Thursday, October 21, 2021

How do I know? Wealth doesn’t have to mean bigger wallet

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In the fall of 2013 I wrote an article for The Wall Street Journal about wealth inequality in America. My article, “How to Be Successful When You’re Worth Too Much,” made the case that the rich are actually the most generous of all groups.

The number one reason Americans give money to charity is that they feel it will do more good than harm. We give to charities for all kinds of reasons – sometimes for the fun of it, sometimes to feel like we’re giving back to a community, and sometimes because we’re like the proverbial frog in the pot of boiling water and will only jump out when it goes dry. Most Americans work hard for their money, saving it to accomplish their individual goals and dreams. We also try to give it to our kids so they can have financial security for the future.

These same individuals continue to volunteer time and effort to help others. They seek out little-known causes or cultivate charities on a personal level, knowing that it could be their life’s work. Our cultural brand of philanthropy says that we care about the problem that need to be solved. We know the cause; we give so that the cause may have the funding it needs to make changes and innovations for the betterment of society.

However, the problem is that these individuals themselves might simply choose to be more successful than other contributors to their charity. Making substantial wealth means accumulating significantly more assets that can be distributed as wealth rather than being limited to the income and wealth they earn as workers. Therefore, they may simply have other things they’d like to do in life that they could afford to do if they weren’t competing against others for that donation.

A recent research by Alix Ivey, Professor of Mathematics at Rochester University, reports that “With a median net worth of $23.5 million, the wealthiest one percent of the country had twice the wealth of the bottom 99 percent combined.”

If we push past the Forbes Richest list and consider average incomes, we may see that it may not be the wealthiest individuals who often donate the most to charity. Many of the rich actually raise their average income through the generation of wealth. It is often not the wealthy individuals who decide to give the most, it is often the middle and lower income individuals who decide to take an interest in the issues they care about.

For example, when a billionaire executive leaves his company to start a non-profit, he will raise his average income. If he takes his company private, his company will raise his average income. All of the above examples are examples of increasing income and wealth levels, regardless of the income and wealth of the wealthy.

Thus, at the end of the day, we can simply leave the decision of giving to the willing recipient. This does not negate the need for one to save a little more money during his or her work career, and we can both save and give. Wealth also builds wealth in that the longer one lives, the more time wealth can accumulate.

The more successful an individual or family becomes, the more valuable they will be to their families and their community. You don’t have to be the richest individual in the world to contribute to charities, you just have to have the desire to help. Most charitable giving is not transactional at all. It’s not about the needs or wants of those we help. It’s about being moved to help because of empathy.

For those who are still concerned about being too rich, I’d just advise them to keep a few things in mind: You don’t need to become the wealthiest individual in the world in order to make a difference. Many Americans don’t give to charities because they feel they’re not too wealthy or because they choose to take care of their families. A dollar donated is a dollar that’s not being taxed or wasted. And the fact that you are a millionaire doesn’t guarantee that you will be moved to solve a problem that you don’t feel is important enough for you to tackle. People don’t give their money away because they feel they are the richest person in the world – they give their money away because they are inspired by a problem they care about.

Don’t we all care about money some?

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