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How Charitable Giving Improves Your Financial Health – Episode 211


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Charitable giving helps those who receive, but what does it do for those who give?

Is there a correlation between personal financial security and charitable giving? Reese and Ryan reflect on the gifts the giver receives on this Christmas Day episode of the Dentist Money™ Show. 

The dental community has an impressive record of giving both of their time and money to charitable causes. What drives that desire to give back? And what, if anything, do the givers also receive in return for their gifts?


Podcast Transcript

Ryan Isaac:
Hey Dentist Money Show listeners, this is Ryan Isaac. We’ve got a great episode for you, probably one of the last of the year, of 2019. One of the last of the decade. First I just want to say thanks for joining us, thanks for tuning in, we really appreciate it. And this time, on the Dentist Money Show, we are talking about giving back. Donating time, money, talents, things that dentists are great at doing. Mission trips, free dentistry, it’s really cool to see all of the giving that the dental industry does. So, today on the show, Reese and I talk about the different ways that people give back, the different motivations for giving, the different rewards for giving, and what that means for your financial plan and your future, and your happiness.

Ryan Isaac:
Again, thanks for joining us. If you ever like to have a chat with us, go to our website, DentistAdvisors.com, click on the book free consultation button. And schedule a time to talk with one of our advisors. Join our Facebook group, DentistAdvisors.com/group. Come see us at one of our events, anywhere around the country happening all the time now. Or one of our live webinars happening once a month at DentistAdvisors.com/events. Again, thank you for joining us. Enjoy the show.

Announcer:
Consult an advisor or conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a registered investment advisor.

Announcer:
This is Dentist Money. Now, here is your host, Reese Harper.

Reese Harper:
Welcome to the Dentist Money Show, where we help dentists make smart financial decisions. I’m your host, Reese Harper. Here with my trustee old cohost, sir Ryan Isaac.

Ryan Isaac:
Yes, and happy holidays to everyone. This episode is going out, I’m being told, on December 25th, 2019. So, the happiest of all of the holidays that could possibly be celebrated at this time.

Reese Harper:
Ah, the legend himself. Sir Ryan Isaac.

Ryan Isaac:
Yeah. It’s kind of crazy to think the decade’s over. It’s finished.

Reese Harper:
I know. I’m kind of excited to go into the 2020s.

Ryan Isaac:
The ’20s? The rocking ’20s?

Reese Harper:
Yeah. We’re now well past Blade Runner, 2020 …

Ryan Isaac:
I know. All the future movies we grew up with have like-

Reese Harper:
Yeah, like all of our flying cars are now in the air.

Ryan Isaac:
It’s close.

Reese Harper:
And-

Ryan Isaac:
It’s kind of disappointing.

Reese Harper:
… we … Well, I think the original Blade Runner didn’t anticipate one major thing though, about 2020.

Ryan Isaac:
Which is what?

Reese Harper:
I mean, they got the flying cars they got wrong, too. But the one thing they forgot was cell phones.

Ryan Isaac:
Oh, was that not … It wasn’t planned on?

Reese Harper:
They didn’t get that one. Original Blade Runner.

Ryan Isaac:
So crazy.

Reese Harper:
Couldn’t project the cell phone taking over the country.

Ryan Isaac:
They didn’t know that we’d be like the human race-

Reese Harper:
They were still … Yeah. I think there was still literally payphones in that movie, if I’m not mistaken.

Ryan Isaac:
Really? Oh, that’s crazy.

Reese Harper:
I’ll have to check with Tad. Tad, is there … Yeah, I’m getting thumbs up from the producer’s desk.

Ryan Isaac:
Thumbs up. On payphones.

Reese Harper:
Yeah.

Ryan Isaac:
That’s lame.

Reese Harper:
Yeah, there’s still payphones there. I was like-

Ryan Isaac:
Which is worse? The payphones in the future, or the fact that the whole human race now walks around with their arms extended at a 90 degree angle and their necks craned down, and that’s it. That’s how we live.

Reese Harper:
Yeah.

Ryan Isaac:
Just like-

Reese Harper:
Hey, there’s some pluses and minuses to the future, but I think we got some good stuff, too.

Ryan Isaac:
We got some good stuff. Well, let’s talk … Since we’re in the mood, we’re in the mood for giving, and being nice to each other because it’s December and that’s what you do, I’ve got a story for you here. Today the topic is giving, charitable giving. We’re going to talk about some of the implications on financial behavior, we’re going to talk about some of the implications on mental and emotional health, physical health.

Reese Harper:
I gave you a charitable gift for Christmas.

Ryan Isaac:
You did. I am not wearing them right now. A nice little package of ye old stance socks of doom? [crosstalk 00:03:36] The buttery blend.

Reese Harper:
The butter blend, for those of you who do not wear the butter blend. Yeah, just know that it’s a comfortable blend.

Ryan Isaac:
It’s a good blend. So, I’ve got a story. We’re going to kick this off with a little story though, and I’m going to be honest, I think … The story’s about hermit crabs, and if I had to give you a spirit animal in our office, I would say you’re kind of … And by the end of the story, I also think you’re like a hermit crab, just by name. I think you’re like a hermit crab be you like to have an office door closed, and just working just like a hermit would.

Reese Harper:
Yes, since that’s so unusual.

Ryan Isaac:
Yeah.

Reese Harper:
All right. You know, 10-4. I’m going to go with it.

Ryan Isaac:
Slide the food under the door, just don’t interrupt him, let him go. Let him keep going.

Reese Harper:
Let him do his thing.

Ryan Isaac:
Let him do his thing.

Reese Harper:
I mean, except for that, I mean, let’s go with your analogy, but just after having the last week-

Ryan Isaac:
It gets more complimentary by the end of this. I’m just saying. Just the title of a hermit crab.

Reese Harper:
But since the last week of my life has been talking to people while in my office the entire day for nine hours a day, I don’t know. But you know, let’s go with it. Yeah, I-

Ryan Isaac:
You’re probably talking to more people now than you did years … Now there’s like 20 people in a small building. And you don’t even have an office to [crosstalk 00:04:45]

Reese Harper:
Well, when it was you and me, when it was just you and me, and I was kind of didn’t want to talk to you, yeah. I was like-

Ryan Isaac:
So it was me the whole time. Oh. Okay, it was me.

Reese Harper:
Yeah, dude. You weren’t here when there was … The time the fourth person showed up, I opening the door, don’t you remember?

Ryan Isaac:
Like who’s this guy? This is Reese, the CEO, everybody. Have a chat with him. That’s fair. Okay. So, this is the reason I chose the … I heard this story, I read it somewhere. And then when we were going to talk about charitable giving, I thought, “Man, this is such a cool hermit crab story.” So, the hermit crab … Do your kids have hermit crabs, by the way?

Reese Harper:
I mean, a hermit crab hides in its shell, or something. Doesn’t it? That’s all I know.

Ryan Isaac:
Yeah, that’s what it sounds like. But they change shells.

Reese Harper:
We love going to the beach and my kids find-

Ryan Isaac:
Find them?

Reese Harper:
… the tide pools, and then we explore for hours. I’m on the phone usually, working. But yeah, when we’re there, the kids are exploring the tide pools.

Ryan Isaac:
You can see them in the distance? Looking at the tide pools?

Reese Harper:
Yeah, and I pretend like I don’t have the air pods in. I’m like, “Hey kids, yeah. This is awesome. Good job, good job.”

Ryan Isaac:
All right, go ahead. And you’re yelling on the phone.

Reese Harper:
I mute it, and then yeah.

Ryan Isaac:
To the developer?

Reese Harper:
Yeah.

Ryan Isaac:
One of our developer team, shout out to them. That’s a terrible idea.

Reese Harper:
Yeah, good people.

Ryan Isaac:
So, the hermit crab, yeah. They actually, they grow out of their shell, so they keep growing. I don’t know if that’s true forever. But they do grow out of their shells, and they have to abandon one shell and they have to go find another. So, I’ve read this story and I was like, “This is the perfect charitable giving story, supplied by the mighty hermit crab.” So, in the wild they’re actually pretty social creatures, despite their name. And they live in big groups. I’m not sure what the groups are called. We can call them packs, or herds-

Reese Harper:
Crabages.

Ryan Isaac:
What?

Reese Harper:
Crabages.

Ryan Isaac:
Crabages. So, they live in big packs called crabages.

Reese Harper:
We just made that up.

Ryan Isaac:
Yeah, we made that up. That’s not true.

Reese Harper:
Just full transparency.

Ryan Isaac:
Yeah, I’m going to go change the Wikipedia page so that, that holds some water. But anyway, so here’s what happens. So, when one crab starts getting too big for its shell, it goes on the hunt for another one. But when it finds a shell, see, they only like to have a shell that’s the perfect size for them. They don’t like it too big or too small. And so, when they find a shell that might be a little too big, they wait for other hermit crabs to show up. And then what they do, is they extend their little crab hands, which I’m trying to picture these little crab hands, and their little pinchers, I think that’s that they’ve got. And they hold crab hands, and they form a line. And they wait for the perfect size crab to show up, and then they give that shell to the perfect sized crab.

Ryan Isaac:
They just wait. They’ll form a line. Sometimes there’s like dozens of these hermit crabs, and they’re just all lined up holding their little crabby hands. And then they wait for the perfect size one, and they give that one to the perfect size crab, and then they all give each other their shells. They shift shells up. Up the line. Now, I don’t know what this means for the little one at the end-

Reese Harper:
It makes no sense.

Ryan Isaac:
What do you mean? The little guy-

Reese Harper:
Well, I’m not getting it still. So, we hold hands. Do we have shells when we’re holding hands or are our shells off?

Ryan Isaac:
Okay, all the shells, they’re all shelled. So, all these little shelled hermit crabs are holding hands in a line, because one of them found the perfect shell that’s empty, all right? They’re discarded shells, usually from other animals, which is kind of cool. And, but instead of just taking it, the crab waits and he gets all of his friends to come join him. And they hold hands, and then they just measure which crab is going to be the best fit. And they actually order themselves from biggest to smallest in this line. They order it. And then they give the biggest one that’ll have the most perfect fit, they give that one the empty shell. And then they all give each other their shells. They shift down the line, or up the line, and give each other their shells.

Reese Harper:
Oh, okay.

Ryan Isaac:
Yeah.

Reese Harper:
So, they’re like … It’s like we found the perfect shell for you, bud.

Ryan Isaac:
Yeah, yeah. Well, one crab finds it, but he doesn’t necessarily just take it for himself right away. He waits until all of his friends and family come in, and they hold hands, and then they give it to the person who will actually be the best fit in that shell, that’ll fit the best. They’re just like this really crazy story about crabs-

Reese Harper:
That’s crazy.

Ryan Isaac:
… who give each other their shells. And then in this line, and they shift all their shells up. So, I heard that story and I thought, “That’s a good way to end the year, on a high note of the animal kingdom teaching everyone how to be generous and giving, and thinking of others as we-

Reese Harper:
Yeah, before yourself.

Ryan Isaac:
… humans try to do.”

Reese Harper:
I like it.

Ryan Isaac:
Think like the crab. So, that’s what I was saying, you also remind me of a hermit crab. I feel like you’ve done a good job in our business holding hands, theoretically, metaphorically speaking, with people and giving them a good opportunity. So, you’re like a hermit crab, too.

Reese Harper:
Well, I don’t know if I deserve that compliment, but HR be warned, we are not holding hands mandatorily.

Ryan Isaac:
We are consensually holding hands, and it’s just totally metaphorically.

Reese Harper:
Yeah, it’s a metaphorical shifting. Anyway. Let’s talk about charity.

Ryan Isaac:
Well, yeah. So, you had asked me last night. You said, “Hey, look. Let’s try to find the beginning of the charitable deduction.”

Reese Harper:
Yeah, you’re like, “What should we do? Talk about tax?” I’m like, “No, I want to know the day that the charitable-

Ryan Isaac:
I want to know when it started.

Reese Harper:
… deduction was invented.”

Ryan Isaac:
Yeah. And I’m like, “I just want to talk about hermit crabs.” But here, let’s do this. Let’s take a quick break. But when we come back we’ll start there, the history of the charitable deduction.

Ryan Isaac:
Hey Matt, what do you like to drink or snack on when we do our webinars every month?

Matt Mulcock:
Yeah, it’s a good question. I’m usually hitting a Red Bull. But it’s hard because it’s an evening webinar, you know?

Ryan Isaac:
Yeah, these evening webinars taking place 6:30 PM Mountain Standard Time.

Matt Mulcock:
Mountain Time.

Ryan Isaac:
Once a month.

Matt Mulcock:
Where do you find it?

Ryan Isaac:
Well, if you’d like to find the webinar, or you’d like to register for it, you go to DentistAdvisors.com/webinar, or just go to the website and click on webinars under the education tab.

Matt Mulcock:
It’s a good time.

Ryan Isaac:
It’s a great time. What kind of things do we cover in our webinar, Matt?

Matt Mulcock:
So, each month we’re going to hit an element, right? So, it’s going to be some component of your financial life. We’re going to dive a little bit deeper than we would, like on the Dentist Money Show, right? We’re going to draw pictures, there’s live polls, you can ask questions.

Ryan Isaac:
It’s a great time.

Matt Mulcock:
Yeah, it’s a good time.

Ryan Isaac:
Well, we love to see you in attendance at one of our fantastic webinars. Just go to DentistAdvisors.com, sign up today for the next one. Thank you very much.

Ryan Isaac:
Okay, and we’re back. And so, the history, where the charitable deduction started, do you have any guesses? Since you didn’t know. This was news to me too, when I learned all this. So, I’m just curious, do you have any guesses?

Reese Harper:
It’s got to be in the 1900s.

Reese Harper:
Why do you say got to be?

Reese Harper:
Well, I don’t know. I just assumed that it wouldn’t have existed prior to-

Ryan Isaac:
That’s fair.

Reese Harper:
… the 501 … I think it probably has to … I don’t actually really know. I’m totally guessing.

Ryan Isaac:
No, no.

Reese Harper:
But I would’ve thought it was triggered by the establishment of a charitable organization. Like that would have to come before-

Ryan Isaac:
Yeah, that was before.

Reese Harper:
… the tax deduction for a charity.

Ryan Isaac:
Yeah, it was before. So, this actually, the first time the charitable deduction got brought up as part of the tax code was 1913. This is pre World War I.

Reese Harper:
Okay.

Ryan Isaac:
But it wasn’t supported. However, it did get brought up again in 1916, after the war had started as part of the 1916 Revenue Act. The reason was because after the war had started, taxes had increased and there was a really legitimate, very large scale worry about charities and higher education institutions not receiving donations anymore because of the war. So, it was really this bill that didn’t get passed in peace time, and then the war started and everyone was like, “We have no idea how this is going to result economically for us. We don’t know what’s going to happen during the war.” Things got more expensive, taxes went up, and then everyone started worrying people aren’t going to give to charity during this time. So, I got the wording of it … Here’s the original charity deduction. Its contributions or gifts made within that year, to corporations or associations, organized and operated exclusively for religious, charitable, scientific, or educational purposes, or to societies for the prevention of cruelty to children or animals.

Ryan Isaac:
And it equated to 15% of net income. Up to.

Reese Harper:
Yeah.

Ryan Isaac:
So, that was the first one. And two of the things that drove this, obviously the war, but one of them was higher education that relied a lot on donations. They were really worried about that. And the other thing that kind of drove this was they were worried that if charities weren’t donated to, they would go under, and that would further kind of make the government get bigger and bigger to have to expand to take care of more people because charities weren’t. And this was kind of a way for taxpayers at that time to say, “Hey, we don’t want big government. We want private institutions and charitable organizations to do some of that heavy lifting.” So, there’s a little history lesson. 1916.

Reese Harper:
Interesting. You have anymore interesting facts about it? Because I’ve got one I would like to ask you about.

Ryan Isaac:
Do I? That’s kind of a funny question. Do you have anymore interesting facts about the history of the charitable tax deduction?

Reese Harper:
Well no, like about charity.

Ryan Isaac:
I know, I’m [crosstalk 00:14:04].

Reese Harper:
I want to ask you one. You got to guess. Okay?

Ryan Isaac:
Okay, let’s do it. Yeah. Okay.

Reese Harper:
In 2018, okay? Is the last time I was able to collect the data. I didn’t tell you to research this so I just wanted to see if you-

Ryan Isaac:
Sounds good. [crosstalk 00:14:22]

Reese Harper:
… I’ll have a guessing game with you. I wanted you to guess as to the amount of total charitable contributions made in the United States. You probably saw a number like this-

Ryan Isaac:
Dang it, I’m … Okay. I won’t do it. I’m scrolling through-

Reese Harper:
No, don’t look.

Ryan Isaac:
I won’t look, I won’t look.

Reese Harper:
2018, 2018. Just guess.

Ryan Isaac:
In the United States?

Reese Harper:
Yeah, US charitable giving, 2018.

Ryan Isaac:
85 billion.

Reese Harper:
We’re a lot more charitable than you thought. Yeah.

Ryan Isaac:
280.

Reese Harper:
292.

Ryan Isaac:
Okay. I missed the two.

Reese Harper:
Yeah.

Ryan Isaac:
It’s a little cheating, because I did see … There’s some really interesting … That’s where I was going to go next with this. I couldn’t find it worldwide, so we’re going to have to stick to the United States. Shout out to any listeners outside the continental US. Or actually US, I guess. But I could only find US statistics. So, what did you say? 2018 was 292? Because I found-

Reese Harper:
Yeah.

Ryan Isaac:
… 2017 ending data.

Reese Harper:
Well, 2017 would’ve been a little higher than 2018, because they changed. And in 2017’s new tax law, where they doubled the standard deduction-

Ryan Isaac:
Yeah. Which was a worry.

Reese Harper:
It was a worry that they’re like, “It’s going to go down.” But then, it did go down just a little bit.

Ryan Isaac:
Yeah.

Reese Harper:
It’s like 1% or 2% down or something.

Ryan Isaac:
Yeah. Slight change. So, I thought there was some interesting things, like the number one receiver of charitable giving are still religious organizations. It accounts for about a third of all charitable giving. And that usually holds steady in kind of … I mean, it’s just like easily double [crosstalk 00:16:01]

Reese Harper:
Well, and how much does education get, do you know how much the schools get? [crosstalk 00:16:08] It’s not as big as a third.

Ryan Isaac:
Education accounts for 14% of all donations and is just shy of 60 billion dollars a year. In this country, in the United States. And this is by the end of 2017.

Reese Harper:
That’s interesting.

Ryan Isaac:
I mean, here are the categories. You’ve got education, 14%. Human services charities, which I don’t know what that would qualify as, but that’s 12%. Foundations get about 11%. Health charities get 9%. Public society benefit charities get 7%. International charities get 6%. Arts, culture, humanities get 5%. Environment and animals get 3%. You know what’s kind of interesting is-

Reese Harper:
Those animals need more support.

Ryan Isaac:
The animals that … Well, in the original 1916 bill it was specifically mentioned on charities that focused on the wellbeing of people and animals.

Reese Harper:
Interesting.

Ryan Isaac:
We’re only getting 3% to the animals, guys.

Reese Harper:
The number I gave you earlier too, the 292, that was in 2018 from individuals though. I don’t know the corporate donations, but there is a different amount of charitable giving from foundations, and corporations, and-

Ryan Isaac:
There are. So, well, that might be-

Reese Harper:
… I don’t know what that is.

Ryan Isaac:
… the total, because individuals are the largest group of donors. Individuals give 72% of all donations. But see, the next category of donors is bequests, which are like … those are like estates, like in estate gifting, and heirs. That’s 15%, which are kind of donors anyway.

Reese Harper:
Yeah, that’s true.

Ryan Isaac:
And then, corporations are … let’s see here. No, I’m sorry. I’m sorry. 72% are individuals, foundations are 15%, bequests are 8%. So, individuals and bequests are almost 80%. Foundations are 15%, and then corporations are only 5%.

Reese Harper:
Yeah, I want to say the total, I remember looking at this, I just don’t have it in front of me, it was like the total was … It’s like another 25% or 30% beyond the 292 that I said. I think it’s closer to like 400 or something.

Ryan Isaac:
Yeah. [crosstalk 00:18:22]

Reese Harper:
If you count all the bequests and all the corporations and everything else. It’s a lot of money if you think about that. I mean-

Ryan Isaac:
It’s a ton.

Reese Harper:
… our total tax revenues into the government in 2018 is like, I don’t know, I’m sure it’s like in the high single, one trillion, not quite two trillion kind of a thing. And you know, 500 billion in charitable giving …

Ryan Isaac:
Yeah, it’s output-

Reese Harper:
Output?

Ryan Isaac:
… tax revenue.

Reese Harper:
You know, at least a fourth of it, or a third of it. As much as the government takes in, in tax collection.

Ryan Isaac:
Yeah, it’s pretty crazy.

Reese Harper:
From individuals, right? From individuals. So, that’s a lot of money. People give away a lot of money. [crosstalk 00:19:12]

Ryan Isaac:
Well, and then there’s time. So, there’s stats on people volunteering, which I think is really interesting. A lot of our listener base, obviously dentists, are kind of famous for donating a lot of time. In their own cities, donating time giving free dentistry, going oversees donating time, giving free dentistry. So, about 63 million Americans, so about 25% of the adult population volunteered time, talents or energy. And so, it’s kind of interesting. So, the economic value, put that Americans contribute just shy of 200 billion …

Reese Harper:
Really?

Ryan Isaac:
Based on like $1.00 per hour economic value per person. Yeah. It’s kind of-

Reese Harper:
I bet a lot of … How much of that comes from our clients? Dentists, orthodontists?

Ryan Isaac:
Couldn’t find that. I actually looked for that. I wondered by occupation, I couldn’t find any good studies on-

Reese Harper:
I bet healthcare does a lot of that, man.

Ryan Isaac:
Yeah.

Reese Harper:
I swear, it’s like I’m so impressed with how much time our clients and just dentists generally, and doctors generally spend in donating time. It’s just really cool to see that.

Ryan Isaac:
Yeah. You know what’s interesting though, the age groups of the highest donors of time, or volunteers how they put it, the age groups kind of surprised me because they’re age groups that tend to be pretty busy, mid-career. So, between ages of 35 and 44. And the ages of 45 to 54. Basically 35 to 55 are like 20%, almost 29% are giving … in that age group are volunteering time. Which is kind of crazy because it’s such a busy time in life, when I just think about like our average client and all they have going on. Women volunteer at higher rates than men, 27^ compared to 21%. And I think actually, women accounted for about 63% of all financial charitable giving across the country.

Reese Harper:
I knew it, I knew it.

Ryan Isaac:
But yeah, interesting … I knew it. It’s just the nicer-

Reese Harper:
Well, let’s hit a couple of other items on this list that I think are pretty critical for this time of year.

Ryan Isaac:
Yeah, I mean, you probably have some in your mind. I mean, two big things I wanted to talk about here besides some of these statistics, which I think just think are really interesting are the non-financial effect of charitable giving, there’s so many studies that show the effect on our mental, emotional or physical wellbeing. And then also maybe just some of the technical efficient ways to do charitable giving, we can get into at the end. How about you? I know you had some things on your mind you wanted to talk about as far as does giving make us happier? Are we actually better off by giving? Is it all just ego?

Reese Harper:
About 30% of people, or starting at 30 plus percent of the charitable donations each year go to religious organizations. And some of those donations are, let’s say completely voluntary and of their own free will and choice. And then some of those donations might come from a place of fear, of maybe some kind of penalty, right? Or maybe publicly-

Ryan Isaac:
Like your membership dues, kind of.

Reese Harper:
Yeah, like you’re not chipping in and you’re kind of feeling bad about it. For whatever reason those donations come in, I think they’re … It’s applaudable that people are able to live on a little bit less than maybe what they earned and want to give some of that money away to people who might be in a difficult situation, or maybe a situation that’s less ideal than what their own circumstances. But I still think this is like a time in the world where charitable donations are kind of more in question than they’ve ever been, too. Like transparency’s really critical, how much compensation a 501(c)(3) gets from its management team to be able to execute all the work. I know a lot of people feel like they can use their donations to give to immediate sources, but then they don’t get the tax deduction for that.

Reese Harper:
And so, they’re giving money to what they feel like is a good cause, but maybe that cause doesn’t have a 501(c)(3) set up and so you can’t legally deduct it. And then, I sit on one advisory, or charity board that I’m I guess an active, maybe an active participant in, or try to be as much as I can. I help with the financial side of it, and it’s like a scholarship fund for music students that was a … I don’t know if you … It was all from one donor-

Ryan Isaac:
It was a bequest, right?

Reese Harper:
… that passed away. And it was a bequest of a pretty large amount of money that was intended to be used for scholarships for people that were pursuing music, because this person was a music teacher during their life. And so, what ends up happening in a lot of cases with these smaller charities that actually are really cool, like this charity is amazing if you think about it. You can get thousands of dollars in scholarship money if you just show up at these events and say, “I want to pursue, or continue to pursue music throughout high school or throughout my college years.” They’re very open to providing a donation for any purpose that furthers the education or literacy of music. And it’s a great opportunity, but there’s not demand for it, right? There’s not enough demand to make it easy for them to get the money into the right hands of people they feel like are deserving of-

Ryan Isaac:
And really trying extra hard to give it to people that might not even really want it, or appreciate it, or need it.

Reese Harper:
Yeah, people just showing up and they’re like, “This isn’t really a good thing.” So, sometimes they’ll do something easier. Like they’ll buy a piano, right? Or they’ll …

Ryan Isaac:
Interesting.

Reese Harper:
Improve a theater. Or they’ll go to a school district and help. Because it’s easier to do that than try to get the money to the cause, the end point that really matters. And so, what I’m saying is like, I feel like there is a time where it’s important to be able to look at your charitable donations and be able to just understand that dynamic that exists, because it really is … A lot of people end up donating money towards the easiest place to donate to, but then that money doesn’t always get down to the need as efficiently as it should. And I just think that’s a big … It’s a big topic right now. And for me, I think it’s one that’s … It’s important to engage in, because the tax code’s allowing a significant economic advantage to be … Not an advantage, but an incentive to actually improve living conditions, and working conditions, and education for a large percentage of the population. But getting that money into the hands of the right people, it’s-

Ryan Isaac:
And then distributing it after it is in the hands of the right people.

Reese Harper:
That’s what I mean, like getting it to the charity is one thing. And the bigger the charity, like this foundation that I’m a part of, they made the comment to me like, “Man, this is getting to be a lot of work. Should we just … Don’t you think that the donor-

Ryan Isaac:
Just disperse it all and be done?

Reese Harper:
… would be okay with us giving to St. Jude’s?” Right? Or like-

Ryan Isaac:
Oh, okay.

Reese Harper:
… a hospital.

Ryan Isaac:
Just doing something totally different.

Reese Harper:
He loved people, and he’d want to help them. I’m like, “Well, no.” I’m like, “That’s kind of defeating the purpose.”

Ryan Isaac:
Yeah.

Reese Harper:
But it’s hard to get it into the hands of the intended target.

Ryan Isaac:
Yeah, it’s hard, man.

Reese Harper:
And so, I don’t know. And last year, me and my kids were trying … Well, this year too, we’ve been trying to find a family that we can be able to help that is in real need, right? But I can’t even take a charitable deduction … right? When I go do that kind of a thing.

Ryan Isaac:
Do you just go give a family that needs just some extra food and medicine?

Reese Harper:
But I knew a family that was … We got introduced to a family that had come in from another country, and they were a refugee family, and there was like five little kids. And they were living in really difficult circumstances. And it was something that was a really cool opportunity-

Ryan Isaac:
But you need a tax break. It was a [crosstalk 00:27:51]

Reese Harper:
I can’t even get a deduction.

Ryan Isaac:
We wanted to take a break for just a second and remind you how easy it is to book a free consultation with one of our dental specific advisors. What you do is go to DentistAdvisors.com and you’ll see a big, green button that says, “Book free consultation.”

Reese Harper:
Can’t miss it.

Ryan Isaac:
Click that button and book a time that works for you, or you could just call us at 833-DDS-PLAN. Let’s start a conversation about how we can help you with your finances.

Ryan Isaac:
It is a perfect segue, because I was just thinking, there’s like three common thoughts behind why people give, but then there’s some really cool new science on the effects of what happens when people give. Just regardless of their motives. Or regardless of the amounts they gave. There’s some really cool actual physical, mental, emotional effects. But there are these three motivations that are always hotly debated are it’s all under ego. Is it standing, like social positioning? Is it-

Reese Harper:
Yeah, think about it like maybe does the reason that I went and did that, right? Was because I knew I’d get some kind of social recognition, even-

Ryan Isaac:
Yeah, someone knew you did it. Yeah.

Reese Harper:
Well, even if it wasn’t … They knew, the family knew. So that gave me some kind of a benefit, right?

Ryan Isaac:
Yeah.

Reese Harper:
But it’s also just like the personal ego that I might’ve felt from doing it myself. I just felt good about myself for doing it. Anyway, what are your other three reasons?

Ryan Isaac:
Yeah, well that’s one. I mean, yeah, standing positioning kind of in your surroundings. Another one is this desire to improve group cooperation and group cohesion. That is a little bit more altruistic of a thing. I really just want the people and the environment I’m in to just be lifted and be better. I just want the overall environment to be improved, so that’s a little less eco-driven. Most ego-driven is expecting something in return. Like I will do this but I want something back in some shape or [crosstalk 00:29:53]

Reese Harper:
Well, does that count like-

Ryan Isaac:
That’s tax code.

Reese Harper:
… I’m going to go to heaven then? Is that kind of that one?

Ryan Isaac:
I don’t know. Yeah. I mean-

Reese Harper:
Well, isn’t that what that would categorize?

Ryan Isaac:
Yeah, I guess you … Yeah.

Reese Harper:
I’m getting something.

Ryan Isaac:
That could be it. Yeah.

Reese Harper:
I’m getting something physical.

Ryan Isaac:
Begrudgingly, but yeah, in your own faith beliefs you’re like, “Yeah, this will score me some points.”

Reese Harper:
Yeah.

Ryan Isaac:
Get some Brownie points with this thing.

Reese Harper:
Yeah.

Ryan Isaac:
But, so those are the three motivations-

Reese Harper:
Well, isn’t there one that could be nothing? Is there such thing as a motivation that’s literally no one’s going to know about this-

Ryan Isaac:
It’s altruism.

Reese Harper:
Is that exist?

Ryan Isaac:
Yeah. That’s the other argument, that there are some people or some circumstances that give, that are just purely altruistic. Which I’m sure it happens, I’m sure.

Reese Harper:
The most cynical person, I have a very cynical, cynical friend that would say, even in that circumstance-

Ryan Isaac:
Is it me?

Reese Harper:
… that’s still selfish. It’s still driven by selfishness because you get to tell yourself that you’re a good person because-

Ryan Isaac:
It’s still the ego.

Reese Harper:
… you got to give away your money. So, it’s still benefiting your own ego.

Ryan Isaac:
These are all the arguments that people have, for why people give. And they’re actually really, really important to discuss because when people run charities, they have to tap … It’s just marketing. They have to tap into what makes somebody give? And I read this study last night, for anyone … Did you ever do the ice bucket challenge? Was that ALS? Was that the ice-

Reese Harper:
Yeah, it was.

Ryan Isaac:
Was that the charity?

Reese Harper:
Yeah, I think so.

Ryan Isaac:
Did you ever do that? Get any cold water dumped on you?

Reese Harper:
Yeah. I did. Uh-huh (affirmative).

Ryan Isaac:
So, it’s a style of charitable giving where if someone endures pain, it’s the same thing when people sign up for marathons or something.

Reese Harper:
Okay.

Ryan Isaac:
It’s the style of marketing charitable giving where when people endure some kind of pain in some way, that it’s like perceived so being more dedicated. And so, all these things are really … they’re really important debates at the charity level with the boards that you talked about.

Reese Harper:
Well, I want to give you some more reasons, and you can tell me if they fit into your three categories, okay?

Ryan Isaac:
Okay.

Reese Harper:
Because you got your three categories, but I’m thinking like some of the donations that I’ve made have been out of gratitude for what I’ve received from the organization. Like I’m grateful for having participated at this college, and I am grateful for what they gave me so I’m making a donation to that school-

Ryan Isaac:
So, that would go in the category debated as group cohesion or cooperation. That’s your desire to give back to your environment something that you derive value from, that you want to see them succeed, too. And like you want the-

Reese Harper:
Like I got value from that.

Ryan Isaac:
… you want your environment to improve.

Reese Harper:
Okay.

Ryan Isaac:
Yeah, it’s something in your environment that-

Reese Harper:
And then, so not all of … So, it’s interesting. So, let’s say within a religious context too though, that could apply there too, right?

Ryan Isaac:
Yeah, sure. It’s something that’s in your environment that you’re looking to … You want to improve it because you derive value from something in your environment or your immediate-

Reese Harper:
What was the first one?

Ryan Isaac:
… circumstances. The first one was it’s like positioning and standing among peers, or community.

Reese Harper:
Yeah, yeah.

Ryan Isaac:
You were just talking about running one of these things on a smaller scale for music scholarships. I mean-

Reese Harper:
I’m only a small part, but I am on the advisory board. Okay?

Ryan Isaac:
Yeah, and I mean, these are so important. It’s like, humans just really complex and motivating someone to give, it’s just such a big part of it. So, I’m going to tell you about an experiment that I read about that’s kind of the other side of this. There’s all these reasons why people give, but it’s becoming kind of like a … Not even debatable anymore, on whether or not there’s benefits from giving. So, there’s this experiment, I think it was in Germany. Might be wrong on that. But what they did is they told everybody … And they just told all these people this, they just told everyone, “Hey, you’re going to receive …” Just call it 100 bucks. It was not in US dollars. But, “You’re going to get 100 bucks next week, and we’re going to randomly assign all of you …” It was a fairly large study.

Ryan Isaac:
“We’re going to randomly assign everyone to either spend the money on themselves, or spend any portion of it they want on somebody else. And the people who are randomly assigned to spend it on someone else, we’re going to bring you in and you’re going to tell us about your plans for them.” And so, they brought all these people in, they brought the people in who were going to give it to someone else. They talked about their plans, what they were going to do for someone else. And then they brought in the people who were going to spend it on themselves. In that same experiment, they also asked them a series of questions and a series of puzzles and tests that would pit themselves against other people, put them in situations to do that. And then they did all this and ran everyone’s brain scans through an MRI.

Ryan Isaac:
And it turns out that the people who were assigned to give, regardless of the amount that they chose, their brain scans showed high amounts of activity in the centers, regions of the brain associated with good chemical reaction feelings, endorphins, and the same kind of just pleasure centers of the brain. And this kind of experiment has been replicated a ton of times, and there’s really cool ways that they’ve done this. But basically the outcome is no matter what the motivation, and even what these studies are showing is regardless of the amount, there is a physical emotion, there’s a physical chemical reaction because of giving that is this kind of chemical feedback loop, makes us feel … Literally makes us feel better.

Reese Harper:
I’ve seen a ton of research on this, too. It seems like that there is a higher amount of pleasure derived from giving than spending on yourself.

Ryan Isaac:
That’s the point of it. And because it doesn’t last forever, that’s why one of the biggest goals of any charitable organization is to get someone to do it recurring. To do it not at a one-time event. But how do we get a person to think about this every week, or every month?

Reese Harper:
So, I know we got to wrap up, but here’s my takeaway though on this, that for me is-

Ryan Isaac:
Yeah, I’ve got a question for you too, as you close it up here.

Reese Harper:
Well, go ahead. Tell me a question. I’ll [crosstalk 00:35:54]

Ryan Isaac:
Well, yeah. Maybe this will set up what you’re thinking. My question is, in your experience, maybe personally or just watching dentists make financial decisions for the last almost 15 years, what … Do you notice a difference in the way people behave with money, or their habits, or the way that they treat or view money, or wealth, or financial possessions, whatever, a difference between people who tend to give or don’t? Is there like a habitual difference? Is there a personality difference? Does it change or shape people’s financial decisions when they’re givers? Or not givers?

Reese Harper:
This is an easy answer for me, but I don’t have experience outside of watching our hundreds of clients. Maybe I’ve even … I don’t know if I’ve talked to 1,000 people about this, but I haven’t probably observed intimately that … 1,000, but hundreds, intimately.

Ryan Isaac:
Like tax returns, financial decisions, spending.

Reese Harper:
But I would say there is a correlation between the amount of financial security people have, the amount of organization that the confidence level that people have in their finances, and some level of donations. I don’t want to quantify the volume, but people that take time and make effort to donate to some degree, as a general rule, I feel like those people tend to have more organized personal financial situations, and have better financial behaviors generally because they’re forced to do with less than they would’ve done in the first place. You’d think that people that didn’t donate would actually have higher savings rates, or-

Ryan Isaac:
Like a surplus. Or they’d feel-

Reese Harper:
An excess surplus.

Ryan Isaac:
… a greater financial security.

Reese Harper:
Yeah, not sure what … That may be the case. But it’s not my observation at this point. I would have to see more data, because I’m … Some of the most successful people I know are quite generous. So, I guess my summary from this whole conversation is I’m just really impressed with the charitable nature of a lot of our clients. If you look at the most charitable countries around the world, the US is always in the top five. And we’re definitely the largest. The top five are like Ireland, and New Zealand, Australia, Indonesia, I think the US is listed as like the fourth most charitable country of the top five. But we’re by far the largest, and so from a scale perspective, we donate a significant amount of money to charity, and a lot of those charities influence global poverty in a significant way.

Reese Harper:
I just think that’s a really special part about a lot of the dental audience that is part of our audience, and I just wanted to encourage people at this time of year, that Sir Ryan Isaac and I both do feel like taking some time, or some money, and making donations really does not only improve your psychology and your overall financial health, but well, it pragmatically can improve your finances too, and we’ve just seen that observation over time.

Ryan Isaac:
There’s got to be some kind of brain function that when you’re forced to get into habits of sacrifice of some kind. And I mean, this translates across doing that in a business, relationships, health, fitness, finances. I think there’s just a concept of being forced to sacrifice something and probably even more when it’s sacrificed for the benefit of somebody else that probably just rewires your brain a little bit to think about the stuff you have and maybe your gratitude for your career, income, the house you live in, the food you get to eat, the car you drive, whatever. There is a correlation somewhere.

Reese Harper:
Yeah, my point I was going to make is I’m convinced, even though there’s a lot of cynics out there, about why people donate. I’m just convinced that most people that are donating, although there are selfish reasons for people to donate, to me those reasons wouldn’t be enough for people to donate.

Ryan Isaac:
That much, on that volume.

Reese Harper:
Yeah. Yeah. Like on that scale-

Ryan Isaac:
That scale, and what’s happening.

Reese Harper:
… like one fifth of our personal … One fourth, almost, of personal tax receipts-

Ryan Isaac:
Tax revenue. Yeah.

Reese Harper:
… are also coming in, in donations.

Ryan Isaac:
Yeah, and just like looking good to your peers isn’t enough to [crosstalk 00:40:34]

Reese Harper:
That’s not enough, man. If I was just doing that because … But my point was, I’ve seen that there’s a much bigger rationale, that to me you have to want to give some of your money away. It’s just not enough benefit to just be acknowledged by your peers, or get something-

Ryan Isaac:
Yeah, and ego can’t drive ongoing, recurring donations.

Reese Harper:
It’ll eventually die.

Ryan Isaac:
So, lightning round, financial advice as a financial advisor to dentist, two dentists here, would you give the advice that giving of some kind, maybe it’s time, maybe it’s money, will improve your financial situation?

Reese Harper:
Yeah, if it’s time or money. I think it can be time or money, too. It doesn’t have to be money.

Ryan Isaac:
Yeah. I would agree with that.

Reese Harper:
Yeah. Your financial situation is going to get better if you sacrifice something of your own time or your money to help a cause, a benefit. I just think that’s the beautiful thing about our country. We just have a fairly charitable society compared to many countries. And that’s cool.

Ryan Isaac:
Yeah. All right, Reese. Well, I’ll end with a quote, with your favorite person with the last name Churchill. Out of all the Churchills, I’m going to end with your favorite. Winston. He said, “We make a living by what we get, but we make a life by what we give.”

Reese Harper:
That’s cool.

Ryan Isaac:
You like that? Let’s end the year on some good feelings. So, I think shout out to all our listeners, 2019 ending, and kind of crazy to see … just this thing keep going, and really grateful to everyone for joining us and listening, and sending us questions. As a reminder, we take a lot of topics for this show out of our Facebook group. If you go DentistAdvisors.com/group, throw some questions in there that gives us good ideas for topics, and we love to discuss these things. If you ever want to talk with us, about your financial situation, if you have questions, it could be around how to do more tax efficient charitable giving, it might be about your investment portfolio, give us a call. Schedule a time to chat with one of our advisors. You can do that by going to DentistAdvisors.com. Click the big green rectangular button on the screen, and find a time that works in your schedule.

Ryan Isaac:
Also, if you go to DentistAdvisors.com/events, we do a monthly webinar on one of our main elements that we discuss with clients every month. We just did spending, net worth, insurance, so check that out in the events page. And last but not least, if you like to just pick up the phone and call or text us, you can do it at 833-DDS-PLAN. Again, thanks everyone for tuning in, listening to us, we appreciate it. Happy holidays, happy new year. Talk to you next time.

Reese Harper:
Carry on.

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