Hugo on Charity: Philanthropic Lessons from the Ex-Convict and the Bishop

“Forget not, never forget that you have promised me to use this silver to become an honest man.”

-         M. Myriel to Jean Valjean, Victor Hugo’s Les Miserables

You may remember M. Myriel, the good bishop who pardoned Jean Valjean from what could have been the gallows. Valjean, driven to desperation after being released from twenty years’ labor on the galleys for purloining a loaf of bread to feed his sister and her child, escapes and flees to the mountain town where M. Myriel has become bishop. After leaving the bishop’s home, where he is given shelter for the night, he is caught red-handed by the gendarmes in the street with the bishop’s silver plate on his person. The bishop covers for Valjean before the police:

‘“Ah, There you are!” said he, looking towards Jean Valjean, ”I am glad to see you. But! I gave you the candlesticks also, which are silver like the rest, and would bring two hundred francs. Why did you not take them along with your plates?” Jean Valjean opened his eyes and looked at the bishop with an expression which no human tongue could describe.’  

Churchmen, clerics, and saints are expected to make charity a part of their daily lives. It’s not uncommon for religious to give a tenth of their income to various charitable causes; many give more. Many of these gifts are given in secret, with the good they actually do being equally recondite. The most rewarding of these gifts are those of the tenor of M. Myriel’s, however. This post will discuss an aspect of charitable giving that receives less attention than it deserves in the financial press: impact giving.

Impact giving is nothing new. By using the term, we simply mean any charitable or philanthropic endeavor where the donor has significant, boots-on-the-ground, face-to-face, personal involvement with the recipients of their financial largesse. The limits of this type of giving, as well as the activity many of these institutions engage in routinely, are circumscribed only by the imagination of the donor. Consider a few examples:

·        The George Kaiser Family Foundation buys Bob Dylan’s archive in an eight-figure deal with New York-based art, music & literature dealer Glenn Horowitz

·        Nike founder and “Shoe Dog” Phil Knight gives a $500MM gift to his alma mater, the University of Oregon

·        A member of a local community establishes a $5,000 donor-advised fund with a focus on breast cancer research

And the list goes on. Charity is woven into our country’s history, its public policy, and its tax law. One of the few gifts in the tax code that still remains (the current administration notwithstanding) is the lack of a statutory limit on charitable deductions (apart from the 30% of AGI limitations in a given year). This is part of our heritage. Yet, for all the financial benefits charitable gifts afford their donors, many of them lack the intimacy of spirit that passes between Myriel and Valjean – the human element is lost. What can we do about this? There are several solutions.

Solution #1: Give your money to the good ones, but give your time to the great ones 

Those in the financial world often have a limiting view of charitable giving – it’s something they tell rich people to do to lower their income and transfer tax burdens. But most experienced advisers know that charitable giving for the sake of tax benefits alone rarely bears fruit; it’s only those who already have established a pattern of giving to their favorite causes who are well-equipped to consider the major gifts that afford the greatest financial benefits. For those causes that are producing palpable results for their stakeholders – the bone marrow bank that’s provided thousands of extra matches last year, the scholarship fund that’s allowed an immigrant to pursue a STEM degree, the refuge that’s provided a hundred rest-filled days to parents of care-intensive special-needs children last year – it may make sense to consider monetary gifts. But what about the person you ran into on the street who your radar tells you is actually telling the truth about losing her job and needing help meeting the basic needs of daily life? What about your corner food bank or soup kitchen where hundreds or thousands of people can eat each day, but who are always short-staffed? What about the literacy clinic where twelve year-olds are still struggling with first-grade reading material, or the home for abused spouses? The calculation here is simple: consider what means the most to you, and whether your dollars or your hours will do the most good. 

Solution #2: Use your imagination

One rule of thumb in dealing with charitable giving is that you shouldn’t assume it can’t be done just because you haven’t heard about it. Mark Zuckerberg didn’t politely ask the IRS before deciding to establish his ground-breaking “entrepren-anthropy” (though he undoubtedly vetted it through his tax and legal team). Instead, he assumed he could bring an element of the entrepreneurial vision that made him successful, and turned it into gifts designed to have an impact. Perhaps the vehicle for most well-off and affluent families for this is the private foundation. Private foundations do have limits attached to them, but those limits are fairly broad. Survey data shows that, in general, millennials are a generation searching for meaning; they like to know about the impact of the decisions they make and want to know that what they do produces a palpable result. This characteristic is tailor-made for the children of a wealthy family who want to teach members of Generation Y about vetting charities, researching track records and seeing if they’re good stewards of the gifts given them, and even coming up with innovative ways to help struggling organizations achieve 501c3 status. Think briefly of the incredible breadth of human endeavor a private foundation can write checks to:

·        Art museums

·        Libraries

·        Rare bookstores

·        Music collections

·        College and university programs

·        Hospitals and medical clinics

·        Religious institutions

·        Scientific organizations

Robin Williams said in Dead Poets’ Society: “Medicine; law; engineering: these are noble pursuits; but poetry; art: literature; romance: these are what we live for.” To paraphrase Churchill: “We make a living by our business; we make a life by our art.” The right kind of charitable gift – whether large or small, in financial or in human capital – helps us cultivate a side of ourselves that other activities don’t.

Solution #3: Give it away in secret

It may seem strange to mention this in a financial column, but sometimes the most valuable charitable gifts are those that never make it to your Schedule A. Nir Poraz, an Israeli special forces commando killed in a 1994 hostage rescue, once told his soldiers: “Give, not out of habit, or as though anything is expected of you, but as the sun that shines; as the shadow that falls.” This is genuine altruism. The ancient Romans termed it caritas; it is characterized by complete disinterestedness as to the donor’s benefit on the one hand, and naked solicitude for the welfare of the donee on the other. We can again turn, momentarily to M. Myriel’s cash flow worksheet, which Hugo provided us in his immortal epic:

Schedule for the Regulation of my Household Expenses

·        “For the little seminary, fifteen hundred livres.

·        Mission congregation, one hundred livres.

·        For the Lazaristes (lepers) of Montdider, one hundred livres.

·        Congregation of the Saint-Esprit, one hundred and fifty livres.

·        Seminary of foreign missions in the Holy Land, one hundred livres.

·        Maternal charitable societies, three hundred livres.

·        For that of Arles, fifty livres.

·        For the amelioration of prisons, four hundred livres.

·        For the relief and deliverance of prisoners, five hundred livres.

·        For the liberation of fathers of families imprisoned for debt, one thousand livres.

·        Additions to the salaries of poor schoolmasters of the diocese, two thousand livres.

·        Public storehouse of Hautes-Alpes, one hundred livres.

·        Association of the ladies of D- of Manosque and Sisteron for the gratuitous instruction of poor girls, fifteen hundred livres.

·        For the poor, six thousand livres.

·        My personal expenses, one thousand livres.

·        Total, fifteen thousand livres.” 

This is a fictional character, it’s true. But there are undoubtedly elements of authenticity behind the author’s work. Hugo himself, at his own request, was buried in a pauper’s grave in the Pantheon, and the continual almsgiving that his protagonist in Les Miserables exhibits seems to betoken much of his own feelings about charity. Perhaps the lesson to be drawn from the good bishop is that, if we devote enough of ourselves to the cause, the effect will take care of itself. This is charity’s greatest reward. 

This material is presented for informational purposes only and should not be construed as individual tax or financial advice. ? 2017