483 | Effective Giving for the FI Community | Rebecca Herbst & Jack Lewars

26:02Your body's a little bit weaker. It's not as strong as it used to be. You are unlikely to start working out as easily. Whereas if you've been working out regularly and on a consistent basis, you probably can do three times more or four times more than you used to. And so I think habit formation is real. So if you start donating now on your path to FI, And that could look something like donating on a monthly basis where you're actually like seeing, really seeing yourself giving some money away. It's much easier to carry that forward, right? So like I said earlier to you guys, my husband and I just doubled our donations.

26:36Had we never donated before, it would have been really hard to give the amount that we're giving now. And so all the friction that goes into giving, right? Like where you're going to give, as I said earlier, what you're going to give, right? So I had to sit down and think, do I want to donate VTI or BND? Do I want to donate from my regular brokerage account? Do I want to open up a donor advice fund and put money in there and then donate from that? I had to come to all these decisions on my own. And so since I've come to those conclusions now, and we can talk more about that, every month now, it's just a click of a button for me.

27:12I'm just like, this is what I'm donating. Here are the charities that they're going into. And then every six months or every 12 months, I'm revisiting that strategy and putting more thought into it. And so I get it. I get that it's hard. And I get that we want to reach that early retirement stage. But there's so much room to give now. And that's why I went and created this thing called the philanthropy calculator to show that if you did take an income pledge like Jack, like 10%, or even something way more doable, like giving 1 % of your income annually each year, like the one for the world pledge, that it really doesn't add that much time to your FI timeline.

27:54So if you're coming out of school, earning 60K a year, saving 30%, you have nothing in investments, it's going to take you like 23 years to get to early retirement, assuming nothing changes with you at all. And we know that's not true, right? Like you're probably going to get an income raise. You're going to figure out your expenses, right? But like that's probably standard for like maybe, you know, the demographic listening to this podcast. It's going to take you 23 years. if you were to donate 1 % of your income annually, it's going to add another six months of working. That is like a drop in the bucket for you to donate 1 % of that income, not just through retirement, but through the rest of time.

28:37So obviously, if you do something like take a 10 % pledge, yeah, that's a commitment, right? Like, right, Jack, that's a commitment. That's going to be like additional years of working for you moving forward. But if you do something that's much more doable. It's really not a big impact. And what I'll also say is there's tons of other things that will change your viewpoint, right? Like a lot of people might start off on the path to FI and think that they have 15 years to go. And then all of a sudden they have six years to go because they got a salary increase or they got a huge inheritance from a family member or their portfolios are doing way better than what the 4 % rule taught us it was going to do, right?

29:16And so I think when you look at the math in that way, just like with reaching FI, like how could I ever retire early? When you just look at the math, it helps you make those decisions much, much more easily. I think that's exactly right, Rebecca. And I would make two points in addition to that. The first one is, as someone who comes a little bit more from the effective giving community and a little bit less from the FI community, If you give 1 % of your income and it slows down your retirement by six months, and by doing that, you can prevent roughly 15 children under five dying for no good reason, that is not a difficult moral trade-off.

29:55That is not a difficult moral trade-off. And the second thing I would say is there is a lot of evidence that the best donation opportunities are being used up over time. So if you're talking about a 20-year horizon for you to go from graduating to financial independence, the donation opportunities we have in 20 years, if they follow the historical trend, will be much less cost-effective than the ones we have now. And I'll give you a very obvious example of this. We know that there are high-quality malaria vaccines coming down the track. Two have been approved for use with children by the WHO in the last few years.

30:34Neither of them is a silver bullet. One has very difficult cold chain logistics associated with it, which will make it hard to deploy in remote areas, in hot countries. And neither of them is particularly effective in comparison to other vaccines. Like, for example, the COVID vaccines were substantially more effective than these. But what that means, because there are other candidates in trials as well, is that we shouldn't really expect to need to spend an enormous amount of money on malaria prevention in 20 years time. But right now, this year in 2024, 600 ,000 people are going to die of malaria.

31:08And we could prevent each one of those deaths with an intervention that costs under$10. And so if you do wait, you should think about whether the donation opportunities you have once you reach FI are going to be as good as the ones that you could be drip feeding into now. And you can do both, right? We can do both things. So if I spend$40 ,000 a year, right? And I need a million dollars a year to retire early. That a million dollars is not going to just become zero, right? Like a lot of us are reading that Bill Perkins book, Die with Zero. It's a really powerful messaging, right? We're not going to die with zero, most likely.

31:48We're probably going to die with money left over. And so there's an incredible opportunity to give now to people or beings that really need help today. And then also give large sums of money that have compounded over time later on and do really good with that. So for me, I donate stock regularly now. We also donate 100 % of proceeds from yield and spread to effective charities as well. So I look at that as like time and skills donation, not just money donation. And then upon my death, even if I still want to give some of that money to the next generation, I've pledged to give 80 % of that wealth away upon my death, right?

32:32Because I'm going to be, I'm not going to draw down on that completely. I'm taking 4 % per the 4 % rule. And by the way, I haven't even really been doing that the past four years. And so I know that like, I'm probably going to be okay. And so we can give money now and we can give money later. And to me, that's the best recipe to help with both habit formation, but also to tackle, as Jack was saying, interventions today. And maybe there'll be instead of anti-malarial bud nuts, as we know, there's already anti-malarial vaccines coming out that will come later down the line. I can be donating to that too.

33:10I've been experimenting with this idea in my mind. I'm not an economist, so maybe some of your listeners, this will be the point where I become thoroughly devalued in their eyes, but just try this out with me. We all accept in the FI community, the idea of compound interest. So you put some money in now and it grows a lot because of the effects of compound interest. I think there is something called compound impact, which is if you intervene now and a child under five doesn't die from vitamin A deficiency or diphtheria or tetanus or malaria, that has a compounding effect because that child can then go to school.

33:47That child can then get a job, become economically productive. They can vote if they live in a democracy. They can have a family. Also, it will have a big effect on their family. One of the biggest things that stops women participating in the workforce is when they need to have many children because many of them will die in infancy, not to mention the moral cost of losing a child, which must be just horrendous and unimaginable. And so I also think you need to weigh, if you drip feed into your impact now, you will have this compounding impact effect over time. And I feel like if you wait a long time and then make a big donation, it's possible that even though the donation is much larger, your actual overall impact will be less because the cost of doing good will have gone up in the meantime.

34:39So you can sort of see these things in parallel. Now, I don't actually know. I don't know that impact compounds at 8 % a year or whatever the stock market's supposed to go up by on average. And I don't know that the cost of doing philanthropy is going to change in the equivalent ratio. But I do think this is something to think about, which is you have the opportunity to intervene now in a way that may do a lot of good over time. So you should factor that in as well. I love that. Yeah, I love that as a thought experiment. And it's funny because you mentioned a couple of minutes ago and loosely paraphrasing the highest quality donation opportunities are being used up over time.

35:17And I was actually 15, 20 minutes ago, I was going to ask what I thought was almost like a straw man argument or something ridiculous. That was a thought experiment of, hey, what does this look like in a perfect world? Because as I'm thinking about effective altruism, okay, we all donate to the highest value, let's say malaria or mosquito nets of some sort, until that issue or disease, etc. is eradicated. And then we all move to the next. And it essentially cascades on down. In my own brain, when I thought about that, I thought it was so ridiculous that I didn't bring it up at the time. But then hearing you mention that, it seems like maybe that would be the perfect world scenario.

35:56I think that's exactly right. So I'll give you two really hopeful, positive stories through a massive international effort and some individual heroism, we were able to develop a smallpox vaccine and deploy that. I think it was first deployed in the 50s, maybe 60s. It's estimated to have saved a billion lives. No one needs to donate to smallpox prevention now. Wild polio was eradicated about two years ago. There is some recurrence, but there are large multinationals looking at that like the Bill Gates and Melinda French Foundation. And so a retail donor that is an ordinary person making donations doesn't need to worry about donating to polio prevention now.

36:38So what we do over time is we change the bar of what we think cost effectiveness is. And in the amazing world where we eradicate malaria, which I believe will happen during my lifetime, we will move on to the next problem for sure. And there are lots of problems that we can definitely eliminate. It really is insane that we live in a world where a child can get diarrhea and it can kill them. That is just crazy. It is crazy that we live in this world when a packet of oral rehydration salts that costs next to nothing would prevent that happening. So we can live in a world where we don't have to fund diarrhea treatment in the same way because the water is clean.

37:20And if anyone does get sick, they can have access to rehydration salts. So yeah, I actually think your straw man is exactly right. Maybe this is a really weird analogy. It's like a champagne fountain, right? We fill up one thing. That's exactly how I pictured it. Literally, Jack, exactly how I pictured it. This is probably why I'm described as a champagne socialist by my friend. A lot of the examples Jack is giving, you probably read about it, right? You've probably see documentaries about it. But the reality is, one of these problems are really neglected. Like you think like, oh, running water, we will have solved for that.

37:54Vitamin A deficiencies will have solved for that. Basic categorical surgeries will have solved for that. We have, we have solved for those things in the United States, where I live, or the UK, where Jack lives. But that's not the case everywhere in the world. And so, you know, going back to that discussion around like, if I'm going to give, I want to give to something locally where I can see the impact of it. And I can see those people or see those animals or see those that are suffering. And you can see that. Yes, you can see that. But measuring the effects of that far away, like the math behind that is just so, so real for me.

38:32And so it's not that I don't want to give locally to my community here in Ogden. In fact, like I do volunteer work with my skills, time and energy here, but I can't really hop on a plane and go over to somewhere in Kenya or Nigeria or Laos. I don't really have the personal skills to help administer immunizations. I don't understand the local culture. I won't necessarily have like a great impact in that way that I might locally here in my community with more of my time and my personal physical self there, which is why I like to spend some more of my time in that way, but then send my money elsewhere where it really can do a lot of good to causes or problem areas that are still incredibly neglected.

39:24A colleague of mine, and I'll say it's Kenan. So Kenan, if you're listening to this, I didn't steal it, had this great phrase, which was give globally, act locally. And I really like that. Yeah, I love that. I do want to come back because Rebecca, you mentioned a couple of times the time and skill donation. So we have two things to come back to closing the loop is the nuts and bolts and the time and skill donation. But before we move on, yeah, talking about these vaccines and thinking just, again, very viscerally, because a lot of this stuff, what compels you to take action? So for instance, my uncle, my dad's brother had polio like in his lifetime.

39:59And that's what's so crazy. This is not that long ago. And then the remarkable nature of vaccines, which have changed the world, right? And to hear that there's a malaria vaccine coming, it's, it's incredible. And so it's so interesting to think, but my brain is going both ways of like, okay, obviously you've convinced me, right? Like on a lot of levels, the effect of altruism and like, where can you direct? But I think we also need to be honest with human nature, right? Which is why I think both of you have mentioned habits and it almost sounds crass in some sense to talk about, okay, for five or $10, you can save a life, which is remarkable and still understand the basic humanity of sometimes people need a little feedback, right?

40:41Like I think about giving to, I think it was like donorschoose.org or something. It was something like that where I gave to a classroom and then they sent me handwritten notes from the kids. And frankly, that felt really good. That was pretty cool. So there's some interplay here between, I think we'd all love to live in a world where we could do this purely altruistically. But I think we also need to understand the basic nature of humanity, that some feedback loop is important as well. I'd love to hear your just general thoughts on that. Yeah. I'd love to say this, which is, if you are giving because you feel motivated to give, like it's your moral obligation to get like Jack, right?

41:22Like Jackson, very, very young age, I felt this moral obligation to give that is wonderful. And there are a lot of people that that's all the information that they need to give away money. Not everyone is like that. Everyone has problems. Everyone has issues. And those problems are real. Those issues are real. I'm not taking away from that at all. But if you want to just be a good person, like if you're giving away because you're like, you know what, this makes me feel a little bit better. It makes me feel a little less guilty. That is okay too. When I pulled the early retirement trigger, it was right in the middle of COVID, right?

41:59A lot of people were struggling. They were losing their jobs. They weren't in contact with their friends. It was a really hard time. And I had got let go. I'm doing air quotations from my job. I got four months severance package. I volunteered to be let go. And I have that like FI golden parachute. And so when I left the workforce and I hit FI, I felt incredibly guilty. Like it took me a while to feel comfortable with the idea of being an early retiree when not just people across the world are suffering, but like my immediate community. And I really felt that. And I actually use some of that guilt as like motivation to give back.

42:45It's a lot of it is what helped me found yield and spread and put time and energy into building that and seeing how I could help my community and my people around me during challenging COVID times, as well as create this outflow of money towards effective charities for people halfway across the world. And so what I would say is it's okay if you feel guilty about giving. It's okay if some of it makes you uncomfortable, right? But it's all about really thinking about what your legacy is going to be in your old age. Once you stop working, what do you want to have been known for? What makes you feel good?

43:28I think that there's nothing wrong with that sort of level of hedonism, if you will. I also feel very strongly that giving cost-effectively can be rewarding on a personal level. And if I can plug the non-profit that I lead at the moment, One for the World, every three months, we send every donor an impact report showing exactly what they donated, which non-profits they supported, what the outputs of that were, so bed nets or vitamin A supplements or vaccines, and what the impact of that was, so how many deaths they have prevented. And then we include a story from someone who has received one of these services through our amazing recommended non-profits.

44:13And I find that intensely rewarding. But also, you are right, human nature is human nature. And if the thing that is stopping a listener from getting into this is, well, I want a tighter feedback loop, do both give a slightly smaller amount to effective charities and give something locally i took a pledge to give 10 of my income away i give 10 effectively cost effectively i give about two and a half percent for a mixture of things that i think are important and really hard to measure and then one donation that is really quite shameful that i'm not going to tell you about that is just for personal warm and fuzzies and is definitely not cost effective and that's okay because that's part of helping me to do my philanthropy is that I want to give 30 pounds a month to this just really, really, really non-cost effective charity that has related to rugby, which is not one of the most high priority cause areas in the world, but that's okay.

45:10I love that too. I've met a lot of people within the effective altruism community that I've taken a pledge like 10 % and they still keep around, you know, for lack of a better phrase, like a fun fund for giving. Because if your friend does come to you and say, hey, donate to my charity for a marathon, you don't want to go back to them and say, no way, Jose, I only donate to effective charities and your cause is ridiculous and I'm not donating to that. I don't think that's super healthy. I do think it's an opportunity to have a constructive conversation with someone about why you choose to donate, where and why.

45:43But you still can create those opportunities for yourself to donate to things that give you those warm and fuzzies. And I do the exact same as well. I do it a little more with my time. Like I said, for example, I volunteer with my local adaptive ski group here in Ogden, Utah. Do I think that the money that I'm giving away is much more effective? I'm very much, it's not just think, I'm very much aware that I think it's much more effective use of my resources, but I really take in a lot of joy from the time that I spend working with people with disabilities out on the mountain. I love being outside.

46:21I love helping out. It's a great community. And so I think we can do it all. We can donate to rugby causes. We can donate to our local adaptive ski clinics, and we can also give money away for fistula surgeries abroad. And it's imperative that people know that we are not on this podcast to try and shame people who do other facts of philanthropy. Apart from anything else, we should be extremely cautious about saying that we know anything in this space. We think certain things are true and we are updating all the time. And then also, I think it's really wrong to suggest that people who have a personal connection to a cause or want to support a charity that they see locally are doing something that's wrong.

47:04That is net positive. That is a good thing to do. The only thing that I think is actually shameful is if you go through your whole life and never do any philanthropy. Because if you live in a high income country, and you have disposable income, you are in the top few percent of the whole world in terms of how privileged you are. And if you literally went through your whole life, and you think that every single thing that you ever get is to be spent on your own consumption, I think that is shameful. But nothing else, no other type of philanthropy, or even the patient philanthropy approach of waiting and giving later, none of these things should be shamed at all.

47:41I think it's a huge, huge error when people imply that it's morally wrong to do other types of philanthropy that aren't cost-effective giving. Yeah. And I'm glad you brought that up. And I think what I'm hearing is painting the picture of a balancing act, right? And that there's no wrong answer here, but I think Rebecca, how you were saying about, okay, maybe I think effectively globally, but then in a much more local nature, I give my time and skills and money certainly. But it like, that's how I'm kind of picturing a cohesive plan for myself is I can balance those two. And there's nothing wrong with that.

48:19So that again, when my neighbor comes up to me and says, Hey, we're going to do a 5k for the local cancer foundation. Okay. Well, that's something I can still donate to, obviously. And we're not saying you can't, I mean, clearly nobody's getting that picture, but it's important to understand there is at least how I'm seeing it. Like there can be this balancing act and that's really great. Thanks for listening to choose a fi and for all your support of our mission here. The absolute best way to support choose a fi is when you sign up for your next rewards credit card to use our cards page at choose a bi.com slash cards.

48:55I keep this page constantly updated. So it should always be the top resource for you. Thanks for being part of our community and for your support. The one thing I did want to ask, so, okay, these effective charities, and this is more of a nuts and bolts question. So maybe we could transition into that because I think, as you know, people in the fight community, we have our questions, our list of, uh, am I doing this right? And maybe it's the old type A strivers in us, but I'm always worried about donations getting eaten up to maybe admin costs. And you hear some of the negative nature of that, but even just like, because I did something suboptimally, let's say.

49:33So if I were to, let's say for argument's sake, want to give a thousand dollars in a year to a particular charity, is it better to give it in one fell swoop or is it better to give it in$80 monthly increments? Is that something that, that I should even be thinking about? Or am I really just getting down into the weeds of something that's not important. There is some small benefit to the charity of you doing recurring giving each month, which is many of your listeners will have worked in businesses that focus on monthly recurring revenue. Charities are the same. That helps them to plan most effectively.

50:10If you give once a year, they have to wait 364 days to find out if you're going to re-up next year. But I wouldn't overstate this. And it is true that a lot of philanthropy happens in December, even as someone running an effective giving charity, we see 20 to 30 % of our annual volume go in December at the end of the tax year. And especially at$1 ,000, and as long as it's happening every 12 months, I wouldn't massively beat yourself up about not doing regular giving. I would also just refer back to Rebecca's point about habit forming though. And I have seen people who intended to donate an amount at the end of the year and then the price of the cost of living went up and then they felt a bit poorer than they did before.

50:59And so they chose not to donate so much. And actually, probably rationally, they were in the same financial position they were in before. But the longer you wait, the more things can distract you or undermine your resolve. So I guess on the margin, I would say donate monthly. Yeah, that certainly makes sense. So right, it doesn't sound like it's a terribly massive decision either way. I'm not going to go wrong. But again, I'm just trying to think, how can I do this optimally? If it was just something simple that would help the charity, it's good to know. So Rebecca, let's get back to some of the things you mentioned before about nuts and bolts.

51:34So you mentioned donor advised funds, donation of appreciated stock versus cash. Can you give just like a super quick overview of this? And then maybe we can reference some articles on your site in the show notes. Yeah, sure. So I created the giving guide, which has all the information in there that really the everyday donor would need to know about, you know, how to give, whether it's cash, whether it's shares of a fund, whether it's ETFs and how to give in a tax optimized way. The long skinny short of it is like obviously operationally for the donor, just giving cash is really the easiest, right?

52:14Because you can just put your checking account into whatever site or you can input your credit card, right? And that money just flows to the charity right away the most easily. I think where people get tripped up is they try to give in a tax optimized way. But the reality is you have to be giving five figures away, more or less. Not always. This isn't a rule of thumb, right? You have to be giving five figures away and meeting or exceeding the standard deduction to get some benefit from giving to public charities for the most part, 501c3 organizations. And so that's the skinny in terms of like how much.

52:52Now, when you give away stocks or bonds on a regular basis, if you donate those straight from your regular brokerage account, you don't get taxed on the gains from those stocks. So like the model that I use with my husband is we donate VTI to this organization called GiveDirectly and we donate our shares that have appreciated the most. And so that way, when we are selling stocks to use as part of our everyday spend, as part of the 4 % rule, we are selling stocks that have appreciated the least so that we are taxed the least on those stocks. And then when we give away stocks to charities, since we are not taxed on those gains, that's why we choose the ones that are appreciated the most.

53:37And that is regardless of whether you've donated one share, two shares, three shares, whatever amount you're giving. However, if you are donating and you are looking to get a tax deduction, you have to meet or exceed the standard deduction here in the US. And so a lot of people get tripped up with that because a charity might say, make your tax deductible donation today, which is fair. It's fair that they're saying that, but it's not exactly clear. It's not exactly true. your donation is only tax deductible if you are exceeding that$13 ,000 plus amount. Yeah. You also see real estate agents still talk about this with the mortgage interest deduction as well.

54:24It's, oh, your mortgage interest is deductible. Well, yeah, I guess theoretically, but only if you go over the standard deduction and it's only for the portion over. So it's similar in that regard. So it's true, but not the entire picture in essence. Right. And I know it's hard for a charity to come at you and say, hey, make your tax deductible donation today. But only if X, Y, Z and A, B, C. And then you are sitting there looking at a website and going, oh, I don't even want to donate now because this seems complicated. And so it's actually one of the pain points within the personal finance meets giving communities that I'm trying to tackle and trying to best understand.

55:03And please reach out to me and have a dialogue with me about this. How do we give people better information around personal finances and donating without actually making it harder for them to donate? because you're adding all these extra layers in our, what is a very complex tax system here in the US, right? Oh, without a doubt. And so I wrote this four-part blog series on donor advised funds. And if you don't know what that is, it's a tax advantaged account for giving, which if you go ahead and like Google donor advised funds, like most of the results that you're going to get are ads from banks or providers about the donor advised funds.

55:46But there's a lot of things that a donor advised fund is wonderful for, but there's a lot of things that you don't really need to use it for. So I think the majority of people that I speak with about their finances, and I have a coaching program, I help people learn about their plans for giving and help them optimize with their financial plans for that. One of the things that they run into is like, oh my gosh, should I be opening all these specialized bank accounts so that I could give and then I can be the best donor that I could possibly be. But the reality is, is like, if you want to donate cash on a regular basis, and you're donating, you know, four figures, go ahead, do that, do that on a monthly basis.

56:25There's not huge ways to get more tax optimized from that. But if you are donating more meaningful sums of money, like five figures a year, then let's talk, let's research it, let's, you should be talking to your financial advisor. You should be talking to your tax accountant. You should be learning about the best ways to do that. Not just because it saves you money, but because it actually means more money is going to the charity itself in the end. Yeah, without a doubt. This is complex, but it's important. So that's why dialing in on this is so important. So we've said before in the past that if you're going to donate to a donor advice fund, And there's that interplay with the standard deduction, right?

57:05So in theory, could you put multiple years of donations into your donor advised fund in one calendar year? Because then it increases the likelihood that you'll be over the standard deduction and you'll actually get a tax deduction for it. So that's one potential strategy. Yeah, that's actually some of the myths busting around DAS that I wanted to do. Yeah. Which is that's how DAS are actually advertised to us, right? So the methodology that you just put forth is called bundling or bunching, where you take donations from multiple years into one. So let's say you could donate$5 ,000 each year over the next three years, or you could take all those three years of$5 ,000 and put it into one and donate$15 ,000, bring you above the standard deduction, and then you would be able to make those donations tax deductible.

57:59There's a belief that you need to put that into a donor advised fund for that result to take place. But that's not true. You can donate$15 ,000 in cash today and exceed the standard deduction. You could also donate $15 ,000 worth of appreciated stock and get that tax deduction, or you can put it in a DAF. What is special about the DAF that the cash donation doesn't have and the stock donation doesn't have is you can put all that money into a donor advised fund today, get that deduction today, but slowly make your donations over time. Now with$15 ,000, this may not be as impactful. Let's say you put in a hundred thousand dollars, but you're not quite sure you want to donate all of your a hundred thousand dollars to one specific organization.

58:55Maybe there might be a different intervention you want to look at two or three years down the road. You can then say, donate $20 ,000 today,$20 ,000 tomorrow, and so on and so forth. So that is really what is special about the DAF. The second thing that's also really special about the DAF is you can automate the donation strategy. So let's say I, Rebecca, I only donate to one or two charities that I really care about, but maybe Brad, you donate to a hundred charities every month, right? That's 12 ,000 transactions that you'd have to do a year. You could just set that system up in a DAF, put your a hundred thousand dollars in today, and then it'll just do all those grants for you over time.

59:38So those are the two special things about a DAF that everyone should know about on this call. Yeah. And I'm glad you clarified because in my head and how we've described it previously was also how you described it with the donor advice fund. But I think the clarification that is so important, I think I took it as a given that, okay, in this hypothetical, you want to give$5 ,000 a year for the next three years and you put$15 ,000 in donor advice fund, then you just give it out over time. But like you're saying, you could just give it all to the charity now and just essentially circumvent the donor advice fund.

1:00:13There's no point in the donor advice fund in that regard. So it's more, it allows you to get that tax deduction in one fell swoop in one tax year, but only if essentially you're going to give this out over time or want some optionality for potentially giving to different charities in the future. So obviously, if you made the donation all in one fell swoop, you would get the tax deduction in the current year. Right. And in the spirit of fire too, right? Like let's say you have a regular brokerage account with Vanguard or Fidelity or Charles Schwab where the fees are really low and you're just donating to stock directly to charity.

1:00:50There's very few fees associated with investing. You know, in the spirit of fire, I'll say like there are more fees associated with donor advised funds. And so when you invest your portfolio within that sort of account, again, you're also potentially not necessarily like this is a guarantee, but you're potentially lowering the amount that you could be donating to an organization because you put it in a DAF. So in some ways, it could be a hindrance unless you're really putting in large, large sums of money that are growing over time and you can make up for those fees. But I just wanted to make that clear to listeners as well.

1:01:29Yeah, no, that's very important. And just kind of going back real quick to the donating appreciated stock or funds, et cetera, because I think most people just don't have a sense of just like, again, the nuts and bolts of how this works, right? So let's say hypothetically you bought a mutual fund for$1 ,000 and, you know, or obviously multiple shares of that, that added to$1 ,000 X number of years ago, 10 years ago, now it's worth$10 ,000. So if you wanted to make a$10 ,000 donation to a charity, I think what most people would expect is, okay, I have to sell this stock. I will get$10 ,000 of proceeds, but built in there was a$9 ,000 long-term capital gain, right?

1:02:12So that's going to be taxed at 15%. So come tax time, they're going to be looking at roughly what,$1 ,400 or$1 ,400 and change of tax liability that if they were actually netted out, okay, they're only left with$8 ,600 or some such. So do they give an$8 ,600 donation at that point? Do they give 10 ,000, but then it's really 11 ,400 because they had to pay this tax on it. So So there's some interplay there of like, okay, what am I actually doing? As opposed to, like you're saying, you can just donate the appreciated stock. So you can donate the$10 ,000 of stock. And you should, you should, like, there's really no scenarios in which you should sell stock.

1:02:56Right. No, it's insane. Donate it. Nobody knows that. That's the thing. That's the beautiful part about this is like, nobody knows that because no one's advertising that to us because no one makes money off of that. Right. Like, I mean, unfortunately I have to just be honest. No, absolutely. I mean, that's, it's incentives rule the world, right? So that's important. So in that case, I think most people then again, get caught up in how do I actually donate appreciated stock? Like what are the nuts and bolts of that? Like if I have a Vanguard account or a Fidelity account, like just some shares sitting in my taxable brokerage account, and I want to give to one of these organizations, do I initiate it?

1:03:33Do I call up Fidelity or Vanguard? Do I have to liaise with the, if that's even a word, with the charity? How the heck do I do this? So just like with the DAF and you can do automated giving, some banks allow for this. Most traditional banks, though, what you would do is they have a form it might call asset gifting form, something like that. So if you just go on your bank's website, search that term, giving, charitable giving, something like that. A form will come up and it will be, it will ask you to select the account that you want to donate from. It will ask you to select how many shares of whatever stock, bond, fund, ETF that you want.

1:04:13And then you will choose the tax lot that you want to give it from. So I want to give five shares from this tax lot. And so I might write one share of VTI, comma, January 1st, 2001, whenever I bought it, right? And so I'm being very clear that I'm giving that sock, that I give the charity's name, and then I just sign and date. And so there are definitely ways of automating. There's third parties too. But for me, honestly, it takes two seconds to just say, here's the shares I want to give. And I like to control it a little bit because I want to look at the tax slots. Like if I bought 10 shares January, and then I bought 20 shares in March, and once I run through my shares in January, I'm going to say, okay, I want to now go through my shares that I bought in March.

1:04:56and then it's just literally the click of a button. So each month when I go through my finances, I sell stock for my portfolio so I can live off of it as an early retiree. And so I go in and say, okay, I'm gonna sell these shares because I'm not really earning that much income now, right? So I do go ahead and sell that. And then I, in the same vein, I just go ahead, okay, I'm donating these stocks and it takes seconds. Amazing. That's really, really helpful. Thank you for going through that. Cause yeah, again, these little things, these little points of friction that hold people up, right. It's again, it's understanding human nature.

1:05:32We've been talking about that. That's really been a through line. A lot of, of this conversation is like, okay, the behavioral, the friction, how do I overcome it? So thank you for, for dialing in. And what I will say is like, if you are a person that just loves being operationally very effective and like a little fee here and there doesn't bother you open up a donor advice fund because you can just do that once and then it's done for you for the rest of time. You don't have to choose the shares. You don't have to choose any of these things. You don't have to fill out that paperwork and sign it or not paperwork, but like e-paperwork and sign it.

1:06:06Right? So if you are someone who just wants to set it and forget it because you think, I might not get to this or it could be hard, go ahead, open a donor advice fund. It's totally worth it then. And you can still open up a donor advice fund with our friendly for the people banks like Fidelity, Charles Schwab, so on and so forth. Nice. Yeah. We obviously don't love to give specific financial advice here. That's always dangerous on a podcast. But I personally opened up a Fidelity charitable account. I think at the time I did the research, it was the lowest minimum, which again, overcoming friction.

1:06:41I think Vanguard had a much more significant minimum contribution. I don't know if that's still the case. Are there any other that kind of rise to the top level that you would say just offhand that you've seen people talk about? I think the ones that you mentioned are great. I think Fidelity and Charles Schwab are really comparable. You're right, Vanguard has a much greater minimum. If you go to my website, yieldandspread.org, and check out the four-part series DAF blog post, In the fourth post, you can go through and see a comparison of providers and who you might want to work with in opening up a DAF.

1:07:16Brilliant. That's absolutely perfect. And everything we've talked about in this episode, we'll have in the show notes for sure. All right. Well, I think we're kind of wrapping up here. And this has been absolutely wonderful. So incredibly helpful. I really appreciate both of you coming on. Jack, I wanted to throw to you for final thoughts. Is there a place that, so someone's listening to this episode. the thing that we talk about most in the choose a buy community is taking action. That is what separates us. I think from any other community online or in the podcasting world, it's our people take action to make their lives better and hopefully to make their community in the world better.

1:07:50So where does someone go once they hit stop on this episode? I love this. And one of the things I have to do on podcasts all the time is say, if you found this convincing, don't think, well, that was interesting. And then get on with your day, actually do something about it. So a really easy action is to go and read The Life You Can Save by Peter Singer or Doing Good Better by Will McCaskill, which are both excellent entry points to this world and were a big part of Rebecca and my journey into effective giving. I was also thinking how different types of listener might interact with this. And if you are a normal person aiming for financial independence, I would encourage you to think about giving 1 % of your income effectively.

1:08:31It won't slow down your path to FI very much, and you will do a staggering amount of good in the meantime. But it's possible that you've already achieved FI. And in that case, I would say to you, is it possible that you have a single liquidity event coming up? That is something like you're going to receive an inheritance, maybe you own stock in a company that's going to IPO, maybe your wealth is growing, not shrinking because it's performing better, in which case think about making a more substantial donation. And then my final plea is, if you are in a position where you intend to give more than a million dollars, you must take advice on how to do that.

1:09:07Because unlike in the way that we invest in the financial independence community, you are basically picking winners and losers in charities because there is not a charitable ETF where you can invest equally in a large number of charities and take the average performance. You are going to put the majority of it into a small number of charities. And if you think it would be insanity to put a million dollars into one stock in the stock market, or even four stocks in the stock market without doing an enormous amount of research and taking advice, it would also be insanity for you to just pick four charities and put a million dollars into it.

1:09:40So if you are in a position to do that because you have achieved financial independence, or maybe you have a liquidity event coming up, then please, please get in touch. And I am one of the people who can do this for you, but there are other excellent people out there who can help you to make incredibly cost-effective donations. Great advice. And that's a perfect way because I was going to ask, okay, how can people get in touch with each of you? So Jack, just launch from there. So you can reach me through the website of One for the World, which is onefortheworld.org. That's one, the numeral, not the word.

1:10:12I am actually transitioning out of One for the World. I'm not entirely sure if that will have happened by the time this podcast is released. But if so, you can find me on LinkedIn. There are two Jack Lewis's. If you find the guy who does a lot of production in Hollywood on films, that is the wrong guy. That's fantastic. And Rebecca, where can people reach you? Yeah, you can reach out to me at yieldandspread.org. I would love to hear from you. There's a bunch of things that I mentioned already, the philanthropy calculator, our giving guide and the coaching program. I'd personally love to meet you.

1:10:51If you are on the path to FI or thinking about giving and just want a little bit of love with your financial plans to see if it's feasible or doable, I would love to chat. So just reach out to me there. Amazing. Thank you both for coming on. This is really, really a wonderful episode. I appreciate your time. Thanks, Brad. Thanks for having us, Brad. I really enjoyed it. Thank you for listening to today's show and for being part of the Chooseify community. If you haven't already, the best ways to get involved are first subscribe to the podcast. So you're listening to this on a podcast player and just hit subscribe and then subscribe to my weekly newsletter.

1:11:26I actually sit down every Monday and write this by hand and I send it out Tuesday morning. So just head over to chooseify.com slash subscribe. And it's really, really easy to get on the newsletter list right there. and I would greatly appreciate it. It's the best way to get in touch with me. You can actually just hit reply to any of those emails and it comes directly to my inbox. So that's the way that I keep a pulse of the community and how we keep this the ultimate crowdsource personal finance show. And finally, if you're looking to join an in real life community, we have Chooseify local groups in 300 plus cities all around the world.

1:12:02So head to chooseify.com slash local and you'll find a list of all of those cities in 20 plus countries all across the world. And if you're just getting started with FI or you have a family member or a friend who you think would be interested, two easy ways. Choose a FI episode 100 is kind of our welcome to the FI community. And even though it's a couple years old at this point, it still stands up and it's a really great just starting point to get an understanding of what is financial independence? What are we doing here? Why are we looking to live a more intentional life where we save money and use it as a springboard to live a better life.

1:12:39And then Choose a Vi created a Financial Independence 101 course. That's entirely free. Just head to choosefi.com slash fi101. And again, thanks for listening.