Surveys

Wealthy Agree That Their Wealth Brings Responsibility, Even In Tough Times

Harriet Davies, Editor - Family Wealth Report, January 18, 2012

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Millionaires in the US feel that their wealth comes with a responsibility to help the country through its challenges, a new survey from PNC Wealth Management reveals.

Millionaires in the US feel that their wealth comes with a responsibility to help the country through its challenges, a new survey from PNC Wealth Management reveals.

Over half of millionaires in the survey feel that, as the US grapples with economic challenges, they are "obligated" to give back to their society - and remain committed to doing so despite the difficult financial environment.

Accordingly, the number of individuals who donated between $25,000 and $999,000 to charity doubled from 2008 to 2010, from 12 per cent to 24 per cent, the survey found.

Appetite to give remains strong despite economic turmoil

As highlighted in a recent report by UBS, some 45 per cent of the world’s wealth was wiped out in the depths of the financial crisis and portfolios are still languishing below their 2007 highs, while the S&P 500 remains 20 per cent down. There appears to be, however, no let-up in wealthy investors’ appetites for giving.

“Despite the continued trials of the US economy since 2008, the number of millionaires who believe ‘I have an obligation to give back to my community’ has remained stable. This year, 59 per cent agree or strongly agree, the same number as in 2008,” according to PNC.

However, as might be expected, volatile financial markets have created concerns among wealthy individuals about their ability to donate to charities. The number of millionaires concerned about their ability to give has declined, though, from 20 per cent in 2008 to 11 per cent today.

In terms of overall amounts given, 22 per cent intend to cut back, while 46 per cent plan no change and 21 per cent plan to increase their giving, according to PNC.

How to make a difference?

The findings on philanthropy also cut to the heart of a debate currently going on in the US about taxes, and how the wealthy in particular should contribute. With a projected deficit of $1.1 trillion for this year, or 7 per cent of GDP, some ultra-wealthy investors  appear to be keen to give back via the public system. The billionaire investor Warren Buffet has reportedly made an offer to match voluntary contributions by congressional Republicans to the US government.

While such grand gestures are necessarily the reserve of the very wealthiest individuals, Buffett has also called for a tax to ensure that all wealthy people pay at least the same tax rate as the non-wealthy, and for the wealthy to give more to charitable causes. Nearly half of respondents to the survey agreed with Buffett but did not believe they "are in the same league" as he is; one-fifth said they are able to help in the way he suggests.

Broadly speaking, in PNC’s survey, 31 per cent said the best thing for the economy would be to reduce taxes on individuals (not specifically the wealthy), while 20 per cent supported raising taxes. A large majority, 83 per cent, said those in fortunate positions should continue to invest in private businesses and industry as a way of improving society.

The survey highlighted how taxes and philanthropy interact: if taxes increased, a quarter of respondents said they would reduce their philanthropic activities. Meanwhile, in a damning indictment of the US political system, 85 per cent said it had “serious flaws.”

The Wealth and Values Survey was commissioned by PNC and conducted by Artemis Strategy Group between 15 September and 11 October 2011, covering 555 millionaires.

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