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Do you know why charity is important?  We all know the positive aspects of giving and helping others, but did you know there are some selfish reasons for giving as well?  It’s not just the credit you receive from others or a tax write-off.

It sounds somewhat contradictory, but one important aspect of building wealth is charity.

It’s much easier to believe that a key to building wealth is saving money and not giving it away; this is the way I lived when I graduated from college.  I didn’t have much money to give away because I wasn’t managing it.  It wasn’t until I paid off my $50,000 of debt that I’ve been able to understand the importance of charity.

Charity is viewed as important in our society, but the true reason for charity isn’t always taught.  Religions reinforce charity with tenets around giving and tithing (10%).   It wasn’t until I read Rabbi Daniel Lapin’s Thou Shall Prosper, that I finally understood why giving is important to my personal wealth.

Most of this article is just a repeat of Rabbi Lapin’s book, so you might even consider it a book review.  Sometimes it’s best to use the explanations smart people already used rather than trying to reinvent them all.

Lapin starts with, “Like love, money is best won by renouncing a need to totally possess.”  This is reinforced by the saying about knowing it’s true love if you release it and it comes back.  This doesn’t answer why giving is important, it just tells us to do it.  If I take all of my money and spend it in a mall, I don’t think wealth will come back to me!

Let’s try another quote from Lapin, “Philanthropy is as necessary for creating wealth as sunshine is for growing flowers.”  Once again, reinforces the importance, but it doesn’t tell us why.

Lapin then gets closer to the heart of the answer.  “One popular way to make yourself feel bigger (more powerful) is to spend money and gain control.”  Essentially, a spender’s high is caused from the feeling of control and power one gains when making the purchases.

That gets us much closer to the answer but spending on yourself is selfish and won’t translate into money returning to you like a boomerang.

Then Rabbi Lapin gets to it and explains the real importance, which I’ve outlined below.  However, before you get to this point you must take his advice:  “Don’t try to find a rational reason for giving away money. Charity is irrational.  Nevertheless, it benefits the giver in many ways.”

The book helps define the importance of charity in four ways:

1.  It’s good for your conscious and subconscious
2.  It helps build your network
3.  You become a better investor
4.  It creates a movement of money around you

1.  It’s good for your conscious and subconscious

Lapin writes how giving to charity is one of the best ways of increasing your income because it makes you, “Feel a better person, which makes you come across as a better person.”  As you come across as a better person, people will start to treat you like a better person which reinforces your original thoughts!

Rabbi Lapin nails it when he says, “One of the great harbors to success is when you harbor deep internal doubt about where you deserve such success.   You have to feel that you deserve good things, or else your subconscious might very well sabotage all of your best efforts.  Giving regular gifts from your income to charity is one excellent way of, once and for all, persuading your subconscious that you deserve what lies ahead.”

It becomes a self-fulfilling prophecy that others are able to buy into as well.  You are a good person because you give; then, you give because you are a good person.

2.  It helps build your network

Lapin explains how an important side effect of giving is it helps build your network.  He explains that you should be very intentional in deciding where your money will go and spend your time there as well.  One part of the intentionality is to ensure you associate with a charity that you like and with people you admire.

The group will have common goals, and you’ll be able to build much stronger bonds than you can through business or simple networking.  You’ll build relationships that will help you in the long run in your life plan.

3.  You become a better investor

Giving your money away shouldn’t be a foolish activity.  Sure, it might sound cool to fly over your hometown and drop bills from a helicopter, but outside of some instant press you probably won’t receive many other results.  Dropping coins would be even worse; I grew up in Oklahoma and know what quarter-sized hail can do!

Lapin explains it best when he describes the ultra-wealthy who build hospitals and other large memorials with their money:

“The very internal quality that enabled them to give away the money to build those impressive looking structures was the same quality that enabled them to make that money in the first place.  If you have the generosity of spirit to give money away, you also have the courage to seek profit by placing your money at risk”.  He continues with, “You have to develop a willingness to remove your money from safekeeping and essentially bid it adieu.”

Giving your money away helps you become a better business person because you become willing to unclench your cash and use it for something else.  Lapin explains that some people cannot invest in anything because they are afraid of losing their money.  He says these people are “equally incapable of charitable giving.”

4.  It creates a movement of money around you

Rabbi Lapin gets somewhat metaphysical in the last point, and I’ll leave most of the explaining up to him.  At a high level, it’s backed up by Newton’s 1st law of motion – an object at rest tends to stay at rest unless acted upon by an outside force.

Lapin explains:

“Make money flow, and you will inevitably be creating bonds.  With bonds in place, more money flows.  Like anything else that flows, money requires pipelines.  This means that your task is to excavate pipelines that can carry money toward you.”

“How do you do this?  By pumping money outward from you to the world out there.  That action itself creates conduits that remain open and usable even after they have served their purpose of conveying your money, in the form of charity, from you to the world outside of yourself.  Now that these pipes exist, they are able to be used for cash flow in the reverse direction, too.”

This is such a great concept, and it realy makes a lot of sense.  Not doing it is sort of like sitting at home all day and then being surprised when you don’t meet anyone.  Motion is required to succeed in life.

My wife and I are giving more now than we ever have, but we want to continue to give more.  It’s highly satisfying and has helped me learn the importance of not living as a starving artist.  If you don’t have any money, you can’t give any away, and you miss all of the benefits of helping others and yourself.

I highly recommend Rabbi Lapin’s book Thou Shall Prosper because it explains the importance of charity.  You should buy it today if you’re interested in owning your life.  What are your thoughts on giving?