Giving Back While Alive
Charlie Munger advocates for giving away wealth while still alive to experience the joy of giving and to make a rational contribution to society, distinguishing himself from typical businesspeople who outsource giving.
THE IDEA
Charlie Munger's Philanthropy
Charlie Munger, vice chairman of Berkshire Hathaway, believes in deliberately reducing his net worth by giving away money while he is still alive. In 2013, he stated: "I’m deliberately taking my net worth down. If it’s not below a billion, it soon will be. My thinking is, I’m not immortal. And I won’t need it where I’m going. There is nothing as insignificant as an extra $2 billion to an old man. I am soon going to be departed from all of my money. Why not give more of it away while I get the fun of giving it?"
Munger differs from most American businesspeople in his firm conviction about giving back. He controls the spending to make real progress, rather than outsourcing the issue. He feels that his fortune was earned not by being productive but by being able to pick the right stocks – a talent he considers a gift that comes with a duty to give back to his country and use his money rationally.
Munger notes: "To the extent that all I’ve done is pick stocks that have gone up and made my family richer, I haven’t left much contribution to society. I guess it’s a lot like Wall Street. The difference is, I feel ashamed of it."
His approach reflects a combination of philosophical and capitalistic wisdom. At Berkshire's 2008 annual meeting, Warren Buffett described how Berkshire collects reputable businesses rather than engaging in disgraceful schemes, comparing it to selling a painting to the Metropolitan Museum versus a parts operator. This illustrates the long-term, rational approach that Munger and Buffett employ.
Munger, emulating Benjamin Franklin, sees competitive capitalism not as mere materialistic competition through greed and dishonesty, but as a process that can be reconciled with rationality, humanity, morality, and honesty.
When to use it
A successful investor deciding how to allocate their wealth between personal consumption and philanthropy, considering the joy and impact of giving while alive.
A business leader evaluating acquisition offers: choose a long-term, reputable buyer that will preserve the business's legacy, similar to Berkshire's approach.
An individual assessing their duty to give back based on their skills and the source of their wealth, applying rationality to maximize positive impact.
A philanthropist designing a giving strategy that ensures they are actively involved and see the real progress, rather than delegating to others.
FROM THEORY TO EVERYDAY LIFE
In practice
Charlie Munger's Personal Example
In 2013, Munger publicly stated he was deliberately reducing his net worth by giving away money while alive, feeling that an extra $2 billion is insignificant for an old man. He wants to experience the fun of giving and ensure his wealth is used rationally for societal benefit.
Berkshire Hathaway's Acquisition Philosophy
Warren Buffett compared selling a business to Berkshire to selling a painting to the Metropolitan Museum, where it will have a wing forever, versus selling to a 'parts operator' who will modify it for short-term gain. Munger and Buffett take this long-term, rational approach to business, wealth, and philanthropy.
A MOMENT TO REFLECT
Put it to work.
What unique talents do you possess that could be considered a gift, and how can you use them to contribute rationally to society?
How does Munger's perspective on giving while alive change the traditional view of philanthropy as a posthumous activity?
In what ways can you apply the principle of 'feeling ashamed' of merely enriching yourself, to guide your career and wealth decisions?
CONTINUE THE CONVERSATION
Source texts
- The Art of Being Rational Charlie Munger