Help grow your wealth by giving to charity
I’m sure the first thought you had when you read the title of this newsletter is that I’m crazy. While that is entirely possible (my wife Bridget is nodding sagely in the background), it turns out it has been scientifically proven that you can help grow your wealth by giving to charity.
Professor Russell James of Texas Tech University published a 2009 study in The Journal of Educational Advancement that explains this in better detail. In this study, James analyzed data of more than 28,000 individuals in the United States over a 10 year period. In doing so, he discovered those who had active charitable-giving plans grew their net worth at a rate of 50 to 100 per cent higher than those who didn’t.
That’s a pretty significant difference.
You might be thinking older people with more money would have taken the time to plan, so what’s the big deal? The amazing part of these findings was that his study was examining the growth of net worth relative to when people started doing charitable planning. He also accounted for differences in initial wealth and age.
In research, we like to say correlation doesn’t mean causality. But in this case, my own experience leads me to think the professor’s findings do point to the likelihood that undertaking charitable planning earlier in life will help grow your wealth.
I’ve worked with all kinds of folks over the years and one thing that has struck me is how much working in and contributing to the non-profit sector can lead to a net benefit. Of course, this is provided that one is truly giving selflessly and not for personal gain.
First and foremost in my mind is that people who are inclined to support charity are almost always amazing, warm and compassionate people. Jerks just don’t survive long around a charity! Since, by definition, charity is a selfless act, selfish people generally don’t show up to the ball game, and certainly, the odd time when they do, they don’t feel welcome at the table and quickly leave.
People who interact with charity are prepared to make short-term personal sacrifices for the long-term collective good. The universe seems to be very good at providing long-term payoff for those willing to give of themselves now. People who give openly to charity – be it time or money – tend to build networks and trust as their long-term commitments develop. If you take the time to reflect on your social circle, I’m sure you’ll immediately identify somebody who exhibits deep personal integrity and compassion and who you hold in high regard for this reason. These are the kind of people who, in the long term, we all prefer to associate with, do business with and know we can count on. We all love to get to know people like this.
If you stop to think about it, it should come as no surprise that these kinds of people can have better financial prospects than those with a different set of personality traits. If you were an employer, wouldn’t you be more inclined to offer these people a job? If one of these people owns or runs a company, wouldn’t you prefer to do business with them over a competitor with a different set of values? And, to add a little more zest to the sauce, isn’t this kind of person more likely to lead a lifestyle that’s less consumer driven so they’re likely more inclined to save money at a higher rate?
So much of our view of philanthropy has been that some rich person has money and gives it away, but both my experience and James’ research point to a very different reality. Giving really does make your richer – not just in spirit, but literally in wealth.