Electric air taxis aren’t going to save the world. Really taxing the rich, on the other hand, could.
Wealth-X, a global research firm that helps businesses “uncover, understand, and engage with the world’s wealthiest individuals,” has just released some new data on the global $5-million-and-up crowd.
Last year ended, Wealth-X calculates, with 3.6 million individuals worldwide worth at least $5 million, a total up 71 percent since a decade ago. North America hosts 43 percent of these global rich, with Asia at 26 percent and Europe at 24 percent accounting for considerably smaller shares.
Our world’s wealthiest now average just over 60 in age. They overwhelmingly share, notes Wealth-X, a “strong interest” in sports, technology, and travel — and philanthropy. And this “strong interest” in philanthropy, the Wealth-X researchers tell us, increases as people of ample means add on the years.
“As they age,” the researchers suggest, “wealthy people often tend to divert a greater proportion of their time to more personal ambitions — such as creating a legacy and giving back to society — and so philanthropy increases in popularity.”
Just how popular? Wealth-X has a stat designed to measure personal “affinity to philanthropic giving.” Anyone in the deep-pocket universe who has given “at least one single gift of $10,000 or more to charitable causes over the past five years,” says Wealth-X, qualifies as someone with an “affinity” for charitable giving.
By that yardstick, well over half of our world’s contemporary wealthy — 54.5 percent — have a clear “affinity” for sharing their grand private fortunes.
A lot here, as they say, to unpack.
Let’s start with the 45.5 percent of the world’s rich who don’t show what Wealth-X deems an “affinity” for charitable giving. These individuals all hold at least $5 million in wealth. Yet they could not bring themselves over the past five years to give even one charity a single donation of $10,000 or more.
For the least rich of the deep pockets in the Wealth-X data, those individuals worth a mere $5 million, a $10,000 donation would amount to an outlay of 0.2 percent of their personal net worth. For anyone holding considerably more than $5 million, a $10,000 donation would amount to an even smaller share. A $10,000 contribution, for instance, would amount to just 0.02 percent of a $50-million net worth and a microscopic 0.001 percent of a personal fortune worth $1 billion.
So those tightfisted wealthy who haven’t seen fit to make a single $10,000 donation over the past five years aren’t just demonstrating a lack of “affinity” for charitable giving. They’re demonstrating a clear aversion to significant giving.
And what about those individuals of substantial means who have cleared the $10,000 bar? These affluents haven’t cleared much of a threshold. Giving away a minuscule share of the wealth you can easily afford to give away in no way shows you have an “affinity” for charitable giving.
Why are our wealthiest giving away so little? Claude Rosenberg, a successful San Francisco-based financial investment executive over the last quarter of the 20th century, felt that America’s wealthy simply hadn’t done the math. So he set out to do the math for them.
In 1991, Rosenberg pointed out, the over 50,000 Americans who made more than $1 million for the year contributed, on average, a modest $87,000 a year to charity. These wealthy Americans could have upped their contributions to charity by ten times and still ended the year with more wealth to their names than when the year started.
Rosenberg explained all this, patiently and clearly, in a 1994 book, Wealthy and Wise: How You and America Can Get the Most Out of Your Giving. A few years later, in 1998, he would launch an advocacy and research organization, the NewTithing Group, to spread the book’s message. His NewTithing website, meanwhile, offered a charitable capacity calculator. Wealthy families, the calculator exercises demonstrated, could live a luxury lifestyle and still, at the same time, significantly increase their giving.
Rosenberg, a man on a mission, even warned his fellow wealthy that darker days would surely be ahead if they continued to shortchange America with their charitable giving.
“America’s lopsided distribution of resources could one day result in heavier taxation of the wealthy,” he cautioned. “And in difficult economic times, growing inequality could lead to more frequent threats of violence and even destruction of property aimed at the affluent.”
Rosenberg would go on to deliver speeches from coast to coast on the ample, untapped giving capacity of America’s rich. His ideas drew admiring coverage in the Wall Street Journal and a host of other major publications. By the end of the 1990s, no single individual could have possibly done more than Rosenberg to convince affluent Americans to up their charitable giving.
But nothing changed. In fact, the problem that horrified Rosenberg continued getting worse. In the 2000 tax year, according to data NewTithing released in 2002, households that made over $1 million could have afforded to give over $128 billion more to charity and still not lost a cent off their net worth. In 1991, by comparison, these super wealthy could only have easily afforded to give $40 billion more.
In 2008, at age 80, Rosenberg passed away. If he had lived a few years longer, he might have ended up also focusing on the other side of the philanthropic coin. America’s awesomely affluent, as a group, don’t just give less generously than average Americans. The dollars they do give turn out to consistently ignore the needs of truly needy people.
“It’s a mistake to believe that the wealthy are contributing mainly to causes that help the poor,” as Teresa Odendahl, the former executive director of the National Network of Grantmakers, has noted. “The majority of their money goes to their churches, their universities and schools, and to the arts — these are nonprofit organizations that serve them.”
The late great columnist Nicholas Von Hoffman would make the same point a little less delicately. The rich, he opined, “give nothing away except to the cancer clinics they go to, the colleges they send their kids to, and the business schools they get their junior henchpersons from.”
Added Von Hoffman: “The museums they do favor have been turned into annexes where they throw their private parties.”
And all this “giving,” we always need to remember, brings the rich tax breaks aplenty. The rest of us, in other words, are helping to pay for those parties.
Sam Pizzigati co-edits Inequality.org. His latest books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. His earlier book, Greed and Good: Understanding and Overcoming the Inequality that Limits Our Lives, now appears free online through Inequality.org. Twitter: @Too_Much_Online.