How to Practice Philanthropy After FIRE (Financial Independence, Retire Early)

The post How to Practice Philanthropy After FIRE (Financial Independence, Retire Early) appeared first on Millennial Money.

At age 36, Jeremy Schneider boosted his philanthropic work. He created a new business, Personal Finance Club, and started donating 20% of its revenues to a number of charities. 

Jeremy was able to do this because he was able to reach financial independence and retire early — a trend known by the acronym FIRE.

Individuals in the FIRE movement (Financial Independence, Retire Early) share a passion for teaching and sharing knowledge and stories. Generosity is a shared value as well.

Are you generous? Do you want to change the world? Do you see a problem that needs solving? FIRE can help you reach your philanthropic goals. 

What Are the Benefits of Giving Back to Your Community?

Being generous can benefit you as well as others. 

Philanthropy and volunteering have benefits to your mental health. Research has shown that these acts of kindness can lower depression and reduce stress. Giving can also trigger the release of feel-good brain chemicals like dopamine and endorphins.

Don’t forget the tax benefits. Charitable donations are often tax-deductible, allowing you to save money by being generous. (Of course, always talk to a tax professional if you have questions about what you can deduct.) 

When you engage in philanthropic activities, you may also benefit from networking. Joe Saul-Sehy, co-author of Stacked: Your Super-Serious Guide To Modern Money Management, met a good friend through his philanthropic efforts in early retirement. His friend ended up recording parts of Joe’s audiobook!

How to Find a Cause to Support After FIRE

Like almost anything, you can find a cause through social media or other channels. There are Facebook groups for almost anything. Reach out to your friends, followers, or other community members. They may have some ideas for you already. 

What are your hobbies and passions? Are there any causes that support those passions? This is an instance where following your passion is the right answer. You are no longer working for money. What do you want to support after you retire?

What Should You Look for in a Philanthropic Cause?

Givingwhatwecan.org suggests using three criteria when choosing a cause:

1. Scale
2. Tractability
3. Need

What Questions Should You Ask a Charitable Organization You Are Considering Donating To?

What percentage of donations go to specific causes? Can I see a budget for your operating costs? Don’t have time to deep dive into different charities? Want someone to research for you?

GiveWell answers the tough questions for you. Research organizations like GiveWell research how to use your charitable donations to make the biggest impact. 

What Causes Are Most Often Supported by Philanthropists?

Here are some charitable organizations you might be familiar with:

• Unicef
• PBS
• Make-A-Wish
• Wounded Warrior Project
• Boys & Girls Club
• United Way

Personal Finance Club is transparent on its website about the organizations it donates to. The company also donates to smaller and more localized organizations. It has donated to Kickstarter projects, GoFundMe campaigns, and more. 

Billionaire philanthropist Robert F. Smith has supported student loan repayment on a large scale. Smith pledged and fulfilled $34 million in donations to Morehouse College. Smith’s donation settled the debts of nearly 400 students. 

Smith also assisted in creating a nonprofit organization called the Student Freedom Initiative (SFI). SFI uses contributions from Smith and others to support historically Black colleges and universities. Currently, the program supports nine colleges. 

Paula Pant, Mr. Money Mustache, and other FIRE content creators have mentioned Charity: Water. The organization’s mission is to bring clean water to everyone. Charity: Water funds more than 90,000 local projects in more than 29 countries to complete its mission. 

And billionaire philanthropist Les Wexner donated over $100 million to Ohio State University, my alma mater. 

Learn More:

• Why You Should Volunteer After Reaching Financial Freedom
• A Guide to Financial Freedom Success
• Socially Responsible Investing: Make a Difference With Your Money

You Don’t Need to Wait Until Reaching FIRE to Give

My philanthropic hero right now is Tami Mitchell. Tami is working toward financial independence while being an advocate for the disabled. She is the definition of a philanthropist. 

Tami uses every extra bit of energy to run a Buy Nothing Group, collect unused medicine for those in need, host giveaways for those who need a bit of extra help, and more. Tami hasn’t reached financial independence, but I have no doubt when she does, her impact will multiply.

When you’ve started your philanthropic efforts or donated a percentage of your income to organizations, the habit becomes easier. Build a saving and investing “muscle,” as well as  a giving “muscle” before you reach FIRE. 

How Can You Balance Philanthropic Work and a FIRE Budget?

Everyone has a different budget and different financial independence goals. The more you save and invest, the more you can budget for giving for the future. But you can also fit giving into your budget no matter where you are on your FIRE journey. 

A lot of people who have successfully completed the FIRE journey took on side hustles along the way to make extra income. Why not give some of that extra money to charity?

Tithing is an age-old practice that involves paying 10% of your income to your local religious organization. But even if you’re not religious, you can still tithe 10% to causes you support. It’s easy to calculate 10%, and it won’t break your budget.

How Often Should You Donate When Following the FIRE Movement?

Daily, weekly, monthly, annually, spontaneously, or whenever you’re doing your taxes. Your donating habits should align with your values, budget, financial independence goals, and other variables. 

If you’re struggling to stay on budget or lower your expenses, try automating your donations. If you’re a spontaneous giver or don’t budget, try setting aside a donation fund so that you can give when you want. 

How Can You Use the FIRE Movement to Improve Your Philanthropic Work?

The FIRE movement is full of helpful people who love to give back.

Tami Mitchell, Jeremy Schneider, Paula Pant, and others use their voices and platforms to share their passions. Feel free to network with them and others on social media.

Join Vicki Robin and Angela Rozmyn at Women’s Personal Finance and Tread Lightly Retire Early. They’re using their post-FIRE expertise to bring financial education to women and boost the socially conscious side of the movement. 

Or pair with someone like J. Money and start a creative and fun way to give. 

Check out Personal Finance Club’s donation transparency page and find an organization that feels right for you. Give locally, use GiveWell, or create something for your philanthropic efforts. There’s an endless number of ways to use FIRE to increase your philanthropic efforts. 

A Way to Give While Investing

Here’s a fun idea (to me anyway): Start contributing a percentage of your income to an investment account and increase it every year. Use that account for charitable giving.

Think of it as a giving 401(k) fund. Rather than it being a retirement account, save as much as you can to do as much good as you can. 

Make it easier on yourself and try a donor-advised fund. The best part? You don’t even have to sell your stocks or cryptocurrency. You can donate cash, stocks, cryptocurrency, and other assets. 

And donor-advised funds can let you be generous on a local, national, or global scale. 

The Bottom Line

Whether your mission is to support local charities and projects, to help solve the student loan crisis, or to bring clean water to all, there is a cause for you. You don’t have to be a billionaire or even reach FIRE to become a philanthropist. 

The post How to Practice Philanthropy After FIRE (Financial Independence, Retire Early) appeared first on Millennial Money.