Turning wealth into good works
With unprecedented wealth comes the moral question of what to do with it – and many Americans are choosing to give it to charity.
Suppose you've become financially independent through business success, investments, or an inheritance, and can have whatever you might want. What would you do with your wealth?Skip to next paragraph
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It's a question millions of Americans are confronting amid a dramatic rise in affluence. The United States now has more than 8 million millionaires, and studies show that an intergenerational transfer of private wealth is under way that will amount, at the least, to $45 trillion by 2052 (and perhaps three times that).
"Never have so many people had such wealth," says Paul Schervish, director of the Center on Wealth and Philanthropy at Boston College. "How they use it is a spiritual question ... the key question of the 21st century."
It's a spiritual question, he says, because many people, no longer focused on financial security or accumulating wealth, are considering what their deeper purposes or ultimate goals are in life, and how to direct their financial resources to achieve them. Many are turning to charitable giving – with Bill Gates as the most prominent example.
Defining this "moral biography" can be challenging for individuals, and a new brand of "wealth coaches" is developing to help people sort out their values and decide how much and where to give. With more than a million nonprofit organizations in the US alone, the prospect can be daunting.
"Donors are overwhelmed, so some go into a kind of paralysis and fund what is familiar to them," says Tracy Gary, the author of "Inspired Philanthropy," who helps donors create giving plans.
Many have moved money into donor-advised funds – and received the tax benefits. But according to information gleaned from a 2006 survey of 50 leaders in banking and philanthropic services, conducted by The Bridge in Boulder, Colo., an estimated $1 trillion has accumulated in those funds and family foundations, and has not yet moved into charitable coffers.
Given the world's pressing needs, some advisers are encouraging more people to get involved in philanthropy and to give a greater proportion of their income. Despite the dramatic growth in wealth, total charitable giving in the US has stayed at about 2 percent of gross domestic product (GDP) for decades.
The Bolder Giving Initiative, which counsels individuals in determining their giving potential, recently launched a 50% League to highlight particularly generous donors. About 80 donors of various ages who have given away half or more of their net worth, profits, or income for at least three years are "going public" with their stories in hopes of encouraging others (see www.boldergiving.org).
John Hunting, for example, began receiving stock from his father's company when he was 6 years old. The firm became Steelcase, the world's largest office-equipment manufacturer, and when it went public in 1998, Mr. Hunting's windfall amounted to $130 million. He has directed $100 million into a foundation that will address one of his passions: environmental issues.
Many of today's newly wealthy are younger, like Jamie Schweser. "I grew up in the punk rock scene," he writes in his bio, and "since I was 16, I've known that if we want the world to be a fairer place with justice for everybody, we have to do it ourselves." So when his parents sold their business and gave him a cool million, he decided to give 75 percent to social justice causes, including $500,000 to the Beyond Prisons Fund, which develops alternatives to incarceration.
Not-so-rich also generous givers
The generous givers aren't always the very rich. Richard Semmler, a math professor at Northern Virginia Community College, couldn't have gone to college himself without scholarships. Today he's giving away 60 percent of his total income – something he can do "because my mortgage is paid off," he says in an interview. His values led him "to support a local charity to help my community and an international charity to help the planet."
Dr. Semmler teaches a GED course at a Washington, D.C., shelter, where he also pays for 100 meals a month. Since becoming involved with Habitat for Humanity as a volunteer, he's sponsored three locally built houses ($100,000 for the last one), given $15,000 to fix up a house damaged by hurricane Katrina, and annually supports building a home in Tanzania.