The First Gift: Why the Newly Wealthy Give Small and Attach Strings
A year after the sale that made him rich, a client of mine gave $50,000 to an organization he had loved since college.
Two elements made that gift noteworthy:
He attached four conditions to the gift – and asked for a report in September
He could have given 10x as much without feeling it in the slightest
When I asked him why the conditions, he said he wasn't certain yet. I assumed he meant he wasn't certain about the organization. He meant he wasn't certain about the money.
It has taken me a long time to understand this, and longer to believe it matters more than any of the motives I was trained to look for in philanthropy.
If you have recently come into a great deal of money, there will be a period – often a long one – during which you cannot quite believe in it. The figure on the statements will seem provisional. You will catch yourself constructing plausible scenarios where it could all be taken back. And, of course, it is plausible. After all, you watched the market hand it over, and you know perfectly well what markets can do. Such fear is grounded both in superstition and in a sound assessment of risk — and numerous clients have found it impossible, at least for a time, to distinguish between the two.
If you cannot believe your money is real and yours, you will be incapable of giving it away freely. That’s what giving incrementally, with conditions, and with a report due in September looks like. Receiving organizations sometimes perceive this as caution or, worse, contempt. They don’t understand that when a donor gives little and demands much, it’s not a signal of mistrust in the organization — but in the longevity of their own wealth.
This passes.
It passes faster if you forgo treating this as a deficiency of character and, instead, pursue it as a question of information. Before you give, stop and have someone build you a real financial plan, an honest projection of what you have and what it will do over the course of forty years, including the years where everything goes badly. When clients I have sent to do this come back, they are changed in ways they did not expect. They don’t feel reassured precisely, but the numbers offer more objectivity.
Once the money is real to you, there are two questions in front of you, and they run on different clocks. Where your money should go — and why — deserves the luxury of years-long conversations with people who know things you don't and a certain amount of wandering that will feel unproductive while you're doing it. How much, and on what terms, deserves none of that patience at all. The day you know where you’re going, give at a scale that costs you something — and give it without strings.
Many new philanthropists don’t do this, and it shows up as an unfortunate pattern years later. Within a month of becoming wealthy, they choose a cause a friend’s involved with and then spend the following decade meting out gifts in careful increments. They experience this as giving prudently. In fact, it’s a habit that dates from this period of feeling uncertain. By the time they believe in the money, these philanthropists have forgotten their initial fears but the habit remains.
My client eventually gave the organization he loved close to $2,000,000, unrestricted, over four years. He told me the second gift was easier than the first, and the third easier than the second. I have heard exactly that from nearly everyone who stops being afraid of the money. That’s not, of course, the same as hearing it from everyone. Some people never come out of the fear. They keep the money, manage it beautifully, and, over a lifetime, give less of it than they earn in a single good quarter.
I have never been able to tell at the outset which it will be, but I offer this in the hope it acts like a mirror if you’re a newly wealthy philanthropist. Your money will be there (remember, you can see it in your financial plan). You can, and you should, give more than you think possible.