In the Webster Dictionary of Language, the definition of philanthropy can be read as: “Affection for humanity manifests itself especially in donations of money or work to needy persons or socially useful causes.

Whenever I think of the art of giving, scenes come to mind that I have observed in humble places in Mexico: At a food market, an old man plays an almost unrecognizable melody on his dilapidated violin. Next to him is a boy with his eyes widened, his arms and feet stretched out from him. A passer-by with a sad look, perhaps a woman of similarly simple origins, silently hands the boy a few coins, which she could undoubtedly have used for her own needs. Or a woman making her rounds in a crowded bus in the city and when she gets off, the bus driver slips her a few coins. The way these people give is moving and unique. From an economic point of view, their small contribution is extremely generous compared to what they own. Whether it is because they feel so close to the situation of the person seeking help themselves or because they feel the unknown power of karma, their giving is honest and full of empathy.

Unfortunately there are many people who do not have the time or the need to deal with such thoughts. On the other hand, there are also many reasons why people feel the urge to work for a charitable cause. Philanthropy can be done in many ways, and there is an opportunity for every person who feels the desire to help. I would like to share some of these thoughts with you to help you understand the meaning, joy, and art of giving.

Those who take responsibility and give help directly on the spot have without doubt the most demanding job. They see the poverty and experience first hand the misery of people in need. At the same time they also feel their gratitude and see the effect that is solely due to their commitment. Nevertheless, it is a very consuming job. I remember an evening in Mexico City, which I spent in a nursing home for abandoned girls. I spent every spare minute with the girls and the caregivers. When I went home that evening I was emotionally exhausted and the next day I was too exhausted to visit the girls again. Meanwhile, the energy, selflessness and empathy of the director of the home was overwhelming. The woman would probably have led a carefree life in the upper middle class. Nevertheless, she decided to be there for her protégés eight hours a day, from Monday to Friday, to chat with them and take care of their problems. Also admirable is the brilliant ophthalmologist Acapulco, who could probably easily pursue other professional opportunities. Instead, he works every morning in his private clinic in the better part of Mexico City and spends every afternoon in a hospital in the slums, where he performs cataract operations. In this way he prevents his patients from going completely blind, thus enabling them to return to normal life.

Not everyone has the selflessness and opportunity to make such a direct contribution to the common good. But as already mentioned, for everyone who wants to stand up for his fellow human beings, there is also an appropriate opportunity to do so. In my experience, philanthropy must be a win-win situation. However, this is not necessarily true for everyone. Some think that they too are not sufficiently recognized for their efforts or that they simply help for the wrong reasons. Philanthropy comes from the heart and you are passionately committed to a cause. Nevertheless, emotions also prevent you from helping. I would like to prevent such negative emotions by rational consideration.

I have been an investment advisor for 30 years and as such my most important task is to ensure the security of my clients’ investments. It is also my duty to introduce them to the principles of risk and return. In this way they can find the optimal balance between their two inner demons; greed and panic. Personally, I consider each individual’s attitude to philanthropy to be an extremely important aspect when talking about money. Yet this point is largely ignored.

Most family offices that manage larger financial assets want to achieve the best possible diversification and at the same time aim for a profit. This is achieved by investing in liquid assets, real estate, etc. They also have to deal with tax issues and take care of any inheritance problems. On the other hand, consumer spending should also be measured in terms of individual needs. This allows for annual budgeting. The extent to which the concept of philanthropy is weighted in this context depends largely on the client’s attitude. This consideration should be well thought out and consistently implemented.

Each of us should do what a family office does. No matter how large or small our assets are or how much disposable income we have. In fact, most people have a system in their financial planning, whether they are housewives, dentists or pensioners.

Of all the aspects that need to be taken into account, however, philanthropy is the most frequently neglected. I have found a variety of reasons for this.

Reasons for philanthropy

Here is a list of some of the many reasons why people engage in philanthropy:

  • Reward for a good deed
  • Ethical responsibility
  • Socio-political awareness
  • Religious thoughts
  • The desire for recognition from society for responsible action
  • Tax considerations
  • Karma (I do not include support for political movements, because unlike other people, I do not believe that this has anything to do with philanthropy)

Some, however, are not sensitive to the above reasons, or to other reasons not mentioned. These individuals believe that their sole responsibility lies with them and their heirs. They want to increase their savings indefinitely and create security (or insecurity). Their point of view must be respected and they should stop wasting their time following these thoughts.

Fulfilling one of the above reasons should ultimately give you inner satisfaction. Because doing something selfless for a known or unknown person or for a neglected animal gives you a good feeling. However, in order to achieve this inner satisfaction, some aspects must fit together. Otherwise you can quickly become frustrated if your own efforts do not produce the desired effect. One of them is to define “to whom” you give.

The “To whom?”

Today there is a whole universe of different organizations whose only goal is philanthropy. Some of these institutions are huge, while others are small one-man businesses. They help humanity in general, or specially selected groups, such as defenseless children, the sick, unmarried mothers, drug addicts, and the elderly. There are environmental organizations that do everything they can to maintain the world as we know it today or to improve it for future generations. Or even institutions that want to preserve the animal world with its various species. The list of such organisations is endless. The benefactor decides for himself at which of the umpteen different institutions or at which charitable activity he wants to make his financial means available. Because, as already mentioned, giving must bring personal satisfaction, which is not always felt for all good causes.

It is wrong to assume that all companies either spend too much money on administrative activities or lose the money on the way to the final beneficiary. To use these or other arguments as a reason for not donating is not justified. I can guarantee to find an organization for every good cause that will use the largest possible part of the donated funds efficiently for the desired cause. You might want to know more about the projects or the administration of the institution you are supporting. The following might be of interest:

  • The aim of the project
  • The location of the project
  • The scope of the project
  • Financial transparency
  • Regular reporting on the progress of the project
  • The direct contact with the organizers or with the supported persons
  • The possibility to visit the project on site

In short, the project in question should be such that it meets the wishes of the donor and leaves no room for doubt. And this is feasible.

The “how much”

Philanthropy should be an ongoing responsibility, not just something you do sporadically or out of a frame of mind. The extent to which you use your financial resources is unimportant, because in any case it is a win-win situation. For one person it is satisfaction, for the other person it is help. For the benefactor, the question of “how much” can be calculated by taking numerous factors into account. Everyone should determine these themselves. The alternatives are:

  • A percentage of total wealth
  • A percentage of the annual return on assets
  • A percentage of income
  • A percentage of the money spent on your own pleasure

It is of great importance that the donated funds are clearly separated from the generated funds and expenditures. This not only gives you a better overview of your financial resources, but also gives you a better ability to make decisions about future donations. Once a year you can spend a precious hour thinking and discussing the topic with an interested person. In this way you have already overcome the biggest obstacle in the process of giving.

I would like to help anyone who wants to discuss these issues and find the right information on this topic.