The Karmic Capitalist: Should I Wait Until I'm Rich to Give Back? (Plus: Auction and Tim Q&A via phone)

117 Comments

Should I wait until I’m rich to give back?

This is a question I have fought with a lot over the years.

Spending time with the upwardly mobile in places like NYC and LA, one can’t help but believe the consensus: It is better to wait until you have made a lot of money before trying to change the world. The idea (excuse?) is that you can then have a greater impact. But is it really true?

I no longer think so. There are a few reasons I have decided to commit at least $100,000 of my own money to education in the next 12 months:

1. Giving back is like investing with compound interest.

Less money earlier often beats more money later.

$1,000 invested now may very well have a much greater impact — due to growth and ripple effect — than $10,000 invested in ten years. How many world leaders and innovators could you create or save if you acted now instead of at an undefined “someday”?

Here’s an extreme example of how time changes value: Manhattan was bought for $27 in 1626. Invested at 7.5% then, compounded yearly, that $27 would be worth $22,224,711,000,000 now. Or compounded quarterly: 4.73442004 × 10^13 ($47.3 trillion). To put that in perspective, the entire yearly GDP for the USA these days is around 7 trillion. (Thanks to Ryan for this example).

Act now and very little can do a hell of a lot.

2. Prevention costs much less than cure and is ultimately more powerful.

For example: to educate a girl for 10 years in the developing world, ultimately producing an economically self-sufficient family and ending the cycle of poverty, costs a total of $2,500 with Room to Read. How much does it cost to provide aid or welfare to an entire family for decades on end, not to mention treating the famine, disease, and violence generated from this collective poverty? Look at Africa and the $50 billion+ that has been given as aid.

Charity doesn’t work — empowerment does. The good news is that the latter depends on acting early and precisely, not lots of money.

3. Giving is an investment in yourself.

Giving shouldn’t be viewed as losing anything.

Based on previous polls on this blog, 32.2% of you make $51-100K per year and more than 20% make $100-200K per year. Regardless of income, could you afford to empower 100s or 1,000s of others with 5-10% of it, especially if it permanently increased your feeling of self-worth and contribution? Of course.

In fact, this self-perception boost is one of the greatest bargains, and performance enhancers, on the planet.

4. Changing the world is cheap.

Changing the world doesn’t require much money. Again, think in terms of empowerment and not charity. How much were Gandhi’s teachers paid? How much did it cost to give Dr. Martin Luther King the books that catalyzed his mind and actions?

Just imagine that you and your friends make $40,000 per year. Imagine that you convince just 5 of them to join you in building a children’s school in Nepal dedicated to your parents (or your lifelong friendship). The total cost? 5 people x $3,000 each= $15,000. I know that most people, myself included, will put $3,000 of crap on credit cards in the next few months that could instead create a miracle… a miracle that you can visit.

You and your friends could plan the trip of a lifetime in 6-18 months to visit the completed school, teeming with dozens or hundreds of students who greet you with smiles and thank you letters. You’ll know it’s your school because your names will be on the door.

If that seems like too much, you can finance a girl’s education for 10 years ($2,500) and effectively guarantee a future without poverty to an entire family. How would you feel about yourself if you just did it and pulled the trigger now?

I can tell you — it’s amazing. It changes your life almost as much as it changes theirs, and you won’t miss the $2,500. I guarantee it.

If you haven’t given before, I encourage you to do it now. Just do it. Take it for a test drive and see how it changes you. On the personal side, you’ll feel great about yourself for a long, long time. On the results side, especially with the groups I’ve researched and selected, you’ll measurably improve the world, something few people do, and possibly win some amazing prizes I and others are offering to people who donate this month.

To whet your appetite, check out some of the projects to pick from here. From there, it’s as simple as checking out the next step.

[kml_flashembed movie=”http://www.youtube.com/v/qbcNuaatFRA” height=”350″ width=”425″ /]

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[Note: If you want to find my responses to comments/questions below, just search (Ctrl + F) “###”, which I put before each of my responses in all posts.]

Posted on: October 4, 2007.

Watch The Tim Ferriss Experiment, the new #1-rated TV show with "the world's best human guinea pig" (Newsweek), Tim Ferriss. It's Mythbusters meets Jackass. Shot and edited by the Emmy-award winning team behind Anthony Bourdain's No Reservations and Parts Unknown. Here's the trailer.

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117 comments on “The Karmic Capitalist: Should I Wait Until I'm Rich to Give Back? (Plus: Auction and Tim Q&A via phone)

  1. Hi,

    Nice post. I like the competitive fund raising idea but I don’t know how to justify raising money to win prizes to people.

    For example if I ask my friends to donate, they ask me why, I tell them it’s to build a school, then they check out the litliberation website and see that there are also great prizes available, it makes me look like I’m just interested in the prizes and not the fund raising.

    I would say a lot of people have the sponsor mindset, where the fun raiser has to do something challenging or out of character to really open people’s wallets. I’m not saying that’s the right mind set, I’m just not sure how to explain that I won a trip round the world because you gave $100 to my charity.

    Not that I could win the litliberation prizes anyway (yes, except the recognition!), being a British citizen living in Japan.

    Hmm typing all this out made me realise the answer. Don’t just ask for donations, do something worth sponsoring then!

    Richard
    (^_^)

    ###

    Hi Richard,

    This is a great question and another one I wrestled with. In the end, I need to prizes to get some of the PR exposure for the campaign, and many people are motivated to take that first step by prizes. I just want it to be their “gateway drug” into a lifetime of giving.

    Also, some people are creating donation pages and giving away their prizes, if they win them, to the biggest donors to the page, etc. Others are simply informing their friends that they will be passing the prizes on to the next competitor if they win.

    Hope that helps!

    Tim

    Like

  2. I’m excited about the web 2.0 marketing and PR seminar. However, I want to be sure that I’m available on the specific time and date before I send my payment. I hope we’ll learn the details soon?

    ###

    Hi Kathryn,

    The date won’t be determined for a bit, but if you (or anyone else) who pays can’t make it, I’ll refund the amount, so no worries. Best to sign up and then just get the refund if you can’t make it.

    Thanks!

    Tim

    Like

  3. Tim, I appreciate your good intentions, but consider: in their zeal to give, givers often forget the extent to which they reinforce existing institutions responsible for the lack and limitation already extant. Giving is so often an excuse not to take the kind of action that would pull and replace the roots of said lack and limitation.

    Honestly now, how much long-term damage is done by those whose hearts are in the right place but whose actions lead to the perpetuation of impoverishment in so many of its forms? So many have been brainwashed in equating virtue with giving that they can no longer see that the reality is far different and much less forgiving.

    ###

    Hi S!

    Thanks for the note. I do agree that giving blindly to the wrong institutions is not a good approach. That’s why I’ve interviewed the CEOs of the groups involved with LitLiberation, and I’ve gone over their financials and results to date. These two groups, unlike many, correct impoverishment instead of perpetuating it.

    Few solutions are perfect, but one of the big questions is: how much is the chosen action better than doing nothing? It’s a good question to ask, as criticism about action can also become an excuse for inaction.

    Thanks for contributing!

    Tim

    Like

  4. You should also consider that “giving back” isn’t just about being able to right a check. I’m very involved with a non-profit organization that works with underserved teens, amongst other programs.

    At this point in life, I don’t have any money to give. What I do have, however, is equally valuable: Time. I am on the membership committee working to improve member outreach and retention; I make calls to solicit product donations for program that interest me.

    The organization tends to see higher levels of volunteerism in their younger members and bigger donations from less active older members. There are of course some exceptions.

    I give back in kind, with my skill sets. At the end of the dya, it’s probably more satisfying that writing a check. I’ll be able to draw my own conclusions in a few years.

    Like

  5. I like the philosophy of this post a lot, especially the point that prevention is cheaper and better than cure.

    What I am wondering–how do you feel about “giving back” through actual work rather than money donations? why not volunteer on a project to help build a school rather than pay for someone else to do it.

    Maybe this is irrelevant, as the ultimate point of the post is to convince people to participate in this fundraiser, but I still think its interesting.

    Like

  6. These are great points. If we are following Tim’s advice, we should all have a lot more time as well as money. Don’t forget that you don’t need to pull out $2500 to help build a school or make a positive impact. Why not go to Nepal and help build a school, volunteer you time teaching, etc?

    Tim I think the program is great. The more you can show people the impact of the program, the more you will inspire people. Images and videos of the actual people and places that you’re working to help might push a few people across the line. Take your VIP’s to the “Ferriss school for children who can’t read good.”

    Like

  7. Great question! I think giving back monetarily and in other ways is crucial to maintaining an attitude of gratitude. Not to mention if everyone waited until they “made it” which is subjective at best and never attainable in many ways (who “makes it”? What does that really mean?) — no one would ever give back in any way.

    It doesn’t take big bucks to make an impact on others. Giving with a joyful heart…and giving to the degree that serves you personally given your financial picture — is a very satisfying and attractive thing to do.

    Like

  8. Hi All!

    Thanks for the comments. To answer a few questions:

    -Money is definitely not the only way to give back! Let me clear up a misconception about LitLiberation: you DO NOT need to donate any of you own money. The competition rewards the best fundraiser — the person who can influence the most people to develop the habit of giving — not necessarily the person with the biggest bank account. Providing your time and effort is definitely as valid, often more valid, than simply writing a check. Remember: giving back the right way is the same as empowering others. Empowering others takes action, not lots of money.

    -The date for the call won’t be determined for a bit, but if you pay for it and can’t make the date, I’ll refund the amount, so no worries. Best to sign up and then just get the refund if you can’t make it.

    -Jesse, I’m a fan of Greg Mortenson and the Central Asia Institute, but I called and emailed them to be involved with LitLiberation, and no one ever returned the inquiries. I take response time as a good gauge of how quickly non-profits can capitalize on good opportunities, so they are not included in this campaign. I’m nervous about giving my money to any group that won’t return my calls for weeks on end. Perhaps in the future, as I am a fan of what they’re doing in Afghanistan.

    Thanks to all!

    Tim

    Like

    • I’m sure glad giving money to charity reminds me that I am involved in something good. Working only 4 hours a week while others do my bitch work for slave wages in India leaves me feeling guilty and empty.

      Tim,
      I am only teasing. I think its better to give than to do nothing at all. But you’ve only been able to give by capitalizing on other people’s lesser positions in the world. You promote taking advantage of these people in your books and paint it in a positive light. You are only helping further liberate the elite.

      Like

  9. Great insight Tim!

    I’m in no way affiliated with this organization (other than a fan), but they offer some really practical ways to give both your money and your TIME back to the community. It’s called “Cool People Care”:

    http://www.coolpeoplecare.org

    These guys are basically just a matchmaking service where they post opportunities to get involved in your community or a cause you care about, and show you how to get involved.

    It’s a nice easy way to give something back. I think we are all responsible for contributing to the greater good of our world and there are lots of opportunities out there for doing so.

    I’ve even really enjoyed giving (micro-lending) to third-world entrepreneurs using http://www.kiva.org (started by former PayPal founders). Here you can give as little as $25 to a business owner you can vet out right on the site. So as you said above, “Changing the world doesn’t require much money. Again, think in terms of empowerment and not charity.” This is a great way to do that.

    Sorry if it seems I’m pimping these sites, but I have really enjoyed using them as a tool to get involved in things bigger than me, and thought you (or your readers) might like them too.

    Keep up the good work!

    ###

    Hi Marc!

    Kiva.org is great, and their president, Premal Shah, is a supporter of LitLiberation. There is a Kiva.org page for LitLib here: http://www.donorschoose.org/donors/leadershipboard.html?category=22 Thanks for the comment!

    Tim

    Tim

    Like

  10. When I launched my new website last February, I publicly committed 5% of my profits to an amazing non-profit that gives free medical care to the poorest of the poor. (Partnersinhealth.org) I decided not to wait until I felt like I had a surplus to give, and instead decided just to go for it right up front. I have a page on my website called “Difference” that explains what we’re doing to my potential clients.

    When I was a freelance photojournalist covering human rights issues, I never felt that I could do enough–give something concrete back. And I couldn’t! I was broke! Now, ironically, as an entrepreneuer, I can do much more. Go for it! Tim’s right. It makes you feel GOOD! –Jenn

    ###

    Hi Jenn!

    I couldn’t agree more about not waiting. I still haven’t received my first royalty check for my book, and I decided not to wait on giving the 10%+. I’m frontloading it, and while it makes me a bit nervous, I feel great. The moment to act is now, to be sure. I couldn’t be happier.

    All the best,

    Tim

    Like

  11. I’d like to add to Tim’s point about not delaying giving with this quote from Mahatma Gandhi:

    “I shall pass through this world but once. Any good therefore that I can do or any kindness that I can show to any human being, let me do it now. Let me not defer or neglect it, for I shall not pass this way again.”

    Working in the nonprofit sector, I can say with all certainty that $5 or 1 hour really can make a difference. It can feed a cold and hungry person, or give a book to a child that has nothing. Don’t wait to be generous.

    Like

  12. I have a suggestion for improving the http://litliberation.wordpress.com/ front page: add links from the step-by-step instructions to the pages where you can actually execute those steps. Right now, the first link is for the unreal prizes. You could add links from the “US public schools” to the donorschoose page (currently only a small link on the right hand side), and a link from “developing countries” to the room2read page. The verb “Create” calls out for a link to the firstgiving page.

    Great idea!

    ###

    Emil, great suggestions. I missed that. I’ve made the changes, and this should improve participation. Thanks!

    All the best,

    Tim

    Like

  13. Tim,

    You should consider on writing a creativity fundraising manual for entities.

    It will be awesome to have pocket of techinques, procedures, ideas, and step-by-step. Lot of non-profit organization struggled to raise capital.

    Consider this a way to give back by sharing your expertise and portion of profits can go to charities.

    Regards,
    Joe

    Like

  14. Tim,

    Great post! Rich and I have been discussing this topic on our blog under the title of “The Gospel Of Wealth”. There’s this school of thought out there that as we become more wealthy, we are somehow obligated to give back to less fortunate citizens. Rich and I have been discussing whether that “obligation” really exists – or is it just something that the majority of wealthy people do to appease their sense of guilt for having so much money?

    Sure, there are plenty of wealthy people who are sincere in their wish to make the world better (Bill Gates and Warren Buffett come to mind immediately), and they see their money as nothing but a tool to achieve their goals.

    But, there are also plenty of people who do it as sort of a Public Relations move… make money selling something to people who really can’t afford it, then contribute $100K to Aids awareness in Africa for example.

    The question really is – is this obligation? Or can somebody just become wealthy and KEEP their wealth for their own enjoyment?

    We’ve linked to your posting here in hopes of getting some more discussion going on this topic.

    You and your readers can read our posts on this subject at http://wealthcoaches.com/2007/09/the-gospel-of-wealth/

    Awesome job as always,

    Bill Richardson

    Like

  15. Hi Tim and others,

    I totally agree with all you say.

    Many years I ago I got involved with this “charity” school in South India at http://www.nirvanaschool.org

    It has been the most fulfilling and rewarding thing I have ever done. Through my involvement and that of others, we have empowered 1,000s of children and their families. All for very little in relative terms of time and money.

    My first ever visit to Nirvana school was a major life changing experience as you can read here:-

    http://www.arvinddevalia.com/blog/2007/01/12/unconditional-love/

    So I urge every one to get involved in empowerment contributions – it will be a life changing experience for both the recepients and YOU.

    And Tim, from now onwards I shall no longer refer to Nirvana school as a charity school, but as an EMPOWERMENT school.

    Thank you

    Arvind

    Like

  16. hey tim, typo in the sentence below. much peace and love, e

    “Line space is very limited, as we will taking questions at the end,”

    Like