Kirby on Finance

Does giving to charity hurt your bottom line?

A common thread of many financial advisors is that to be rich, it helps if you act like a rich person does. Usually they’ll suggest that the rich are different than the rest of the population because they give more to charity, manage their money better, run their own businesses and of course they own their own homes.

While I think all of these are great aspirations for anyone who wants to be rich someday, I think it’s rather misleading. It makes sense that wealthy people benefit greatly financially from owning their own business or home and by managing their money well. But do rich people give more? Probably, but that’s because they’re already rich!

This post isn’t meant to discourage you from giving money to charity. I’m a big believer in tithing, and I’m also a believer in the spiritual and emotional benefit that giving offers us.

Spiritual and emotional benefits aside, why do financial planners encourage us to give? Sure, there are some solid tax incentives in giving but they certainly don’t counteract the loss on our balance sheets when we give. A couple thousand saved is certainly worth more toward our pocketbooks than a couple thousand given to charity.

I have a few ideas as to why financial planners do this. First, I think it’s a somewhat selfish attempt at improving their public image. If the author seems to promote a positive concept like giving, they stand to look better in they eyes of their readers. The better they look, the more likely people are going to listen to their advice and buy their books.

My other idea is a little bit more out there, but stick with me! Most of the public demonizes the rich. While everyone wants to be rich, they usually envy the guy who’s doing better than they are. So, by promoting and publicizing the fact that rich people give more, you’ll be more likely to view being rich favorably and more likely to strive to become wealthy.

Those are just two ideas I’ve come up with. I’d be interested to know more of why this is such a heavily promoted idea because maybe I’m just missing the ball completely!

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