Why Don't the Rich Give More? Here's Why...
By John Hawthorne
It’s ironic, really. You’d think that millionaires and billionaires would be some of the most generous people on the planet. After all, they could literally withdraw all their money from the bank and use it to insulate the walls of their palatial mansions. They could heat their houses by lighting bales of bills on fire.
But the crazy thing is that compared to the rest of the population, the super wealthy give away a smaller proportion of their income. In Britain, the uber rich can secure a spot in the top 100 donors by contributing a miniscule 1.08% of their income.
Transporting these numbers into the U.S., it would mean that the average American could have those bragging rights by giving about $400 to charity. That’s hilarious in a heartbreaking sort of way. The Atlantic puts it this way,
“One of the most surprising facts of charity in America is that the people who can least afford to give are the ones who donate the most. In 2011, the wealthiest Americans—those with earnings in the top 20 percent—contributed on average 1.3 percent of their income to charity. By comparison, Americans at the base of the income pyramid—those in the bottom 20 percent—donated 3.2 percent of their income. The relative generosity of lower-income Americans is accentuated by the fact that many cannot take advantage of the charitable tax deduction because they do not itemize deductions on their income-tax returns.”
Of course, this raises one huge question: What is really going on?
There is a level of absurdity to the whole thing. If anyone can afford to part with some cash, it’s the men and women who don’t think twice about dropping millions on a yacht of gigantic proportions. So what’s the issue here? Why is it so difficult to separate the wealthy from their money? In this post, we’re going to lay out 7 reasons why the rich don’t give more. By the end, you’ll probably go one of two directions:
- Insight into how to approach the wealthy for donations
The Wealthy Don’t Give More Because They Plan To Give Later
Let’s start with the best reason the rich aren’t giving more now: they have plans to give a lot later. A number of the wealthiest individuals in the world – Bill Gates, Warren Buffet, and Mark Zuckerberg to name a few, have all pledged to give a huge amount of wealth over the course of their lifetimes.
5 Hour Energy creator (and multi-billionaire) Manoj Bhargava for example has also said that he’s going to give away at least 90% of his fortune to charity. Sara Blakely, creator of Spanx, has hopped aboard The Giving Pledge, in which the rich promise to give away 99% of their wealth.
So before you begin gnashing your teeth and foaming at the mouth, at least give credit to those individuals who have a plan to donate.
The Wealthy Don’t Like Being Bothered
Now onto some of the less pleasant reasons why the wealthy tend to be more tightfisted when it comes to their cash. The simple truth is they often don’t want to be bothered. They’ve got things to do, people to see, small corporations to crush. They are busy running empires, making deals, running for president, or selling huge amounts of stock.
Giving away massive amounts of money can be time consuming. There are tax options to consider and causes to research. Wealthy magnates don’t want to funnel cash into an elaborate Ponzi/pyramid scheme. Although their donations could potentially save millions of lives… it simply takes too much time.
To be fair, there are serious challenges in donating large volumes of cash. It’s an understandable challenge. Not all rich people fall prey to this trap, as you’ll see below.
The Wealthy Feel Overwhelmed By Choices
There are an enormous amount of options when it comes to charitable donations, and just like anyone else, they can be overwhelmed by the options. And let’s be honest: many of them aren’t exactly subtle when asking for donations. The hyper-wealthy are often bombarded by organizations asking them to “make a one-time donation.”
Additionally, it can be challenging to find an organization that aligns with their values. As Google’s Craig Silverstein said:
Unfortunately, not everyone is as altruistic as Silverstein, who donated 70% of his fortune to women’s education. Many of the rich are more interested in acquiring more houses, Lamborghinis, and hot tubs than in saving the world.
The Wealthy Don’t Want To Be Hassled
It’s amazing how many long-lost relatives come out of the woodwork when you become rich. That uncle Larry who you haven’t spoken to in years, or that fifth cousin three times removed who’s name you can’t remember. When you make money, you become a target for people seeking opportunities to better their own life. And, it’s tough to say no to family and friends.
Psychologist Moira Summers compares sudden riches to announcing that you like steak…and having someone deliver 200 cattle to your door. She says:
Unfortunately, one of the side effects of this is that it can desensitize the rich to legitimate needs. Some people, such as some of the billionaires mentioned above, are willing to endure the hassle in order to find worthwhile causes, while others simply don’t want to deal with it. This again, reminds us that they often have not experienced the consequences of economic hardship, and are therefore less in tune or empathetic to the needs of those who have.
The Wealthy Are Nervous About Financial Stability
Consider the situation some of the rich find themselves in. Those who boast that their wealth is a result of their own hard labor that took years, are apt to feel almost territorial over it. In their eyes, thanks to their hard work and smart choices, they’ve acquired a huge amount of wealth. They might posit that because they were able to create an empire, or grow a business from the bottom up, why couldn’t anyone else?
So, they’re uncomfortable with the idea of giving up their hard earned money. They’re worried about something going wrong, about everything going to pieces. All their hard work suddenly vanishing, like that guy who sells you a used car that breaks down right away, then never returns your calls. It’s a legitimate, understandable response.
Of course, there are others who don’t have that excuse, either because they’ve inherited huge sums of money, or have built up so much wealth there’s no possibility of it going up in smoke.
The Wealthy Aren’t Exposed To Much Need
When you’re traveling in private luxury jets and staying at elite resorts, you’re not going to see much poverty or need. You won’t rub shoulders with a struggling family on the 18th hole of the golf course, and you won’t encounter developing world poverty as you sit down to a massive steak dinner.
One of the reasons the rich don’t give as much to the needy is that they don’t see the needy as much. Ken Stern wrote in The Atlantic,
This means that the 1% are much more far removed from the issues that those same charitable organizations who reach out to them, are aiming to fix. This also might explain why lower-income individuals are more apt to donate a larger percentage of their income. Those that have experienced food insecurity, poor access to education, or unreliable housing, are more likely to sympathize with those who are currently experiencing those issues.
Implications For Nonprofits and Charities
The above reasons present some interesting lessons for nonprofits and charities. First, they need to be sensitive to the circumstances a wealthy person is in. Are they newly wealthy or well-established? If they’re newly wealthy, they’re probably being bombarded with requests for money and may not be open to helping.
Second, nonprofits and charities need to be aware of plans already in place. As noted, numerous rich individuals already have solid plans for donating a huge amount of their wealth. Their commitment to these plans will, at times, preclude them from donating to other causes.
Finally, the wealthy need to be sold on a cause they truly care about. When you combine their insulation from need and the overwhelming number of options available to them, it’s easy for them to tune you out. For most people, an incentive is needed to give.
Where do we go from here?
You may be feeling disheartened at this point, feel like these aren’t good enough answers to why the rich don’t give more, or that it feels futile for middle to lower-income people to try to take on the worlds problems.
While many of the worlds millionaires and billionaires don’t contribute a large percentage of their income or net worth, there have been some success stories to suggest that this may be changing.
Beyond the amazing initiatives of Patagonia and their founder, other billionaires like Jeff Bezos have hopped on the mega-philanthropy trend. He recently pledged to donate a majority of his estimated $124 billion fortune. Many suggest that this was an effect of mounting pressure from the public for Bezos to be more charitable. This goes to show the effect that can still be had from those who lack the financial capabilities make a significant impact from a sole contribution.
It’s important to remember that while we may not be able to make an impact alone, like the ultra rich, we can generate positive change when we work together. By making our voices heard, and advocating for worthy causes, we are able to put pressure on those who are able to make measurable change happen by writing a single check.
Though the rich may not give as much percentage wise, many still do contribute huge sums to crucial causes. At Business Connect, we recognize that although a controversial topic, shedding light on any new perspective is a core of journalistic democracy. It’s also why we have adopted a business model that is centered around putting people and the planet before profits, and why we are proud to call ourselves a social enterprise. Join us in making our voices heard, and in fighting for global change. Only together, will we make an impact on communities around the world.