I Gave Away $10,000. It Cost Me Nothing.

Financial Independence vs. Radical Generosity: A cost-benefit analysis of my first large charitable donation

This week marks a money anniversary. In May 2017, I bought a personal finance book that cost me $10,000. It will probably cost me many times that amount over the course of my life.

It’s the best investment book I’ve ever read.

The book, “God and Money,” changed my view of wealth and generosity. Written by two Harvard MBA graduates, the book presents a framework for radical generosity that challenges conventional thinking about money. Rather than use their high incomes to continuously improve their standards of living, the authors instead implemented spending and saving caps – and plan to give away the rest.

As a Christian with rising income, I was already wrestling with the question of what to do with excess wealth. I was tempted to pursue financial independence, but that didn’t feel quite right. Did God really bless me with more money than I need so I can be more comfortable and secure? Or is there a higher calling for my money and possessions? I struggled to find the answers.

Then I read “God and Money.” The groundbreaking book forced me off the road to financial independence and instead kickstarted my journey of radical generosity – or at least put me on parallel paths. The crazy idea of self-imposed financial finish lines, with the goal of increased giving, provided purpose for my newfound riches.

Within two months of reading the book, my wife and I made a $10,000 charitable donation – our largest-ever single gift. At the time, it felt like a monumental decision. Would we regret giving away so much money?

To celebrate the first anniversary of my journey of generosity, let’s play a personal finance game. I call it “Financial Independence vs. Radical Generosity.”

In this article, I’ll weigh the costs and benefits of our charitable donation against the impact the same dollar amount would have had on our personal finances. Through this exercise, I hope to show that it’s possible to make room in your budget for generosity – even extravagant giving – and not worry about your financial future.

Background Story: Overcoming the Fear of Giving

Let’s start with the background. Right after reading “God and Money,” I joined a Bible study with friends from church on the book of Jonah. Although most people remember the part about Jonah getting swallowed by a whale, it’s really a story about a fearful man running away from God. Jonah resisted God’s call to leave a comfortable place and go on a journey that required faith and dependence.

I had already been contemplating radical generosity, but I was fearful. Then, on the heels of reading “God and Money,” Jonah’s disobedience to God struck me. I shared with the group that I sensed God calling me to take a big step of faith with money.

At that moment, I looked across the room at my friend Robert. In just a couple of months, he planned to quit his job, sell his house and move his family to Africa. A talented graphic designer and photographer, Robert committed to living as a missionary in a rural desert area of Chad for a year to create children’s books as part of a larger emerging literacy initiative. Long term, his missionary organization hopes that higher literacy rates will lead to Bible translation and opportunities to spread the Gospel message.

Robert just had one problem: He had to raise $50,000. And he wasn’t close.

I knew immediately where God wanted me to give.

Financial Costs and Benefits of Charitable Giving

My wife and I discussed and prayed about the donation amount for weeks. We were far apart at first, and then we flip-flopped. Fear clouded our decision-making process. Eventually, we decided to give the higher amount under consideration. We chose the dollar amount that made us nervous, rather than the one that felt comfortable. We committed to a $5,000 up-front donation and $500 monthly gifts over 10 months.

So what did the $10,000 charitable donation cost us?

We made the gift through a $5,000 Apple stock transfer and $5,000 in cash, all through a donor-advised fund. In purely financial terms, here’s a cost-benefit analysis:

When I look at the numbers above, our $10,000 donation doesn’t feel as intimidating from a budget standpoint as it did before we made it. I gave up about $1,400 in investment gains to date, plus future gains. But I received an immediate $2,500 tax benefit, funds that can now be invested, and I reduced future capital gains taxes. The real cost wasn’t as steep as I expected.

Of course, this donation wasn’t all about the numbers.

(Side note: We don’t make charitable donations just to get a tax benefit, but this experience showed me the importance of smart giving. When I say that generosity deserves a place in every budget, I’m not only talking about a line item dollar amount. I’m also referring to an intentional giving strategy that has a positive impact on other parts of the budget. A donor-advised fund makes that possible.)

Lifestyle Impact of Charitable Giving

Here’s the more revealing question: How much did the $10,000 donation cost us when it comes to our standard of living? As it turns out, nothing.

The only real difference was a number on a piece of paper. I’m not sure exactly why, but I expected a bigger lifestyle change that never came. In fact, our personal financial situation has dramatically improved since we made the donation. This has encouraged us to embrace an abundance mindset, or the belief that there will always be more money available, so we can freely share what we have today.

The biggest potential impact on our lifestyle will come if we decide to pursue financial independence and early retirement. I’ll have to work for roughly another month, which seems like a small price to pay for the good the money has done halfway across the world. And I’m not even sure I will retire early, anyway. The money served as a safety net that we probably won’t need.

After all our anxiety about such a large donation, it turned out to be a relatively minor personal finance event. But it came with huge financial lessons. I learned that much of my fear about money and security is unfounded, and that letting go brings much more blessing than holding on.

We never missed the money. And we probably never will.

An Investment in Literacy and Freedom

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I saw Robert last week for the first time since he moved. He came back home for a job interview because his missionary commitment wraps up in six weeks. He enthralled me with stories about simple books changing people’s lives.

During his time in Chad, Robert has created 20 children’s books and counting. These colorful books on animals, insects and hygiene are creating a written language for the Daza people for the first time in their history. As a result, children in northern Chad are learning how to read and write in their previously oral-only tribal Dazaga language.

It’s shocking to realize that there’s still a place in the world where written language doesn’t exist. This carries profound implications for culture and society. Schools didn’t exist in Chad until a few years ago, and education still only goes through sixth grade. As literacy advances, the Daza people are starting to “see the possibilities that come when learning in their own language,” Robert said.

“While reading books about the sun and moon, one man told us: ‘It is like Dazaga is becoming a language,’” Robert said. “Meaning a language as important as French or Arabic, a language you can learn in.”

One local villager described the books as “freedom” for the next generation. To illustrate this, Robert told a heartbreaking story about a teenage girl getting taken from her home, kicking and screaming, and forced into an arranged marriage. Against her will, the girl was driven to the next village to marry a much older man with multiple wives. As the father of a young girl, I can’t imagine my daughter’s life being filled with so few possibilities.

When I asked whether education will prevent these arranged marriages, Robert said some parents have already started turning down offers. They want to see what their daughters can become through schooling. Literacy is changing the culture and providing hope for the future.

That $10,000 went further in Africa than it ever could it my life.

The Verdict: Financial Independence vs. Radical Generosity

When I evaluate this charitable donation in the context of financial independence vs. radical generosity, it’s no contest. Beyond the advancement of literacy in Africa, we supported our friends as they took their own step of faith as missionaries. We also advanced on our personal journey of generosity, leading me to start The Rich Fool personal finance blog. Our families now have a shared faith story. We had two separate callings, one to serve and one to give, that intersected at exactly the right moment. It’s amazing how God weaves our stories together and allows us to accomplish more together than we ever could individually.

While a $10,000 donation didn’t make a dent in our finances, I realize such a large gift is impossible for many people. On the other hand, people with more wealth might consider that a relatively small dollar amount. The number matters less than a willingness to push the limits on giving and realize the untapped philanthropic potential of the wealth sitting in our bank accounts.

For my family, it was the perfect number to challenge and stretch us. The donation showed us how much room we really have in the budget for giving. It demonstrated the wisdom of the parable of the rich fool and its caution not to aimlessly hoard wealth at the expense of generosity. And it confirmed my definition of “rich” and proved we have way more money than we need.

We can give more than we think without drastically affecting our finances. An honest examination of the costs and benefits of generosity reveals that the same money that only marginally improves our already-comfortable lifestyles completely changes the trajectory of someone else’s life.

Radical generosity wins.