I was having this conversation with my fiancee last night. We've both grown up of the mindset that it's important to help others, whether through financial means / volunteering time / etc. That said, I am significantly more business minded than she, and one of the concepts that was under fire last night, was the idea that you need money to make money, so in the beginning you need to put all of your money into your business, but her concern is many "rich" people never flip the switch and talk the talk, they're always concerned about building their estate larger and larger.
So I understand this is a very personal question, but I wanted to get some thoughts as far as how most of you reconcile the two. For example, do you plan to donate some fixed percentage of your assets / income every year? Did you do this from day one, or did you start after you were making some amount of income? Do you volunteer some fixed percentage of your free time? Do you give back in some other way that you're now free to do with the added financial freedom you've earned?
@John Matthews it is refreshing to see this question being asked. I wrote an article you might want to read http://www.biggerpockets.com/forums/92/topics/1113... First I am a Firm believer that you will be "Blessed By The Measure You Use To Bless Others".In Re there are endless ways to do this. Maybe you form a non profit housing venture (you can still pull a salary) and do giving back at the same time. Maybe your business model is giving back more than you realize, often times we help people out of situations they would rather not be in, walking away from a closing table with a seller giving a tearful hug, and knowing I am still the one making money on the deal. Maybe you give a discount on a house (while still making a profit) to help someone who needs it, whose life was turned upside down through no fault of there own. Maybe you bend your rules for a VET who had a rough time, and his credit is trashed, but you rent to him anyways. Maybe you buy a house that you are on the fence about, because it will help the other party more than you, but you still make money. Or maybe you buy a trailer to only break even because a park is trying to screw over a person who just had a job transfer and moved their free and clear trailer in 4 months earlier and the park is trying to take it for nothing if he moves. These are all true stories of things we have done over the years. I have had years with negative income on paper and we still choose to do these type of endeavors. I find that people who tithe faithfully are blessed, I also find it usually when you can least afford it these opportunities present themselves. As a final note I think people do notice and while they may not tell the world for you, people do find out, and that does bless your business. Someone has 2 yellow letters who are they going to call. Just my thoughts.
@Jeremy Tillotson Thanks for the response. I agree completely.
That said, I'm struggling with this dilemma:
I could give $50 this year, but if I do that, I can only give $50 next year, where as if I put the $50 into the business, maybe I could give $150 next year. So I decide to forego giving this year so I can give $150 next year. Next year comes and I'm in the same situation: $150 this year and only $150 the following year, or give nothing this year, and give $450 the following year...repeat. Obviously the numbers are made up, but the philosophy is the same. When do I decide to give what percentage. I'd like to have a philanthropic plan (as well as a business plan) but I haven't decided on the best strategy that balances the two.
Thinking about it, if my goal is to maximize my philanthropy over my lifetime, I could write a matlab program to determine the best rate - but my gut tells me it looks like this: don't donate a thing until the very last year, then donate EVERYTHING - but is that so bad?
@John Matthews whens the end? but seriously people who say this never seem to reach that goal, there always more to be made, and just my thoughts, but in giving small amounts we are tremendously blessed for those givings, therefore allow us to give back even more. Just my thoughts, best of luck and may you be blessed.
@Jeremy Tillotson Agreed. Thanks, sir. Same to you.
My wife and I just did our taxes... We donated a lot last year to a good cause. We don't miss the money... If you are dead broke with no wiggle room then you should take care of yourself first. If that's not the case I don't think you can go wrong by supporting something you care about and I think the sooner the better.
@John Matthews I don't want to get into preaching. But, in the bible it speaks to a cattle rancher and starting out with his herd of 5 cattle and caring for them, breeding them until it is up to 15, and then when he has done that to give 5 away to someone else and so on. The reasoning is in building a strong foundation before giving away his excess, but once the herd is built up to 15 and gives away 5, he still has enough to continue growing.
As @Jeremy Tillotson mentioned, there are many ways to bless others when you don't have money. One of them is by giving your time, as there is nothing more valuable. Also, donating your skills, etc. to those in need. One thing we have done many times over the years has been to hire people that had made some bad choices in life, and need a hand up. Some were past drug addicts, ex-cons, etc. We've taught them skills to be able to earn a living themselves, some are successful to this day, others returned to prison, got out, and are back up again and working. "If you give a man a fish you have fed him for the night, if you teach a man to fish you have fed him for his life".
However; use wisdom and be sure you're the type that can work with them, and remember, lots of people sound good and know what to say, so be cautious. Also, don't hire more than one or two workers like that at a time, as you have a business to run.
@Karen Margrave I wish I could have voted about 100 times for your post, so well said, and we have done the same with workers, but agree you have a business to run. I also feel that the just the way one runs a business can truly help others out, even while making a profit. I am so glad to see others working to give back.
@Jeremy Tillotson But, as I said, use wisdom and discernment. I remember one time driving down the road and there was a young family standing on the corner with a sign saying they had lost everything and needed help. I pulled over and talked to them. I gave the man a card and said, if you want to work, go to the subdivision located at ... street and tell John that Karen sent you and said to put you to work. He went and worked a few days, but quit showing up. Sure enough, he had his wife and kids back down at the corner hustling money.
I'm very business oriented too, and for most of us, I don't think it's in our nature to give something away that we've worked for. But it is in our best interest. Yes, your gut and logic, say that if you wait, you will have more to give. But human nature says that if you wait, you won't give at all. Plus, personal experience, and watching others, has proven that to me.
I literally have to decide ahead of time when, and how, I am going to give or else I just won't do it. There are always plenty of other really important places to use the money. And, when it's time to give, I have to force myself to write the check, expecting NOTHING in return. But, the truth is that I always get a huge return on that money. Nothing else can enrich, and bless, me like helping someone who truly needs it.
Our project this year has been a retired missionary couple in Honduras who take in girls from horrible circumstances and raise and educate them. I can't tell you what a huge blessing it is to help give them the means to take these kids out of abuse, neglect, etc. and offer them a chance at a better, healthy life. Money is just money. But when it's used as a tool to bless others, it becomes true wealth.
I have thought about this and it seems like if you give your money away it helps temporarily. If you can create jobs you do the most good IMO. Creating jobs doesn't sound like much of a noble deed but I can't think of anything more beneficial to society.
@John Matthews Great topic. The same question has entered my thoughts more than once.
You really caught my attention with the Matlab program idea. A fellow engineer, I assume? We tend to over think everything. :)
But this is not a tractable mathematical question. Every gift of time, money or goods that helps another person generates its own immeasurable ROI. These benefits not only compound with time, but actually grow exponentially like a multilevel marketing scheme, as the people we help then pay it forward by helping others. Talk about leverage! Waiting to start this process would drastically diminish the time benefits of this growth.
So don't wait to do something nice for someone else! You may think that you can do something greater in the future, but you can't out-invest the power of compounding good deeds.
@John Matthews This is a great topic. I started to do a little philantropy in 05. The tsunami in Southeast Asia had hit at the end of 04. I had just refinance my home and so I had some cash to spare. I gave $300. In 05 Hurricane Katrina hit and I gave $500. After that, any time there was a disaster where 100 or more deaths, I gave $100. Each Christmas season I give out a total of $100. It would be $5 to this person, $10 here, or $20 there. I had been intending to start giving a small scholarship to a deserving family member from my tenant base but so far I had not follow thru. I intend to follow thru this year. I do the giving because I feel I have been blessed. I will say that it did not just happen by luck because I have work hard and spent time self-educating myself.
I do give, but it is still a struggle to do it. As I grow financially, I will give more. That said, self-preservation come first. If you give away too much at the outset, the greater good that you can do at a later date when you are wealthier and wiser will be far less.
Cast your bread upon the water, in due season it will return to you. He that sows boundifully shall also reap boundifully. He that sows sparingly shall also reap sparingly.
I tithe (10%) on all the money that we bring into our personal account. Usually I give half of it to my church and half to needy people or use for ministry.
So far, my plan is to tithe on rental income when I start withdrawing it from the business. At this point all my rental income is staying in the business.
I'm not sure that's the right approach biblically, but it's my current plan.
What I see is that most consider monetary giving the best way to give. In my post, I was indicating that you can postpone the monetary giving until you are financially stable enough to do so without undermining your business, while at the very same time, give of your time and talents to help those in need. Time is the most valuable thing that we have, and one which we cannot buy more of or make. There are many ministries, and non profits that use others time to run their businesses, help fund raise, plan events, work with people one on on, build homes, manage projects, spend time with kids, etc. or donate items.
Through the years in training people in construction we've had several be able to get their contractors licenses, and now have businesses of their own. I think widening the perception of what "giving" is would help.
My twin sister now, and in the past takes in homeless women that have been abused, are addicts, women that have a terminal illness and no place to go, etc., all while she's trying to find funding to expand her business and buy a new packaging machine for making her natural beef stix, "Simply the Best Meat Stix" Whole Foods and another natural foods store want to stock her product because they're so delicious. Her plan is to find other homes to set up for the women, allowing her to concentrate more on business and train some of the women to work with her in marketing, sales, etc, but until then, they are living in her house. The point is, everyone has their way of helping, and as long as we do it, it works.
Kudos @Jeremy Tillotson Love your way of doing business!!!! Would love to hear more stories of philanthropy here on Bigger Pockets. Seeking to network with RE Investors and RE Agents involved in philanthropy and "Giving back to the community" in the Atlanta Ga, Florida and other areas. Best Of Luck!!!
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