Donate now or wait until you’re rich?

There are two ways to donate your money to social causes. You can either donate gradually throughout your life or wait until you have more money and do it then.

Because saving your money allows you to invest and earn compound interest, the net amount donated in the future will be higher than the sum of your gradual donations.

However, that doesn’t mean that the net impact to the social cause is higher.

If you can donate money to causes that have a compound effect on those affected, you are creating a compounding impact which can result in a higher net impact.

For example…

Every year you could:

A) Give $1000 to a charity that develops educational programmes

B) Invest that money to generate more money

If you give money each year then the maximum amount you could give is only $10,000.

Alternatively, if you invest that money and receive a compound return, the amount that you finally donate could be much higher.

But, it also means that you didn’t support any educational programmes for ten years.

Instead, if you do give the money each year, you could start to support the education programmes which, over time, also has a compounding effect because the people receiving the education will be able to improve their quality of life and the quality of life of those around them over the course of the ten years. This can have a greater net impact compared to the situation where you wait to grow your wealth.

You don’t have to wait until you’re rich to make an impact.