Self-made billionaires more likely to become philanthropists than those who inherit wealth
Howard Lake | 6 October 2014 | News
Self-made billionaires are more likely to pledge to donate their money to charity than people who have inherited their wealth, an investigation into the motives of signatories to the Giving Pledge has revealed.
The study, Why Give Away Your Wealth? An Analysis of the Billionaires’ View, was conducted by economists from Southampton University, looked at the personal characteristics of billionaires that predict whether they will join the pledge. This showed that those who had made rather than inherited their money were significantly more likely to pledge.
But this could mean the number of philanthropists declining in future as the children and grandchildren of self-made billionaires inherit their wealth.
The richer people are, the more likely they are to pledge with richest 25 per cent of billionaires being significantly more likely to sign up. While the study concedes this might make common sense, it says it was not a foregone conclusion since richer people are pledging to donate bigger amounts of money.
Female billionaires are less likely than their male counterparts to pledge to donate half their wealth. The study points out that this is because most of the world’s richest women have inherited rather than accumulated their wealth.
Why billionaires have given
The study also looked at the reasons given by billionaires for joining the Giving Pledge, identifying 10 main motives by examining the pledge letters that all signatories have to make.
Making an impact was by far the most common reason, both in terms of the number of pledge letters that cited it (80 per cent) and how much pledgers wrote about it (43 per cent all the text in the pledge letters related to making an impact and changing the world).
And pledges often phrased their desire to make an impact with a “business-like attitude”. The authors of the study recommend that an “essential tool” for fundraisers when approaching people sufficiently wealthy to join the Giving Pledge is to provide them with a “detailed business plan, clearly pointing out the objectives of the philanthropic activity and the necessary means to achieve them”.
‘Making an impact’ was followed by a sense of personal moral values and a responsibility to give (40 per cent of mentions and 12 per cent of volume); while 35 per cent of pledge letters cited the ‘warm glow’ and the joy of giving.
About The Giving Pledge
The Giving Pledge was set up by philanthropist Warren Buffett sand Bill and Melinda Gates in 2010. The Giving Pledge’s 127 Members -– who include America’s oldest billionaire, 99-year-old David Rockefeller Sr, Facebook co-founder Mark Zuckerberg, Richard Branson and British philanthropist John Caudwell – pledge to give away at least 50 per centre of their wealth during their lifetimes.
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The 10 main motives identified by the Southampton study were:
1. No need – pledgers could give away money because they their needs were already met.
2. No inheritance – pledgers wanted to avoid the “pernicious” effects of excessive inherited wealth on their descendants
3. Warm glow – giving money brought joy and happiness
4. Impact – the desire to change the world for the better
5. Legacy – it was important to pledgers to be remembered in the way philanthropists such as Carnegie and Rockefeller are.
6. Received example – pledgers were influenced by philanthropic roles models
7. Provide example – by pledging they can set and example and become role models for others
8. Values – pledgers cited moral values and a sense of responsibility to give back.
9. Luck – pledgers recognised the role that luck had played in their accumulation of wealth.
10. Blessing – citing their wealth as a ‘blessing’ or explicitly referring to God.
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About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.