'Middle Rich' Give Away Smaller Share of Income Than Others, Study Finds

Wealthy Americans -- those who earn $200,000 to $10-million a year -- give less generously to

ALSO SEE: American Generosity: How Giving Differs by Income Group

charity than both people who are richer and those who are poorer than they are, according to a new report. And, the report says, if those wealthy Americans had donated to charity the same share of their investment assets on average as did others who were not as well off, charities would have collected $41-billion -- or nearly one-quarter -- more in 2001, the latest year for which data were available.

The report, by the NewTithing Group, a San Francisco nonprofit organization that encourages wealthy people to donate more to charity, echoes the findings of other reports from the group: that well-to-do Americans can increase their contributions to charity without affecting their standard of living, simply by changing what and how they give.

The organization urges people to contribute to charity based on their total wealth, not just their income. And it recommends that whenever they can, donors make gifts of appreciated assets, such as stock, rather than cash. By donating, instead of selling, long-term appreciated assets, donors avoid capital-gains taxes, and can either keep or contribute their tax savings.

A report by NewTithing released in December said that donors who had adjusted gross income of $100,000 or more in 2003 could have increased their contributions to charity by a total of $107-billion that year without affecting their standard of living, if they had based giving on their total wealth and made gifts that took full advantage of tax benefits (The Chronicle, January 8).

Detailed Statistics

The latest report breaks down such financial calculations by income and asset levels. It is based on Internal Revenue Service tax data from 2001, the latest year for which such specific data are available. The figures are also based on NewTithing's own estimates of taxpayers' investment assets, which do not include homes or personal possessions.

The super rich, as defined in the report, are taxpayers with adjusted gross income more than $10-million and average investment assets of $152-million. The middle rich are those who earn $1-million to $10-million a year and have average investment assets of $8.5-million to $46-million. The upper middle class has an income between $200,000 and $1-million and average investment assets of $1.7-million to $4.5-million.

Both the upper-middle-class and the middle-rich taxpayers donated on average slightly less than half of 1 percent of their wealth to charity in 2001, according to the report. By comparison, people with incomes ranging from $25,000 to $200,000 a year and investment assets of $83,000 to $490,000, contributed on average roughly 1 percent of their total wealth. The super rich donated the greatest share of total wealth in 2001 -- a bit more than 1 percent.

Planning Donations

Tim D. Stone, NewTithing's executive director, says one reason many rich people do not give as generously as those with less wealth is that they may not be planning their giving as carefully. "People at the high end are not necessarily as obligated to budget when it comes to giving to charity, or spending," Mr. Stone says.

Claude Rosenberg, the philanthropist and retired investment manager who established NewTithing, agreed.

"I'm not sure they are as careful as they should be," he says, adding that a key goal of NewTithing is to encourage wealthy people to plan their philanthropy the same way they might plan their financial investments.

Such planning, NewTithing officials say, would benefit both charities and donors.

The new report says that people with adjusted gross incomes of at least $1-million -- the middle rich and the super rich -- could have saved a total of $659-million in capital-gains taxes in 2001 if they had replaced cash donations with gifts of long-term appreciated assets. The average savings that taxpayers could have realized ranged from $1,584 each for people with $1-million to $1.5-million in adjusted gross income and an average of $8.5-million in investment assets, to more than $32,000 each for people in the super rich category.

Donors, the report says, could have kept those savings or donated them to charity.

To help donors plan their contributions, NewTithing has updated its giving calculator, PrudentPal Charitable Giving Planner, which has been available on the organization's Web site since December. The planner helps donors determine how much they want to give based on numerous factors, including their investment assets, income, and debt. Now the planner offers additional features, such as figuring how donors might augment their total giving using the money they save in taxes from making certain types of contributions.

The report, "The Generosity of Rich and Poor: How the Newly Discovered 'Middle Rich' Stack Up," is available online at http://www.newtithing.org. For further information, contact the NewTithing Group, 1 Market Street, Steuart Tower, Suite 2105, San Francisco, Calif. 94105; (415) 274-2760; general@newtithing.org.