“The meaning of life is to find your gift. The purpose of life is to give it away.”
Have you ever wondered why Bill Gates has pledged 95% and Warren Buffet 99% of their wealth away to charity?
Have you also wondered why Bill Gates continues to be the richest man in the world after having donated over $38 billion to his foundation? His wealth continues to grow at an ever increasing pace even as he donates.
Bill Gates and Warren Buffet are not alone; there are other billionaires who have pledged to give a major part of their wealth to charity. These include Microsoft cofounder Paul Allen, Manoj Bhargava the founder and CEO of 5-Hour Energy, Spanx founder Sara Blakely, Patrice Motsepe founder of the mining company African Rainbow Minerals, Virgin Group founder Richard Branson, The chairman of Indian consulting and IT company Wipro Azim Premji, Facebook founder and CEO Mark Zuckerberg. The list of these great individuals is simply too long to include here.
This brings us to the question “Is there a co-relation between giving money to charity and becoming richer?” Have these billionaires found some secret to wealth creation that we don’t know. Can we apply the same principles to increase our net worth?
We don’t learn this from wealth creators alone. Every religious book that I have read or spiritual leader I have met teach that in act of giving we truly receive. We can be cynical about religion or spiritual practices but we simply cannot deny the teaching or the evidence.
“The charitable give out the door and God puts it back through the window.”
Every wealth creation book that I have read, seminars I have attended or knowledge gained from mentors emphasize the fact that giving leads to wealth creation. I certainly know this from my experience in life: whenever I gave, I received and whenever I was stingy, some misfortune happened in my financial life.
Let us examine some research findings on this subject.
Logically speaking it does not make any sense as to why giving away your hard earned money should result in increase of wealth. However research on co-relation between giving and increase in wealth by Arthur C. Brooks of American social scientist and president of the American Enterprise Institute shows that there is connection between the two.
Arthur analyzed data from SCCBS (The Social Capital Community Benchmark Survey). The data included a survey of about 30,000 people of different education background, race, age, religion in over 40 communities in the U.S. They were also from various socio-economic backgrounds. The survey revealed the following:
- The people who gave money to charity made more money than those who did not.
- Giving increased by 7% when wealth increased by 10%. This means as a person got richer he could give more.
- People who volunteered for social causes made more money than those who did not.
- Charitable impulse of volunteering made these individuals donate more money than others.
- Giving is about charitable impulse and not only about money. You can get the same results by donating time, sharing knowledge, giving food or for that matter blood.
In his final Analysis, Arthur found that regardless of income, a family who gave away $100 more than another family, in the same earning bracket, earned on an average $375 more than the other family as a result of generosity. He found that this was also true for the organizations and countries that gave away money to charity. In the past 50 years, the per capita of Americans has risen by 150% with an increase in donation of 190% within the same time frame.
This finding is supported by that of data from Statistical Abstract of United States. $100 in giving away resulted in an increase of GDP by more than $1800. America being one of the most charitable nations has benefited by being one of the richest.
Sir John Templeton, investor and one of the greatest pioneer of mutual funds of 20th Century stated “I have observed 100,000 families over my years of investment counselling. I always saw greater prosperity and happiness among those families who tithed than among those who didn’t.”
There seems to be some logic in these findings after all! Statistical evidence bears witness to the fact that giving leads to more wealth. But we still need to explore as to why this happens.