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Dec 132014

3df552a - Lifetime Giving of the Rich and Famous

Ever wonder exactly how do rich and famous leaders effectively manage giving back to others over their lifetime of extreme success in balancing life and business? Giving back is a business etiquette that distinguishes qualities of ultra-high achievers from qualities of extraordinarily influential movers and shakers across the business world.

Extremely successful qualities and etiquette in business balance and integrate stakeholder interests with stockholder value, which unites three essential ingredients and critical points of view:


Community attention to stakeholder interests in the social responsibility of business, as advocated by Charles Handy, “What is a Company For?” Michael Shanks Memorial Lecture, delivered December 5, 1990; Edward Freeman, “A Stakeholder Theory of the Modern Corporation,” Ethical Theory and Business, 1997.

Core Values of stockholders in the modern corporate interest and private property, as established by Milton Friedman, “The Social Responsibility of Business is to Increase its Profits,” New York Times Magazine, September 13, 1970.


Competition strategy and Customer satisfaction in Peter Drucker’s thinking on “The Theory of the Business.” Harvard Business Review, September-October, 1994.


Company Fit of strengths, weaknesses and interconnected activities put forth in Drucker’s “The Theory of the Business“; Adolf Berle and Gardiner Means, “The Modern Corporation and Private Property,” 1932; Michael Jensen and Kevin Murphy, “CEO Incentives – It’s Not How Much You Pay, But How,” Harvard Business Review, May/June 1990; and lastly, John Byrne, “How to Fix Corporate Governance,” Business Week, May 6, 2002.

At the sweet spot intersection of Mission, Environment, and People is the Giving Pledge, which is “an effort to invite the wealthiest individuals and families in the world to commit to giving the majority of their wealth to philanthropy.” As of May 2014, 127 billionaire or former billionaire individuals and couples have signed the pledge.

“Forty of the Philanthropic 50 are also on the Forbes Billionaires list, led by those at the very top: Bill and Melinda Gates and Warren Buffett, the founders of the Giving Pledge, who took the top two spots. Each put almost US$2 billion toward philanthropic work in 2012–the year’s only ten-digit givers–with Gates edging Buffett by a mere US$35 million. While it doesn’t count in our rankings, our list also attempts to estimate lifetime giving, with the Gateses and Buffett both giving away at least US$25 billion apiece through the end of last year,” reports Forbes.

Recipient of the inaugural Forbes 400 Lifetime Achievement Award for Philanthropy, presented to him by Bono at a dinner at the Forbes 400 Summit on Philanthropy in June 2013, Warren Buffett has “committed that his entire Berkshire Hathaway holding, north of US$58 billion, will be donated before or at his death, with a further mandate that it will be put to use within ten years of the latter,” according to Forbes.

Wealth-X and Arton Capital recently released findings that the typical ultra-wealthy philanthropist donates US$25 million over the course of his or her lifetime, is 64 years of age, has an average net worth of US$240 million, and an average cash-on-hand reserve of US$46 million.

These are some of the findings of the inaugural Wealth-X and Arton Capital Philanthropy Report 2014 that examines the full spectrum of ultra-high net-worth (UHNW) philanthropic activities, identifies trends in UHNW giving, provides the profile and traits of ultra wealthy philanthropists, and highlights their motivations in contributing to charities across a range of areas and sectors.

Billionaires are interested in charitable stakeholder needs across global communities, involving what is termed as “secular” giving, focused on rising standards of living, urbanization, and population growth, and their impact on heightened protein consumption, not only in developed countries, but especially in under-developed countries and emerging economies around the world.

“As a result, the investment opportunities offered by this long-term secular investment trend are varied: public equities, private equity, and direct investments, such as agricultural land and fisheries,” Simon Smiles, Chief Investment Officer of UBS Wealth Management, typically advises his global high-net billionaire clients.

The Wealth-X and Arton Capital Major Giving Index, which tracks trends in UHNW charitable giving, shows that the level of traditional philanthropic donations remains strong. The index has risen in the past few years, reaching a level of 220 in 2013 – making it the strongest year for UHNW giving since the 1997-8 global financial crisis, and only 12 points below the all-time high of 232 in 2006.

Wealthy individuals amount to 72% of total charitable giving of US$335.17 billion in 2013, up 4.4% overall, according to the 2014 Giving USA report. These high net worth individuals are becoming more confident in giving to the secular causes they especially care about, as the net worth of charitable billionaires at US$3.1 billion and mean high cash balances on-hand at US$600 million continue to grow.

According to Giving USA, total contributions by sources (as percentages of all charitable giving at US$335.17 billion in 2013, including in parenthesis percent increases (decreases) from 2012 giving levels) carves out as follows: Individuals at 72% (up 4.2% amounting to an additional US$9.67 billion given to others in need, the greatest contributing increase, from 2012 charitable giving levels); Foundations at 15% (up 5.7%); Bequests at 8% (up 8.7%); and Corporations at 8% (down 1.9%).

Five charitable sectors have surpassed giving levels realized prior to the heart of the recession: 1. Education, 2. Human Resources, 3. Foundations, 4. Health, and 5. Environment and Animals.

Here’s the Giving USA breakdown of 2013 contributions to recipient organization (by percentages of total charitable giving at US$335.17 billion in 2013): Religion (31%); Education, particularly to higher education and K-12 (16%); Human Resources (12%); Gifts to Foundations (11%); Health (10%); Public-Safety Benefit (7%); Arts, Culture and Humanities (5%); International Affairs (4%); Environmental and Animals (3%); and Gifts to Individuals (1%).

Headquartered in Singapore with 13 offices across five continents, Wealth-X is a ultra-high net-worth (UHNW) intelligence and prospecting firm with the largest collection of curated research on UHNW individuals, defined as those with net assets of US$30 million and above. The firm’s Wealth-X Professional solution is the standard for banking, luxury marketing and not-for-profit professionals working with the ultra affluent.

“Globally, we are witnessing an evolution of philanthropy as it expands from ‘traditional’ philanthropy – involving financial contributions and donations – to cutting-edge approaches such as venture philanthropy, microfinance, impact investing and job creation,” said Mykolas Rambus, CEO, Wealth-X. “Ultra wealthy philanthropists are increasingly focusing on philanthropic initiatives that provide long-term solutions by enabling the less fortunate to seize opportunities through entrepreneurialism, and using their own business acumen to measure the effectiveness of their philanthropic endeavors and to maximize their returns.”

Arton Capital empowers individuals and families to become Global Citizens. This is accomplished through a high-end service experience sustained by long-term relationships. As a global financial advisory firm, specializing in investor programs for residence and citizenship Arton plays a critical role in helping governments, consultants, legal and financial professionals and investors to meet their goals quickly, efficiently and more effectively. As an industry leader, Arton curates the Global Citizen Forum, where delegates, government representatives and industry patrons meet annually to exchange, build awareness, educate and advance global citizenship.

“This is another initiative in our corporate strategy to encourage the discussion about the responsibilities of global citizens in addressing the social and economic dimensions of sustainable development,” said Armand Arton, President and CEO, Arton Capital. “Our strategy includes sharing more and more information about the role of the wealthy in these important processes. One of our strategic goals is to engage all involved stakeholders in a constructive dialogue on how to more efficiently interconnect global citizens so that their joint efforts become a force for bridging the widening socio-economic gap.”

Supported by knowledge partners, Charities Aid Foundation, Global Citizen Foundation, International Youth Foundation and Population Services International, the Wealth-X and Arton Capital Philanthropy Report 2014 research found that UHNW philanthropists are expanding their philanthropic approaches and activities, shifting from major giving towards self-sustaining projects and entrepreneurial venturing.

Additional key findings of the Wealth-X and Arton Capital Philanthropy Report 2014 are:

  • Major giving to educational causes accounts for 40 per cent of all UHNW donations, three times more than the amount given to health causes.
  • Individual gifts by UHNW female major donors, on average, is 26 per cent larger than their male counterparts.
  • The global UHNW population, which comprises 0.003 per cent of the world’s population, holds 13 per cent of the world’s total wealth.
  • Nearly 70 per cent of UHNW philanthropists are self-made and actively contribute to programs that aim to increase entrepreneurial venturing.
  • Impact investments, such as social bonds, will account for 1 per cent of professionally managed assets within the next 10 years.
  • On average, American households donate US$3,000 annually to charity. A UHNW philanthropist with a net worth of between US$30-49 million typically donates at least US$60,000 annually.
  • Billionaires give the most to charity. On average, members of this top-tier wealth segment have donated US$108 million in their lifetime.
  • Philanthropic bequests are expected to reach US$86 billion in the next 10 years.

“Stakeholder interests will not be discounted, unless they can be counted, seriously … Owning people is wrong. Companies are collections of people these days; they are communities, not properties,” says Charles Handy.

Handy further asks “if [business] as a self-governing community, not a piece of property, is such a good idea, why don’t we see more of them?

The answer is provided inside the opening remarks of George Goyder’s book:

Here is the most urgent challenge to political intervention ever offered to the jurist and the statesman. The human association which in fact produces and distributes wealth, the association of workmen, managers, technicians, and directors, is not an association recognized by the law. The association which the law does recognize – the association of shareholders, creditors, and directors – is incapable of production or distribution and is not expected by the law to perform these functions. We have to give law to the real association and to withdraw meaningless privilege from the imaginary one.” – Lord Eustace Percy (1944)

12154ed - Lifetime Giving of the Rich and Famous


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