Are rich people really stingier when it comes to making charitable contributions?
We’ve started the new year, and we’re all done with the annual giving drives. So how charitable were the affluent folks last year? At this point, I’ve discovered a few things about my local community. The NewTithing Group, a philanthropic research organization is now reporting that compared to other rich Californians, especially the Los Angelenos, the Silicon Valley wealthy haven’t been as generous.
Hmmmm…. I’ve come across such a report more than once the past year. Of course I wondered why so, but it has been said that it may be due to who constitutes the rich in the Bay Area. Or even, who is considered rich. I find this quite ironic so I looked into people’s giving patterns further and here’s what I found.
Some Facts On Bay Area And Silicon Valley Giving Trends
- The giving median is much lower than anywhere else. Basically, the median amount given by the richer Silicon Valley residents is $3,000 or 0.5% of approximately $600,000 in investment assets.
- If instead of the median amount, the average amount attributed to charity were to be considered, then this amount is the highest in the state due to greater contributions from a smaller set of donors.
Lumping all the deep pockets together, Silicon Valley appears generous: the average charitable contribution was $23,122. That’s more than 1.2 percent of the average $1.87 million in investment assets that researchers assumed for each wealthy resident. But a few super-large donations skew that generosity, said Tim Stone, director of the New Tithing Group, the non-profit group behind the study.
- Giving in 2006 increased by 108% from the previous year.
- Charitable giving measurements took into consideration investment assets that excluded real estate, principal residence and retirement funds.
The few things I was surprised about were to do with the fact that given the serious wealth here — because there are certainly pockets of that around — and the political orientation of the area (we’re that blue in the sea of red on voting maps), that we’re supposedly not giving more. Here could be some possible reasons why:
Possible Reasons For Less Giving By The Wealthy
- The giving trends of a diverse population may not be tracked in detail.
Giving can be taking place not just within, but outside of the United States, where it’s harder to follow. There are many people, and not just the rich, who make contributions to developing nations outside of the United States, which can be done more informally and through establishments that are actually sponsored abroad. Money going to such places may not be properly tracked. - The new rich haven’t been conditioned to give.
The San Francisco wealthy tend to be of a younger demographic, while the affluent from Southern California are older, more established givers.Younger and newer wealth is still taking time to feel itself out. They’re still in the “pinch me am I dreaming?” state. In other words, the new rich — which by the way could be considered the suddenly wealthy as well — may still take time to digest their new status and to work out their tithing strategies. The movement towards greater generosity is gradually taking root though.
“It’s very different compared with people who have longtime wealth and who have been giving to organizations over decades,” she said.
The young and newly wealthy — including many enriched by the region’s technology and biotech sectors — are “evolving and giving their time to nonprofits, and their philanthropic practices are growing,” Hernández said. “They are really trying to develop their philanthropic legacies.”
- The rich don’t really feel rich.
Cost of living has been identified as a possible reason for the “relative stinginess.” People may not feel as secure about their situation here even if they have the bucks. - People may be thinking in terms of absolute figures rather than percentages of their net worth when they give.
$3,000 may seem a significant enough contribution from anyone; but may seem low when coming from somebody affluent.
Consider of course that I offer only speculation as to why the numbers are lower here, but these reasons should not deter us from giving what we can afford to provide — as it goes, any amount works when it comes to tithing. There’s also no requirement to wait till the end of another year to think about giving as need knows no schedule.
Reference: SF Gate
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{ 10 comments… read them below or add one }
A good point, I’ve always argued myself that rich people are less likely to give. Why? Its because they are stingy and live below their means.
If the bulk of wealth is tied up in company stock, as is the case with some silicon valley nouveau riche, then I’m sure there’s hesitance to realize that wealth and do anything with it other than leave it where it is. Meanwhile, other millionaires who have become so by building their own businesses (not from stock issued by someone else’s business) do not have wealth tied up in company stock, and will therefore distribute their wealth more freely.
Just a guess… I don’t buy the blue/red argument.
Interesting points, all. I do think that the level of wealth matters somewhat before people are truly comfortable with larger donation amounts. Ricemutt recently had an informal survey going that showed that most people described “rich” as hitting a $10 million net worth. I wonder if people hold off the major contributions till then?
Flexo — the SV nouveau riche do hold much wealth in stock options, but many would be wise to go on a regular divestment schedule for diversification purposes. Hence the regular unloading of options by insiders.
Here’s a question though: if you were THAT rich, how high would you up your charitable giving? Do people go by a percentage of their income or asset base?
I would not trust figures like that. Flexo’s point is very valid. But many wealthy individuals structure their finances in vehicles like charitable remainder trust and the bulk of their donation may come after their passing. Hence, any study on this matter should be taken with a grain of salt.
I would like to know if there is some rich person who will lend me $1,000,000.00 intrust free, for 1and half to 2 years and I’ll give it right back after such time ends. I will not invest it, I will not touch it. It will stay in the bank untill such time is over and then it go’s back to them. They will even get it back with some intrust.
I’m a single mom looking for someone to give me that financial boost. Sometimes all it takes is that little push to change someones life. It’s SAD that people’s dreams are out of reach because of that mighty dollar. I sure could use the help!
I am a 48 year old grandmother of 6, And I worked all my life, went up the ladder at my job to mgt. then I got sick, didnt know why i was sick, i kept working, and dragging myself there for 2 more years, then i lost my mother, on Christmas day, then my husband left me, and i found out why i was sick, i had active lupus, to think i worked so hard, and now i live on SSA, I don’t get very much from that, barely pay rent, my bills are so stacked up, its beyond belief to me, one day all is ok, the next? BOOM, gone! I really need some help! My lease is up in June, they will raise the rent then, and its way too much to pay for me now, so, I have until june 1st to try and find something that i can live in, for 450 a month, with utilities included, I cant pay anything higher than that and pay for a phone too,never mind cable, i haven’t had that for 4 yrs. thats a want too, i only do have too`s, Is there anyone that can help me? everyone wants these outlandish deposits, 1st and last months rent, its unreal! If i cant find anything? its the bushes for me, parks ect. i will be living outside most likely. after all the years i worked….all that, i am reduced to this, i cry A LOT, i don’t sleep, i pace, worry, i walk by homes, with people inside watching tv and reading and thier homes look so warm and nice, i can only pray for that, some kind of home, i don’t care if its a studio lot, i am desperate, just a door with a key, thats mine, i can make it cute, you can do anything with paint, and the right stuff. i am begging for anyone to help me, this is the point i am at. God Bless you all for even listening to me whine…..which is what i usually DON’T DO. take care all, Janene
My story is similar to Janene. I left school at 16 and worked hard up until the present day. I’ve not asked for any handouts from family, friends or the government. Every job i’ve had i’ve turned up at work on time, every time and worked hard because that is what you are supposed to do. Yet i find myself in a situation where i walk 25 mins to work as i can’t afford to run a car, i take out loans to cover bills, and everything looks like it’s spiralling out of control. My job targets are changing which means i have to work overtime to achieve them therefore i will have less time to spend with my daughter even though i only see her at weekends as it is. I live in a half decorated house which has no carpet, curtains or any sort of living-room. I have never been reckless with money so really do not understand how it has come to this. The pressure is so great that i too have sleepless nights. I, like Janene, would never dream of asking for handouts unless its absolutely the final straw and thats where i’m at too. Why do the good people, the hard and honest workers get it so tough? Where’s the justice? You reap what you sow…. i think not! If someone with an awful lot of money would like to make a donation or be kind enough to let me live off their interest it would be so gratefully received, and i am offering myself or any favour done in return.. My ambition is to start a company called Helping Hands where somebody helps you then you help the next person and so on… and hopefully everyone can climb out of this terrible way of life we find ourselves in… Thanks for reading and even if nothing comes of this at least i’ve had a good whine and i feel so much better for it!!!
Life is hard. Try to focus and think systematically about how to get out of your rut. Goodness knows how many ruts I’ve found myself in but dug out of.
You can all do it. You don’t need to ask for help. If need be, why not visit your local church or community parish. They are usually very helpful to those who request assistance and may also be able to provide you guidance, spiritual or otherwise.
@Janene, I know what it feels like to have lupus.
I was just reading about a silicon valley entrepreneur who seems to be going against this trend: Mouli Cohen . Perhaps he is more of an exception to the rule.