October 14, 2009
Most Charitable Among Wealthy Have Highest Net Worth -- And Are Happier, Too
By Holly Hall
Wealthy people who give away 10 percent or more of their income to charity tend to build a higher net worth — and to be happier — than other wealthy individuals who give less, says Thomas J. Stanley in his new book, Stop Acting Rich … and Start Living Like a Real Millionaire.
Mr. Stanley, who has written several books on the nation’s wealthiest Americans, including The Millionaire Next Door, based his latest findings on a survey of 944 millionaires with net investment assets of $1-million or more, excluding their home. He compared their net worth, spending habits, giving patterns, and self-reported happiness.
Those who gave the most to charity — 10 percent or more of their incomes — spent less on what the author calls “the impediments to building wealth.” Those include income taxes, expensive homes, clothing and accessories, motor vehicles, mortgages, interest on personal loans, club dues, and vacations.
The most-generous millionaires built their wealth by allocating more money to investments, pensions, or annuities and to financial-advice and asset-management services. They spent markedly less on prestige brands, fancy homes, vacations, and other luxury items.
Among millionaires living in homes worth $200,000 to $300,000, for example, about a quarter gave 10 percent or more to charity. Among those living in homes worth $1-million to $1.2-million, only 17 percent gave as much. In fact, Mr. Stanley found, only 10 percent of millionaires live in million-dollar houses.
The most generous wealthy donors, said Mr. Stanley, “are the least enamored with status. They have a small house and a big heart.”
And they have greater levels of overall satisfaction, he writes. “These people feel that giving is a substitute for spending more on products and pleasure-related services. They seem to get more satisfaction from accumulating wealth and giving than from consuming more.”
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Hi Holly,
The jury is definitely in. This study, along with the study conducted by the National Institute of Neurological Disorders and Stroke that found that the same part of the brain is stimulated when we give to and help others as when we are enjoying physical pleasure (hmmmm) is clear about the benefits of generosity! What a great discussion to have with donors —understanding their values and attitudes about giving generously. One more conversation that will lead to discovery and revelations! More good news for those of us who believe!
— Karen Osborne Oct 14, 06:49 PM #
This is all nice, but I don’t see the evidence that correlation = causation to support the apparent assertion that giving creates wealth.
If someone can direct me to empirical evidence, I would be grateful. Otherwise, this is the same unsubstantiated claim that TV evangelists make.
— 0101101 Oct 15, 08:24 AM #
To comment #2 – Stanley isn’t claiming that giving builds wealth! He’s just saying that high spending reduces wealth, and low spending enables greater giving — as well as more joy in life. That’s certainly our conclusion from interviewing over 125 people who have given at least 50% of their income, assets, or business profits. Read their inspiring stories at BolderGiving.org
— Anne Ellinger Oct 15, 09:22 AM #
In Malachi in the Old Testament, God says, “Bring the whole tithe into the storehouse…Test me in this and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it.” Seems he was right!
— Chris Mueller Oct 28, 09:24 AM #
I love Chris’above comment. Let me add to that that this is the ONLY place in the bible where God tells us to “test” Him!
— Elizabeth Murphy Oct 28, 10:42 PM #
Great article. Thanks, Karen, for comment 1, also. Regarding comment number 2, it is truly annoying that there is no empirical evidence, and our study was hardly scientific, but in our book, Generation BIG, Bold, Innovative and Generous, we found that people who reach for enormous generosity tend to fall into revenue streams they never would have seen living the “normal” paradigm of work, accumulate, retire. And the level of excitement and wonder is priceless among BIG people. Come to www.generationBIG.com and find out. Thanks.
Jeff Smith, Co-Founder, Generation BIG, Inc.
— Jeffrey Smith Nov 4, 04:31 PM #