight, we can do more than just share our riches with another. We can reveal to him his own.

Time spent helping others do more for themselves can be the highest form of giving. Give a man a fish and he'll eat for a day. Teach a man to fish - and he'll sit in a boat and drink beer all day.

(Sorry, but you already knew the original chestnut.)

Money, of course, is the way most organizations get things done. But dollars and cents are only one kind of gift.

Those of lesser means can always give a portion of themselves, whether through a thoughtful act, a timely suggestion, a helpful idea or a word of appreciation.

As John D. Rockefeller Jr. observed, "Giving is the secret of a healthy life. Not necessarily money, but whatever a man has of encouragement, sympathy and understanding."

In the end, our worth is determined by the good works we do, not the fine emotions we feel.

And while we may not always have happiness, it is always possible to give it.

Carpe Diem,

Alex

P.S. There are hundreds of charities worth investigating or contributing to. However, if you share my interest in "increasing liberty and decreasing misery," feel free to check out two of my favorites: the International Rescue Committee and the Cato Institute.

Know someone who would benefit from reading Spiritual Wealth? Just send them the following link, and encourage them to sign up. It's free:

www.spiritualwealth.com/siup/signup.html

Alexander Green is the Investment Director of The Oxford Club and Chairman of Investment U, a free, internet-based research service with over 300,000 readers. (The Oxford Club's Communique, whose portfolio he directs, is ranked third in the nation for risk-adjusted returns over the past five years by the independent Hulbert Financial Digest.) Alex has been featured on "The O'Reilly Factor," and has been profiled by Forbes, Kiplinger's Personal Finance, CNBC, and Marketwatch.com, among others. He lives in central Florida with his wife Karen and their children Hannah and David.

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