Most
Americans sorta, kinda, know deep down inside they could give more
to charity. Claude Rosenberg Jr. has gone a long way toward quantifying
how much more we can give. All told, it's a huge number -- $250 billion.
That's what, Rosenberg estimates from an extensive analysis of the
Internal Revenue Service's income and wealth statistics.
Coming up with such numbers -- and spreading the word -- has become
a full-time occupation for Rosenberg, who stepped down in 1996 from
RCM Capital Management, the $60 billion San Francisco firm he founded
and later sold to Dresdner Bank. Now 71, Rosenberg directs Newtithing
Group, a nonprofit he started to continue the philanthropic research
he first published in his 1994 book Wealthy and Wise.
How much more could the wealthy be giving? Plenty, Rosenberg says.
If you look at this table, "Where the Wealthy
Give More -- and Less", you'll find Newtithing Group's detailed
estimates of how much they gave on average in each of the 50 states
and Washington, D.C., and what fraction that is of what they could
be giving. The most generous state? Utah. The least? Delaware.
How much more anyone ought to give is a sticky subject. Rosenberg
came to the task after an entire career in finance, which he began
after getting undergraduate and business degrees at Stanford University
and serving two years in the Navy. He approaches the question with
the basic observation that it's not just a percentage of income that
one should base charitable donations on, but a percentage of one's
income and net worth. "People who are fortunate enough to have surplus
income and investment asset wealth should be looking in a different
way at their money," he argues.
Coming up with that percentage for any given individual also involves
some detailed figuring. By yearend, Newtithing expects to have an
online calculator capable of doing just that, with a link from its
Web site (www.newtithing.org).
For his efforts, Rosenberg was invited to the White House for an Oct.
22 conference on philanthropy. I reached him by phone at his San Francisco
office just after his return. Here are edited excerpts from our discussion:
Q: How was your visit to the White House?
A: It was uplifting, interesting. The President in his remarks
indicated that charitable giving has remained about 2% -- both 2%
of income and 2% of gross domestic product -- for a long, long period
of time.
Q: I see.
A: And that fits right in to what we're doing at Newtithing,
because we know that the potential is very, very much higher than
that.
Q: How has the picture changed since your book was published?
A: The societal problems that I mentioned in the book, which
I felt were very important to be remedied, have not subsided. And
the ebullience of the investment markets, including stocks and real
estate, has just gone through the roof. So when the book was published,
the number that I figured was available for additional charitable
giving was more like $100 billion, and about 40% of that could come
from a very small group, 1% or 1.5% of the tax filers.
Q: And how much now?
A: Today that number is about $250 billion. Three-quarters of
that could come from the top 3% of the tax filers.
Q: You make plenty of assumptions to come up with that.
A: I wanted to make sure when I wrote that book that nobody
could ever accuse me of trying to hype something that would be injurious
to people with their own finances. So I bent over backwards then,
and we continue to do that. We have eight or nine explanations now
in our charts indicating just why we are very confident that all
the work that we're publishing is extremely conservatively done.
Q: Has anyone challenged you and said, "Gee, you really weren't
conservative enough in your assumptions, and therefore your conclusions
about what people can reasonable give are wrong?"
A: I'm knocking on wood everywhere, but the answer is no. I
haven't had one. Not one. Nor has anyone in groups where I've talked
stood up and really challenged me or seemed to be angry because
I was suggesting something that was going to be getting into their
pocketbooks.
Q: Are you satisfied with the impact that your book has had?
A: As I've said to everybody from the beginning, my book is
not Danielle Steel stuff. To be honest with you, when I first submitted
it, I had six rejections. The people all basically said to me, "How
can we expect to sell a book that tells people that they should
be giving more money away." Jimmy Carter, who was one of my endorsers,
asked me very specifically the same question: "Did you ever think
when you were writing the book that anybody was ever going to want
to buy it?"
Q: So what has happened?
A: The experience has been just beyond my fondest dreams. We
were the top Amazon.com seller in our group, philanthropy. The book
has been so much more than the publishers ever dreamed... I thought:
"Here's the book. I'll make the statement. I sure hope some people
will take it to heart." What I found was that so many people took
it to heart and were in touch with me and thanking me that I formed
the Newtithing Group.
Q: Why don't people, particularly the wealthy, give more?
A: I think people do care. They simply need to be taken out
of the bondage that occurs when people think about their money and
are rightly conservative and don't want to change their standards
of living. And they don't have to -- that's the good news.
In the book, I didn't take an antagonistic approach toward the wealthy
at all. I was empathetic, and I still am, because I think that wealthy
people just haven't developed a habit. And many of them are busy,
and many of them are overwhelmed with solicitations, and they weren't
sure what to do, and so they just procrastinated. And they were
rightly conscious of, "Well, gee, maybe as I get older my health
is going to change, or are my assets going to hold together?" And
all of those concerns are legitimate.
Q: Go on.
A: The thing I didn't understand or didn't think about until
later is that when you're very wealthy, you don't have to budget.
That's one of the beauties of being wealthy. And when you don't
budget, then you really are in a position where you don't know what
you can and cannot afford to do. And therefore most people have
fears that are exaggerated because they really don't know. That's
the work that I did for them originally in Wealthy and Wise
and that we're doing all the time with the Newtithing Group.
Q: What is the biggest oversight or mistake people make in their
charitable contributions?
A: For one thing, they have this mistaken thing about never
dipping into capital. And that's not true. In fact, a lot of people
think that's a solid adage, so to speak. But in fact, when they
ultimately make their gift, they may give an appreciated security,
which is certainly capital.
Q: What else?
A: Another is they really have kind of lost sight of what has
happened to money. They haven't adjusted in their mind properly
for the present value of money today. In other words, there are
still a lot of people out there today who think $100 or $1,000 is
a lot of money because they remember when it was a lot of money,
and they're still kind of holding on to that today.
Q: Fidelity Investments conducted a survey last summer that
found just 7% of Americans had ever donated appreciated securities.
Why do you think that number is so low?
A: They really aren't educated to do it, and it's just a little
bit more difficult. I've heard people from audiences say, "Well,
how do you do that? Do I sell the stock and then give the cash?"
Q: Ouch!
A: Of course, that's not the way you want to do it. There just
seems to be a lack of knowledge.
Q: Jim Clark of Silicon Graphics, Netscape, and Healtheon fame
just pledged a $150 million gift to Stanford University. In that
case, it would be very unlikely that the gift would come in cash,
right? He'd be donating stock or other assets, right?
A: I don't know for sure, but that's what normally happens.
Q: What else?
A: If anyone wanted to put a title on the White House meeting,
it was the importance of now. Just those words: the importance of
now. We've had this great prosperity, economic prosperity of all
sorts, and tremendous buildup of wealth like we've never seen, and
problems still exist. And while we have the financial wherewithal,
we ought to use it.
