Recent research by Denis Tracey at the Asia-Pacific Centre for Philanthropy and Social Investment at Swinburne University reveals that wealthy Australians are not as generous as their American peers.
People usually like to be thought of as generous, and stories of kindness and altruism are a source of pride in most cultures. Many Australians would probably say that we are a generous society. They would point to the success of our migration program (though perhaps less confidently than five years ago) and to the way we react to occasional appeals such as the recent Asian Tsunami campaigns.
But how do we compare with other countries? More particularly, how do our wealthiest citizens match up?
The Asia-Pacific Centre for Philanthropy and Social Investment was recently commissioned by Daniel Petre of the Petre Foundation to find out how generous rich Australians really are compared with wealthy people elsewhere.
This is not straightforward. Firstly there is no reliable information on giving that is based on the donors’ net wealth.
However data is available based on tax returns. From public sources in several countries (including Australia and the USA) we can compare tax deductions claimed in respect of gifts by people with annual incomes exceeding $1 million.
There are some difficulties though. Not all wealthy people have incomes of more than $1 million, and (odd though this may sound) not all people with very large incomes are necessarily wealthy.
Second, this information captures only donations to tax-deductible recipients and so excludes a lot of giving.
Third, there are very large differences between US and Australian tax laws. But even so, the gap between what rich Australians give compared to their American counterparts is so enormous that some conclusions can be reached. These do not make comfortable reading.
The position can be summed up succinctly. In 2004 Forbes magazine, which chronicles the affairs of rich Americans, published a ‘Who Gives’ list which examined the philanthropic giving of the twenty richest Americans.
All recorded gifts over time were added back to the individual’s estimated wealth to arrive at his or her ‘philanthropy-adjusted’ net worth. For example, in the case of Forbes’ richest American, Bill Gates, donations throughout his life to date total $28.2 billion were added to his estimated current net worth of $48 billion, giving a ‘philanthropy-adjusted’ net worth of $76.2 billion.
Forbes was then able to calculate that Gates has given away 37% of his wealth. Using the same formula, George Soros has given 43% of his wealth, Ted Turner 30% and Warren Buffet just 1%. On average, the twenty richest Americans have to date given away 14.45% of their wealth over their lifetime.
In Australia BRW magazine publishes its own annual ‘Rich List’. If each of the 200 individuals named in the 2004 list had established a philanthropic foundation and donated into it 14.45% of his or her wealth, the result would be 200 foundations with an average corpus of $56 million.
Assuming an earning rate of 6%, these would produce annual donations of $672 million. It is worth noting that in the financial year ending June 2001, Australians gave $838.15 million in total to not-for-profits in tax deductible donations.