So far so good. The financing of a charity, however, can be more troublesome. The beneficiaries of a charity, be it children, those with chronic conditions, mental health issues, food hunger and so on, by and large can’t afford the full market price of the services a charity provides; this, after all, is the charity’s raison d’être. Instead, the funding shortfall is made up by donors. The result is that, unlike the business example above, charity management often have two prime constituencies as they are required to look after the beneficiaries with one hand, whilst simultaneously maintaining and growing a donor income stream with the other. This “one man, two guv’nors” dynamic is made harder in the UK by the country’s (unintended, I think) just-in-time, fund-raising culture, whereby charities do not know what they can spend next year without having first raised it this year. Such hand-to-mouth funding fosters financial insecurity, makes long term planning difficult and it may also promote, perhaps require, a drift by the charity into constant sales/ spin-mode in an attempt to pay the bills. Under such pressure, any means to get the donor to sign up can be seen as fair game. Suffice to say, the model does not always work well.

      Zak and I wrote a fair amount about mistakes in the Nomad letters (which can be found elsewhere on the IGY Foundation website) in which we discussed how mistakes often result from overweighing an apparent short-term win, without fully recognising the consequent, long-term cost. We all do this to some extent. A list of common mistakes/vices might include snacking on chocolate cake, smoking, drinking, drugs, (Pastor Zakaria will be available for confession shortly), lying, stealing, cheating…all represent a short-term high/convenience whilst borrowing something from the long-term. Companies are not immune: firms that cut (vital) investment spending to “protect (this year’s) profits” or make acquisitions to plug revenue growth holes are borrowing from their future. Of course, businesses can be well run or poorly run, and charities can be well run or poorly run too, but, in our opinion, the distinction between good and bad is often synonymous with a long-term or short-term orientation: long-term good, short-term bad.

      In the morning of the Berkshire Hathaway Annual General Meeting in Omaha, Nebraska each year, the firm shows a twenty-minute video containing clips from the last fifty/sixty/seventy(?!) years. In one clip, perhaps from the 1980s, the firm’s Chairman, Warren Buffett, is asked how he differs from other investors and he provides a one word reply: “patience”. Zak and I may be biased, but we think that clip is quite a moment.

Patience is a product of confidence and trust**

      If Zak and I are not confident in our analysis and/or, if we don’t trust the other guy then, without those two bedfellows, what is the case for being patient? And, without patience there is no force preventing the drift toward short-termism, with all the moat-draining behaviour that implies.

      In our opinion, (reasoned) confidence, (deserved/earned) trust and (resultant) patience is what seems to be lacking in so many business, charity and political ecosystems. The table above contains a list of short-term characteristics and their long-term alternatives. The list is not exclusive (outputs and inputs are often inter-changeable) or exhaustive, but it may be the start of a map away from the worst moat-draining activities and behaviours and toward a more rational and fruitful allocation of time and resources. And, ultimately, as Charlie Munger (Berkshire’s vice-Chairman) likes to ask, don’t we all want to live in a seamless web of deserved trust? We hope that the check list may be of some benefit to you, as it has been to us, in spotting and avoiding the worst of the short-term folly.