Entrepreneurs Twice as Charitable as Heirs
BY Angus Loten
Self-made millionaires donate an average of $120,000 more per year than those that inherited their wealth.
When it comes to charitable giving, self-made entrepreneurs are more than twice as generous as millionaires who acquired their wealth through inheritance, according to a new study.
The study, which included nearly 1,000 respondents across the nation with household income above $200,000 or a net worth of at least $1 million, found that entrepreneurs donated an average of $232,206 per year, according to researchers at Indiana University's Center on Philanthropy.
By comparison, donors who inherited their wealth gave an average of $109,745 annually, the study found.
Those whose net worth came from savings, return on investment, and real estate tended to be less generous to charities, the study found.
Yet, beyond the dollars, researchers also discovered a strong correlation between the size of donations and the amount of time a donor spends volunteering for a cause.
On average, respondents who gave upwards of $132,000 to charities and non-profits also spent more than 200 hours volunteering, compared to less than 50 hours for those who gave under $32,000, the study found.
Wealthy donors also claimed to be far less influenced by prevailing tax policies than is often thought, researchers said. Despite dire warnings by some business groups that failure to repeal the federal estate tax will result in a decline in charitable giving by the rich, more than half of the study's respondents said the amounts they donate would stay the same regardless of any changes to the tax.
An equal number also said they would continue giving even if there were no tax deductions for charitable donations at all, the study said.
Rather than seeking tax shelters, more than 86 percent of respondents said they were motivated to give by the opportunity of "meeting critical needs" in society, while 82.6 percent said they were moved by a "feeling that those who have more should give to those with less," the study said.
Whatever their motivation, wealthy households gave an estimated $126 billion out of national total of $260 billion last year in contribution to the non-profit sector, according to Patrick Rooney, the center's director.
Initiatives they helped support covered a range of causes, including education, religion, health, and the arts, the study found.