Catherine H. Tinsley
University professor

Catherine H. Tinsley

Associate professor at Georgetown University's business school and the executive director of the GU Women's Leadership Initiative.


Why not more?

Q: Do financially successful people have an obligation to help those in need? Are Bill and Melinda Gates, who have given away hundreds of millions of dollars through their foundation, encouraging others to step up to the plate? How much should people who have made millions be expected to give?

We all have obligations toward others, obligations that most of us readily and happily acknowledge. The financially successful really have no more or less obligation to give to others -- to pay it forward or pay it back. Yet, what research on charitable contributions shows is that, perhaps surprisingly, the wealthy do not give very much to charity, relatively speaking.

Empirically, most of the economic data shows that households give somewhere from 2 percent to 3 percent of their adjusted gross income to charitable causes. Moreover, this rate of giving has been pretty consistent across the past several decades.

When you consider that our current progressive tax code effectively reduces the cost of giving for wealthier households (those in higher income brackets), it is somewhat surprising that the wealthy do not give more.

As well, the vast majority of the charitable contributions made by the very wealthiest households come from just 5 percent of these households. In other words, 95 percent of the wealthiest households (those who make over $1 million) proportionately give less to charity than do those households of more modest means.

A colleague of mine and I have explored why this phenomenon might occur -- why the wealthy do not give more to charity. Our thesis has to do with how people explain financial success. In general, people succumb to what has been called "the fundamental attribution error."

In this context it means that people tend to discount the good luck that has contributed to their own financial success and to dismiss the bad luck that may have befallen those who have had less financial success. If people believe that financial success is driven mainly by effort, they are likely to feel less obligation to help those who are less successful, reasoning that those less successful have "made their own bed."

As I have written in previous blogs, I think that all of us probably need to do a better job acknowledging the role of luck in our own successes. Yes, we worked hard, but we also likely had some good fortune as well. Being grateful for this good fortune motivates giving back. Gates, Warren Buffett and many other wealthy people seem to understand this; I hope others follow suit.

By Catherine H. Tinsley  |  November 23, 2009; 11:15 AM ET  | Category:  giving Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati  
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It always looks like "luck" to the people who don't get the promotion or raise.

It's rarely luck. People who are successful at company are diverse in backgrounds, attitudes and preparation, but they share one thing in common: hard work and a drive to succeed.

And all luck mean in life is that you were ready when the opportunity arose.

The guy who busts his *ss in college and gets that job right out of school for lots of $$$. Was that luck? Only the losers think it was luck.

Posted by: Ombudsman1 | November 24, 2009 12:18 AM
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Uh huh; it's luck. I don't deserve my house and my car, because I'm lucky. What an airhead. Make over a millions, sweetie and see, after you pay taxes and employees, and employees' taxes, and employees' health IF YOU HAVE ANY LEFT OVER FOR CHARITY. There is something past the end of your nose, dear. Strain.

Posted by: chatard | November 23, 2009 10:35 PM
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Yes, luck vs. effort. It's the same argument for whether we should tax the bejeebers out of the rich. In my 60 years on this planet observing how things are (is that pompous or what?), I have come to believe that a LOT of it is luck. And so you won't be surprised when I say, heck, let's just tax them -- so much easier. I know that's not going to happen anytime soon, though, so, yeah, it's great to see the rich realize how lucky they are ("There but for the grace of God go I," if nothing else) and give voluntarily accordingly. And it's even groovier when companies do it.

Posted by: barnesgene | November 23, 2009 4:59 PM
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As mentioned above but wrongly attributed, Vince Lombardi said luck is where preparation meets opportunity. We have a lot to do with making our own luck.

As a Christian I believe that all humans have a responsibility to help those less fortunate in our community. And we will always have those less fortunate with us. There is a basic truth articulated by philosophers over the ages that there is a ranking of people caused by native ability, circumstance and initiative. There will always be those that rise to elite status, those in the middle and those on the bottom. Our responsibility is to understand this, respect this and to help those we can. God will judge if we helped the less fortunate to an acceptable degree. It is not for one human to judge another.

I was taught by me father and mother that there were hard working people and "no accounts". I was not to judge people by what they had but by their character and effort. This made it very difficult for me to help those that chose not to help themselves. I'll do anything to help someone trying and nothing to help someone who is "owed".

Bill Gates can do with his wealth as he sees fit. He earned it.

Posted by: jlowryusa | November 23, 2009 4:31 PM
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I agree with the first comment. The people who are self made wealthy generally work and sacrifice a lot more than those who expect a hand out. There are a lot of lazy people in this world who expect things to be given to them. I do not think they realize how much work it takes to be successful. If you ask any self made millionaire I will doubt many will tell you they did the bare minimum and succeeded. The story you will most likely hear is how they burnt the midnight oil working, attending meeting after meeting to "sell" their ideas. And then after years of work finally receiving their rewards. Disagree with me if you want but I feel after you work hard to earn you money, you should be free to do whatever you want with it. Not be subjected to some idiots in Washington telling you want you need to buy or else! And definitely not being forced to pay for someone who decides they don't want to work hard and make any sacrifices.

Posted by: sanmateo1850 | November 23, 2009 3:42 PM
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Many of the self-made worked right next to someone who behaved oppositely. Someone who never stayed a minute late at work and missed their child's soccer game. Someone who never took on additional, difficult responsibilities or improvements to advance their prospects. Someone who never delayed gratification, budgeting conservatively. Self-made wealthy might fully understand luck has helped their success; they might just be reluctant to help those who didn't sacrifice anything to put themselves in a position to be lucky. After all, Oprah says luck is when opportunity meets preparation.

Posted by: freezebeach | November 23, 2009 3:15 PM
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