(I think this is a very important article, so I’d appreciate it if you could like and share it!)
There is a simple way to vastly increase your lifetime charitable giving: rather than donating immediately, put your money in an investment account for a few decades, and then donate the money after it’s grown a lot.
The stock market grows at about 6.68% per year, adjusted for inflation. If you put money in the stock market, and then wait 50 years, you’ll have 25 times as much money in the end as the beginning. If you wait 80 years, you’ll have over 170 times as much money. This means that you can massively increase your charitable impact by investing money and then waiting to donate it, rather than immediately donating it.
There are some downsides to waiting. Some charities might need the money now. It probably makes sense, if you’re planning to give to the Shrimp Welfare Project (which you should be), to give now rather than later, as the stunners that they give out are reused year after year. Similarly, now looks like a particularly important turning point for the insects, so giving now is probably a good idea. And if you’re predicting a huge AI boom, there might be no time like the present.
But in most cases, you should probably wait to give! I’m 21. If we assume I live to be 85 years old, then if I invest my money and donate it when I die, I can give almost 63 times as much. That’s a staggering increase in total money donated.
Now, it’s true that there are some downsides to donating waiting:
It might get harder to do good as time passes.
On some issues, now might be a particularly important time.
By giving now, you might be able to convince others to do the same.
If you never donate money, but just keep a ton of money in an investment portfolio, when you get old, it will be easy to convince yourself to keep the money rather than donate it.
These are okay reasons to wait, but I think the fact that your money will grow so much probably outweighs it. And there are other reasons to wait. When you’re older, you’ll be wiser. You’ll have learned more. You might have found new, good places to donate. If I had donated money five years ago, rather than waiting, my money wouldn’t have gone to the shrimp!
For this reason, I think it makes sense to take a middle position. You should donate some amount now. But you should put more money in an investment account that’s specifically for donating. You should reserve it specifically to be donated, even mentally treating it as already donated. I’d recommend giving maybe 1% of your income away and then putting another 9% aside to be donated later.
Why donate 1% immediately? There’s huge risk of value drift—that when you get old, you will spend the money rather than donating it. By donating some amount every year, you make charity a big part of your life, and this increases the odds that you’ll donate later. As an analogy, if you want to become a professional Magic The Gathering player after you retire, you should play somewhat regularly in the mean-time, so that you commit to being the sort of person who will follow through later.
You should consider investing to donate very seriously. It’s a way to potentially increase your charitable impact by a factor of well above 10. You’ll have more total donations if you give away 1% of your money and invest it than if you give away 10% immediately. There really are hundred dollar bills lying on the sidewalk.
They say that exponential growth is the most powerful force in the universe. This is false—the Busy Beaver function grows faster! But it’s clear that exponential growth is a powerful force; just a few percent annual growth leads any quantity to massively increase over long time scales. You can harness that incredibly powerful force for good, and save lots of extra lives. Remember, it only costs about 5,000 dollars to save a person’s life, so 10xing your charitable impact could potentially save several hundred people. So go do that!
You can avoid the "huge risk of value drift" by investing in a Donor-Advised Fund (which legally only permits transfers to charities, not withdrawals for personal use).
Something I'd like to understand better about the "give now vs later" debate is how much extra positive flow-through one should expect from sooner donations. If I save someone's life today for $5000, and they go on to do various good with their life (contributing to local economies, having children, etc.) in the next 50 years, that growth from human capital could be worth more than the growth of financial capital in an index fund? But I don't know if anyone has tried to assess this. (Links welcome if anyone knows more!)
Given that anyone could die unexpectedly, I think it's also important to set up a will that specifies where you'd like your assets to be donated when you're gone. Otherwise, that lifetime of saving and investing for a delayed but bigger donation might never be realized. Admittedly, I have not done this myself yet, but planning to soon once my first child is born.