Last month, one of the updates concerned this question of why those best able to afford to give money actually give less, in after-tax percentage terms, than everybody else.
A friend who makes several million dollars a year — and who has donated some of it to build a pediatric intensive care unit at a major university hospital — has pondered the question at my request and provides this considerable insight:
I have often wondered why (some) “rich” people don’t give to charity. Here are my conclusions. Most of these were learned when I solicited funds for the pediatric intensive care unit that I largely underwrote. Even with my underwriting, and offering to match two-to-one, this is what I found out:
- Most people who are rich don’t think they are. They do not adjust to their new circumstances. If they started out poor, as did many, they are still into saving pennies, and cannot easily change their habits.
- Many cannot connect the dots between the giving and results. They are too busy to do anything but work, and thus give to United Way or some other umbrella organization, and don’t feel the connection. Those who have the time, start the kinds of project I did. Mine came from a tragedy [the loss of his infant daughter], a catalyst I don’t wish on anyone.
- Taxes. I am sure you will disagree here, but when taxes approach 50%, as they do in NYC, people feel they have “given at the office.” When only 50 cents of every additional dollar earned is retained, the thought of giving becomes less attractive. [Actually, I believe studies show that the higher the tax rates, and thus the tax “benefit” from a charitable deduction, the more people are inclined to give, “since it just would have gone to the government anyway.”]
- Failure to identify. When I was in Eastern Russia, I could not get the money out of my pockets fast enough to give to the blue-eyed, blond children there. When I watch the local nightly news “perp walk,” or the Rwandan tragedy, I do not feel the same “pull” on my heartstrings that I do when I see kids who look like my kids. Notwithstanding our pediatric ICU serves mostly minority kids, it took me some time (6 months, day to day) to identify with them (their parents never came to see them). While this may sound racist, I feel there is a lot to it. People often give because “…there but for the grace of god…,” and they don’t identify with gang members, drug addicts or welfare mothers (even though the situations could easily be reversed — the thought is a tough one).
- The Balkanization and Asianization of America. When people come from societies without a Judeo-Christian heritage, where “no work, no eat” is the norm, they are less likely to be “givers.” There is a surprisingly small amount of donations from Asians and Asian-Americans, relative to their success. The same for Hasidic and Lubovicher Jews in NYC (Balkanization). And for actors and actresses. (They will make appearances, but rarely donate cash, no matter how successful they are – see #1 above). I know my metaphor is a bit mixed here, but I hope you get the point.
- The rapid pace of change, both technological and societal, makes people anxious, and enhances their perceived need for economic security. Storing chestnuts away for a long winter — a winter artificially lengthened by biotechnology for the Baby Boomers — may account for the growth in IRA’s and Mutual Funds. They are worried about a life after employment (sooner, rather than later) with no Government support, or at least none that they would like to think about.
Good reasons — but, my friend suggests, not good enough.
Quote of the Day
It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics, because discrimination, poverty and ignorance restrict growth, while investments in education, infrastructure and scientific and technological research increase it, creating more good jobs and new wealth for all of us.~Bill Clinton
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