From serving on the boards of nonprofits to giving away 10% of their salary, I’m continuously inspired by the Accenture MDs I serve.
My career as an advisor has taught me to make the biggest difference in the world by enabling my clients to reach their goals, including generous giving.
While giving benefits the people and charities who receive the money, there are numerous ways giving benefits the giver.
It’s not just the credit you receive from others or a tax write-off. The importance of charity goes well beyond that.
Charity Helps Build Wealth
Giving money away is an important aspect of building wealth, even more important than hoarding cash for yourself. That’s because giving creates lots of opportunities that you wouldn’t otherwise have.
While I’ve always known I should be charitable, it wasn’t until I read Rabbi Daniel Lapin’s book, Thou Shall Prosper, that I finally understood why giving is important to my wealth.
Rabbi Lapin prepares your mind to receive this information by saying, “Don’t try to find a rational reason for giving away money. Charity is irrational. Nevertheless, it benefits the giver in many ways.”
How giving helps you
While helping others is the main point of giving, there are at least four positive side effects for you, which are:
- It’s good for your soul
- It helps build your network
- You become a better investor
- It creates a movement of money around you
1. It’s good for your soul
Lapin writes how giving to charity is one of the best ways of increasing your income because it makes you “Feel a better person, which makes you come across as a better person.”
As you come across as a better person, people will start to treat you like a better person, reinforcing your original thoughts.
Rabbi Lapin nails it when he says, “One of the great dangers to success is when you harbor deep internal doubt about whether you deserve such success. You have to feel that you deserve good things, or else your subconscious might very well sabotage all of your best efforts.
Giving regular gifts from your income to charity is one excellent way of, once and for all, persuading your subconscious that you deserve what lies ahead.”
It becomes a self-fulfilling prophecy that others buy into as well. You are a good person because you give; then, you give because you are a good person.
2. It helps build your network
You’ve undoubtedly built a great network through your successful career, and many MDs already sit on boards of local nonprofits.
If you’re one of those people, you’ve probably already experienced this side effect of giving: It helps build your network.
You should intentionally choose where you invest your charitable giving to ensure you associate with a cause you support and with people you admire.
The group will have common goals, and you’ll be able to build much stronger bonds than you can through business or simple networking. You’ll build relationships that will help you fulfill your life plan.
3. You become a better investor
Giving your money away shouldn’t be a foolish activity. While burying a treasure in the mountains makes good press, it hurt more people than it helped in the end!
Lapin explains it best when he describes the ultra-wealthy who build hospitals and other large memorials with their money:
“The very internal quality that enabled them to give away the money to build those impressive-looking structures was the same quality that enabled them to make that money in the first place.
If you have the generosity of spirit to give money away, you also have the courage to seek profit by placing your money at risk”.
He continues with, “You have to develop a willingness to remove your money from safekeeping and essentially bid it adieu.”
Giving your money away helps you become a better investor because you become willing to unclench your cash and use it for something else.
Lapin explains that some people cannot invest in anything because they are afraid of losing their money. He says these people are “equally incapable of charitable giving.”
4. It creates a movement of money around you
Newton’s first law of motion backs up the fourth positive effect of giving – an object in motion tends to stay in motion unless acted upon by an outside force.
Giving creates positive motion for you by the three effects outlined above, plus the universe responding in positive ways.
Rabbi Lapin does a much better explaining than I can; he says:
“Make money flow, and you will inevitably be creating bonds. With bonds in place, more money flows. Like anything else that flows, money requires pipelines. This means that your task is to excavate pipelines that can carry money toward you.”
I love the visual of creating pipelines of money flowing away from you, giving to the world. What happens next? Lapin explains:
“How do you do this? By pumping money outward from you to the world out there. That action itself creates conduits that remain open and usable even after they have served their purpose of conveying your money, in the form of charity, from you to the world outside of yourself.
Now that these pipes exist, they are able to be used for cash flow in the reverse direction, too.”
The inertia of money is such a great concept, and it makes a lot of sense. Lack of motion is like sitting at home all day and then being surprised when you don’t meet anyone. Motion is required to succeed in life.
How to maximize your giving
While you were probably already generous with your giving, the points above help illustrate the value to you and your family.
However, if you’re going to give, you should plan strategically to maximize the opportunities and benefits. There are a couple of ways to maximize your giving.
Take advantage of the Accenture match
Based on the most recently available information, Accenture foundation matches employee donations to most nonprofits in the US.
Accenture matches from $100 to $2,500 in employee giving at a 1:1 ratio! This match provides an opportunity to double your donation if you’re giving directly to a charity.
Optimize your tax advantages
Charitable giving can count as an itemized deduction on your taxes.
If you already itemize your tax deductions, or you’re close to going over the standard deduction number, your charitable giving adds to your itemized deductions.
A Managing Director who’s single will probably max the SALT deductions (sales or income tax, $10,000), so once you’re over $2,550 in giving, you’re already over the standard deduction amount of $12,550.
If you own a house and deduct your property taxes, you’ll easily pass the standard deduction amount, and all charitable giving is deductible.
Use a Donor Advised Fund
Another opportunity is to use a Donor Advised Fund (DAF).
A DAF allows you to contribute and receive the deduction that year, even if you don’t contribute from the DAF to a charitable organization the same year.
DAF giving opens up a strategy to maximize your giving by grouping a few years of giving in one year to maximize your deduction.
Additionally, if you’re in a high-income year like when your MD grant vests, you can make a large contribution to the DAF and probably receive a 37% deduction on it!
Get the most from your giving
While giving cash or through your paycheck is nice, you can give in even more valuable ways.
If you’re giving to your DAF or specific nonprofits, you can donate stock. Think about that Accenture stock that you purchased in the ESPP program for $25/share that’s now worth 10x that.
You get to deduct the full amount of the stock value, even if your “cost basis” is only 10% of the amount.
If instead of donating the stock directly, you sold the stock and gave cash, you’d owe capital gains tax on the profit, and the amount you give would be much less after taxes.
As you can see, there are qualitative and quantitative factors to giving far beyond what most people see.
If you spend the time creating a giving strategy, you’ll maximize the benefit to charities and yourself.
One last thing, this stuff can get complicated, so make sure you work with a professional and don’t take this as advice specific to your situation.
