Tom Hsieh is among a new breed of philanthropists whose fixed income doesn’t stop them from helping others Tom Hsieh is a philanthropist who owns his own company.
Tom Hsieh lives in a two-bedroom South Pamona apartment with wife and daughter on a $46,000-a-year income.
If you consider these two sentences mutually exclusive, you haven’t met Tom Hsieh.
Hsieh, 39, a former EartLink executive, had an annual salary of $125,000 a year, plus stock options, and gave much of it away – $750,000 to date. As co-founder of a new technology company, Splinter Rock, he continues to give away his income to charitable causes. In fact, so does his new company, while Hsieh’s dream is to create still another company to do the same thing.
Hsieh and his wife Bree are part of a new breed of philanthropists – average or slightly above average income earners who are perfectly content living on fixed incomes but not content seeing the world as it is. So they give away much of what they earn to better the conditions of others.
While billionaire businessman Warren Buffet two years ago issued a challenge to fellow billionaires to give more, it’s actually the middle class who is taking up the challenge, according to organizations such as Bolder Giving, which promotes giving in the United States. According to a recent study by the Indiana University’s Center on Philanthropy, individuals who make less than $50,000 donate a higher percentage of their incomes – 4.2 percent – compared to those making more than $100,000, who contribute only 2.2 percent.
“We see more (average) people starting to give, and you can see a shift because of the actions and feelings it generates,” said Jason Franklin, Bolder Giving’s executive director, who advises donors how to give effectively. “We have stories ranging from people giving away $100 million and 90 percent of their assets to middle class who give 40 percent of their income away,” Franklin added.
Even with the current state of the economy, “the impulse to give does not vanish,” Franklin said. “In fact, we actually see people give more because of economic uncertainty.”
The Hsiehs, who have a 4-year-old daughter, Kadence Grace Ya-Yin, chose that way of life before they married. Devout Christians, they saw it as the proper thing to do. “We were struck by the message from the Bible, which talks a lot about the poor and God’s love for the poor. It talks a lot about how we need to be generous and share with those who don’t have,” said Hsieh, who started married life in 2002 on a $38,000-a-year income.
“When we were engaged to be married we discussed doing this financial discipline of living below the average household income level and putting money away,” Hsieh recalled. That’s when they realized the honeymoon they planned to take overseas was not within their budget. Instead, they honeymooned two hours away in San Diego.
A year later, they received a call from someone representing the Target retail chain. Before they married, they had entered their names in the store’s gift registry and, unbeknownst to them, were automatically entered in a honeymoon sweepstakes -- and won. The prize was an all-expense, seven-day trip to Tuscany, Italy.
“My wife turned to me and said, ‘This is confirmation from God. He will take care of us, and he will be generous,’” Hsieh recalled.
Hsieh’s goal now is “to make this company successful so we can give away a lot of money. My next task is to build the next company to give away a lot of money. I enjoy being an entrepreneur and being part of a startup company and hope to use those skills to generate as much money as possible to give away as much money as possible.”
Hsieh, whose philanthropic story appeared in People magazine, was not born with the proverbial silver spoon. He and his parents migrated from Taiwan when he was 5 years old and moved to a small Iowa town that was so small it got its first traffic signal the day the Hsiehs arrived. By the time he was in junior high school, however, the family had moved to Pasadena, where Hsieh quickly adapted to the Southern California lifestyle and pursued a career in the high tech field.
In the mid-1990s, Hsieh joined EarthLink. Rather than work around the clock, as all executives were expected to do, he asked if he could start work early and leave early so he could tutor youngsters in the neighborhood. Reluctantly, his bosses agreed. Within months, he earned a promotion, large boost in salary and was put in charge of 450 people. When the company went public, almost everyone in the company, banking their stock options, showed up at work with new BMWs or other fancy cars, while Hsieh continued to drive his 1991 Chevrolet GEO. He has since upgraded – to a 2004 Nissan Sentra, which he paid for with $3,400 in cash. The Hsiehs also moved, from the tough South Central Los Angeles to the moderate $1,000-a-month apartment they rent today. Recently, they took in a teenager to live with them.
Hsieh says it has not been difficult adjusting . “The way I think about it is this,” says Hsieh. “At one point I was earning $250,000 a year. What if I were to lose my job and had to go out and find another job amid a bad economy and found a job that paid half as much? That’s still much more than I need. But what if I could only find a job that paid $50,000 or $40,000? That’s exactly what we need to live.”
He also said the lifestyle he and his wife have adapted is not that radically different from their peers. “We still take people out to dinner. We still buy gifts. Once a week I make sure we have a date night. We don’t always eat at the nicest restaurants, but sometimes we do when it fits into our budget. We don’t live in a large place, but we live comfortably.”
And with a lot less stress. While the Hsiehs are financially disciplined, many of his peers, products of the 1980s “Me Generation,” are constantly stressed and “very anxious all the time. They never have enough,” said Hsieh.
As for the Hsiehs and others like them, there is a deep satisfaction in doing what they are able to do. Explained Franklin: “The act of giving to an organization is something you can relive and share for a long period of time. When you see a surge in giving, it is an indication of happiness.”