The Compounding Interest of Altruism

The biggest point of my last post, which I think I probably didn’t communicate very well, is that we need to do more than just talk. That’s true of life generally, but it’s especially true when we’re talking about making radical changes like I propose.

Biz Stone, one of Twitter’s founders, wrote an article a few years ago about the opportunity entrepreneurs have to give back. In that article, Biz describes a concept he calls the compound interest of altruism. He talks about how he and his wife found many opportunities to give, even when they were not wealthy, and the satisfaction they found in doing so.

Like many people, I’m inspired by the lives of some of the world’s billionaires. I’m currently reading Warren Buffett’s biography, Snowball, with great interest (pardon the pun). Sir Richard Branson has a fascinating story, so do Jon Huntsman, Sr. and Bill Gates. Like Biz Stone, each of these people have talked publicly about the importance of giving. And each of them have signed on to The Giving Pledge, pledging to give away more than half their wealth to charitable causes before they die or in their wills.

I remember first reading about The Giving Pledge shortly after I started law school. I was excited to hear that there was talk among the world’s wealthiest about what to do with their money. I thought about it again and again, and the more I thought about it, the more I was impressed.

During my third year in law school I worked in a legal clinic where we helped people start non-profits and charitable organizations. As I worked there, I started to realize that there were pretty severe limits on what a non-profit organization could do if it wants to keep its tax exemption.

Which led me to my next questions – why form a non-profit in the first place? Why can’t a for-profit business do everything that a non-profit does, and then some?

About this same time, I picked up a book about Moses Maimonides, or Moshe ben Maimon, one of the greatest Jewish philosophers in history, who lived in the 1100s. He was, and is, a fascinating guy. One of Maimonides’ most famous teachings regards the eight levels of tzedakah, or charity. His top three levels caught my eye.

Number three was the principle of giving anonymously to a known recipient. As this was how I’d always been taught to give, this made sense to me.

Number two was the principle of giving anonymously to an unknown recipient through a trustworthy intermediary like a charity. This too was familiar to me, since I’ve given a 10% tithe and various other gifts to my church for a long time and my work brought me into daily contact with charities who depended on just this sort of giving.

But the kind of giving that Maimonides described as the greatest was a complete surprise to me. He explained that the greatest form of giving is one in which the giver knows (and is known by) the recipient and gives a present or a loan, enters into a partnership with him, or finds him work so that “his hand will be fortified so that he will not have to ask others [for alms].”¹

Maimonides’ explanation of charity struck me powerfully as the answer to my question. I realized that if he’s right, there’s really no reason why a for-profit business can’t achieve everything that a charity might achieve. More than that, if Maimonides was right, “business” and not “charity” was the way to really help people.

Many charities do amazing work. But charities depend on the willingness of people to donate some portion of their disposable income. Traditional businesses also do amazing work. But employees of those businesses are always dependent on the business for their livelihood.

What if instead we built a company that is focused on developing its employees to the point that they’re no longer dependent on the business? What if mankind truly was our business?

Then we’d really see the compounding interest of altruism.