The American Heritage Dictionary defines philanthropy as the effort or inclination to increase the well-being of humankind as by charitable aid or donations.
You may ask what does philanthropy have to do with financial literacy? There’s several answers that come to mind so let’s explore a few.
In Consumption vs. Goals I stipulated the formula, Consumption = Total spent – savings – debt payments – taxes. If we reckon for philanthropy the result is, Consumption = Total spent – savings – philanthropy – debt payments – taxes. In this simple mathematical context philanthropy reduces either consumption or savings as debt and taxes generally will remain unchanged. This is only the zero sum view, many see it differently.
The foundations of charity have their basis primarily in religious beliefs. Although they vary in degree charity is described as a duty, virtuous and beneficial to society as a whole. The religious context is not a zero sum game, to those it’s a commandment and it’s synergistic.
In the psychological context philanthropy could be viewed as an antidote to “Viva Yo”. It’s a tool to transcend our mundane desires, a way to give back and be bigger than ourselves.