This is about donation amounts, investing, and patient philanthropy. I want to share a simple excel graph showing the annual donation amounts from two scenarios: 10% of salary, and 10% of investment returns.[1] While back a friend was astounded at the difference in dollar amounts, so I thought I should share this a bit more widely. The specific outcomes will change based on the assumptions that we input, of course.[2] A person could certainly combine both approaches, and there really isn’t anything stopping you from donating more than 10%, so interpret this as illustrative rather than definitive.
The blue line is someone who donates 10% of their salary for the rest of their career. The orange line is someone who invests 0% of their salary for the rest of their career, followed by donating 10% of investment returns starting at retirement.
I’m not going to share the spreadsheet simply because I have some personal information that I don’t want to share tied up in this spreadsheet and it would be a bit of a hassle to separate it out. But for anyone who wants to re-create something like this and fiddle with your own inputs to look at various scenarios, it shouldn’t be too hard to make a few columns like this:
I’m a big fan of using compound interest, and I lean somewhat toward patient philanthropy. The upsides and downsides of patient philanthropy have been written about already, so I won’t repeat all the pros and cons.
What the starting salary, how much and how fast salary increases, what the annual return is for the investments, how old you will be when you retire, etc. I used a starting salary of 70,000 USD at age 30, with 2% annual salary increases, 7.5% annual investment growth
Yeah I think this is a good point! Donor-advised funds seem like a good way to benefit from compound interest (and tax deductions) while avoiding the risk of value drift.
This is about donation amounts, investing, and patient philanthropy. I want to share a simple excel graph showing the annual donation amounts from two scenarios: 10% of salary, and 10% of investment returns.[1] While back a friend was astounded at the difference in dollar amounts, so I thought I should share this a bit more widely. The specific outcomes will change based on the assumptions that we input, of course.[2] A person could certainly combine both approaches, and there really isn’t anything stopping you from donating more than 10%, so interpret this as illustrative rather than definitive.
The blue line is someone who donates 10% of their salary for the rest of their career. The orange line is someone who invests 0% of their salary for the rest of their career, followed by donating 10% of investment returns starting at retirement.
I’m not going to share the spreadsheet simply because I have some personal information that I don’t want to share tied up in this spreadsheet and it would be a bit of a hassle to separate it out. But for anyone who wants to re-create something like this and fiddle with your own inputs to look at various scenarios, it shouldn’t be too hard to make a few columns like this:
I’m a big fan of using compound interest, and I lean somewhat toward patient philanthropy. The upsides and downsides of patient philanthropy have been written about already, so I won’t repeat all the pros and cons.
What the starting salary, how much and how fast salary increases, what the annual return is for the investments, how old you will be when you retire, etc. I used a starting salary of 70,000 USD at age 30, with 2% annual salary increases, 7.5% annual investment growth
Yeah I think this is a good point! Donor-advised funds seem like a good way to benefit from compound interest (and tax deductions) while avoiding the risk of value drift.