The Karma Fund
In 2011, I decided to allocate a percentage of my monthly salary to a conceptual Karma Fund — a personal movement of cosmic goodwill capital governed by three simple principles:
- It’s an acceptable/humane percentage of your gross monthly salary (you can start with 5%)
- There should be a layer of interactivity with your act of charity- recipients undergo a certain selection process.
- Gains from the karma fund are primarily intangible and not just an overall good feeling about yourself. There will always be an exception for tangibles (like Kickstarter, which figured prominently in the fund).
Think of the Karma Fund as an exercise in investing — answering the question — “Which one can give me happy returns?”. While the act of charity is designed to be selfless, I don’t see any reason why you can’t also enjoy and learn immensely from the experience of giving.
Investment Parameters
The objective is to primarily invest your funds in crowdfunding projects you can find on Kickstarter (and similar websites).
Alternatively, as long as you follow the main investment theses (items 1-3) you can explore other funding opportunities offline. It could be in the form of personal contribution to causes like a friend’s schooling, your mom’s entrepreneurial initiatives or even Favors Receivable — skilled man-hours rendered to other people within your professional/personal network pro bono(more on this later). Feel free to experiment.
Should you choose to work with a charity, then the Karma Fund way is to come up with a portfolio of small donations to charities of your choice — the same practice you apply to actual financial investments. One key attribute of the Karma Fund experience is diversity, a virtual trophy case that allows you to monitor, revisit and assess based on its karmic performance. In this context — the more, the merrier.
Favors Receivable
Of course, the Karma Fund doesn’t have to involve real money, people who choose to optimize their savings can still practice and participate in the fund by rendering services with a corresponding monetary value.
To illustrate, you can use the following sample formula:
(Monthly Gross Salary / 240 work hours) * 2 (charity value hour multiplier — feel free to tweak this) = your charity hourly rate.
Say you make US$6,000.00/month then divide it by 240 = US$25.00 multiplied by your charity value hour multiplier x 2 = US$50.00/hour
Going back to the core principles above (item 1) then you have a maximum budget of US$300.00 worth of skilled favors to render based on 5% of US$6,000.00
But what exactly do you gain from here that’s tangible? This is a bit of a gray area and subject to much debate. But here’s the thing, Favors Receivable — based on experience yields better returns in the form of equivalent favors, referrals and even job offers.
Bottom line is, as long as you play nice and don’t charge people for every little thing you do (in moderation of course), the rewards are truly worth it.
Karma Fund Portfolio
My KF portfolio looks like this at the moment.
- 50% Kickstarter
- 10% Charitable Institutions
- 40% Favors Receivable*
My Favors Receivable has been a great ride so far. This month alone, I’ve designed a logo for a friend, introduced a stranger to some VCs and provided ad-hoc tech support to a friend 8000 miles away.
As for the 10%, this was actually in the form of church donations, money given to the homeless and the like. Nothing quite tangible here, so this considered as traditional charity embedded within the Karma Fund.
What’s your mix?
