It's that exciting season again -- the Foolanthropy time of the year. I'm a longtime Fool writer who has been around for more than a decade, long enough to participate in and support every Foolanthropy campaign. I've seen us raise money to fight hunger and to build wells to provide clean water. I've seen us support organizations protecting animals, providing resources to public school teachers, and delivering relief aid around the globe. Over a decade, we've raised almost $3 million together, you and us.
Starting this year, we're doing something a little different. Instead of selecting to support organizations that tend to very different problems around the world, we're choosing to focus on one critical issue and to make it our own. Check out this ambitious goal:
We want to eradicate financial illiteracy around the globe.
The need is great
There's more financial illiteracy than you realize:
- Of the 4,000 students who took the Jump$tart personal finance survey in 2004, 65.5% received failing scores.
- Those aged 18 to 24 spend nearly 30% of their monthly income on debt repayment. (That's twice the rate from 1992.)
- In the 2006 Jump$tart survey, only 14.2% of teens knew that stocks are likely to have higher average returns over the next 18 years than savings bonds, savings accounts, and checking accounts.
- Only 40.3% understood they could lose their health insurance if their parents became unemployed.
- 43% of adults at the lowest level of financial literacy live in poverty, versus just 4% of those at the highest level of financial literacy.
How well can anybody live their lives if they don't understand financial basics? Consider that according to the 2006 Retirement Confidence Survey, some 42% of those aged 55 and older have less than $25,000 socked away for retirement. Imagine how they'll spend their golden years, and how different their retirements would be if they had learned as teens or young adults how to spend, save, and invest sensibly and effectively.
Fortunately, the movement to boost financial literacy is gaining momentum. Dell (Nasdaq: DELL ) , Harley-Davidson (NYSE: HOG ) , and McGraw-Hill (NYSE: MHP ) are on board supporting Jump$tart. And you'll also find financial companies like Capital One Financial (NYSE: COF ) , MasterCard (NYSE: MA ) , Schwab (Nasdaq: SCHW ) , and Intuit (Nasdaq: INTU ) on that list, too.
Why it makes sense
When we announced our commitment to financial literacy (and urged you to nominate worthy organizations for us to consider), some longtime Fools weren't thrilled, and I understand why. You might agree that financial literacy is important, but perhaps you think other causes are more crucial. I think along similar lines in my own giving. I give to my alma mater happily and regularly, but I give relatively little. I'd much rather give more to organizations that focus on life-and-death matters.
But the more I think about this new Fool twist, the more I like it. Here's why: It really doesn't have such a narrow scope. One of my favorite kinds of charities focus on micro credit and micro grants, such as Grameen Foundation, for example, and Heifer International. They provide families with animals or with small loans to start small businesses, helping them lift themselves out of poverty.
Those grants and loans have a strong financial literacy component to them, if you think about it. They are given along with financial and business education for their recipients, and this information is surely passed on to children in the families. Kids will see that with a $100 loan, their mom could buy a sewing machine and start making enough money for a home and to send them to school. They'll see their mom take out a later, bigger, loan as she expands her business, perhaps hiring assistants. These are valuable business lessons.
I also like the epic scope of the campaign. It aims high: "Our long-term goal is to ensure that every young person in the world gets a basic financial education."
Finally, I take inspiration from none other than super-investor Warren Buffett, who wrote the following to his son Howard, as he gave him a chunk of his massive wealth:
Focus the new funds and your energy on a relatively few activities in which HGB [the Howard G. Buffett Foundation] can make an important difference. Concentrate your resources on needs that would not be met without your efforts. Conversely, avoid making small contributions to the multitude of worthwhile activities that have many possible funders and that would likely proceed without your help. ... Pay attention to your home community but favor a broader view. Judge programs by how they fit with your goals and their chances for success, not by who makes the request. Expect to make some mistakes; nothing important will be accomplished if you make only "safe" decisions.
This makes me smile, when I think of Foolanthropy and our fight against financial illiteracy. It just makes so much sense -- we've been around for longer than a decade, teaching millions how to improve their financial conditions. Our motto has long been "To educate, amuse, and enrich." We even wrote a book for teens on money. This is our niche -- and yours, if you're a denizen of Fooldom.
We now invite you to become involved as we help young people around the world become educated and enriched -- and avoid lifetimes of debt and fiscal strife. You don't have to give all your charity money to our campaign, but please put aside at least a little for it.
If you've spent any time with The Motley Fool, it's probably because you believe in financial literacy -- for yourself. Help us spread the good word to others -- that life can be sweet with financial security. Make a nomination for a charity that addresses financial literacy in youth, here.