This is the second instalment of a two-parter on philanthropy in Australia. Part one established the Petre Benchmark for philanthropic giving, and argued that the rich have a unique obligation to donate money. Read part one here.
So, how do Australia’s richest individuals and families stack up according to the Petre Benchmark?
Let’s look at the lists
This first list is the AFR Rich List which lists the 200 most wealthy people in Australia. The most wealthy is Anthony Pratt (as mentioned above) with a net worth of $12.6 billion and the poor guy who comes in 200th is Owen Kerr with a paltry $342 million. Using my benchmark, the Pratts could be donating $126 million a year (5% of the 20%) and poor Owen could be donating $3.42 million (5% of 20%).
Now if you apply the Petre Benchmark to just the top 10, you find that each of the families note would be donating the following annually: Pratt $126 million, Triguboff $114 million, Rinehart $104 million, Lowy $83 million, Glasenberg $69 million, Forrest $65 million, Gandel $61 million, Wing Mau $60 million, Packer $48 million and Perron $39 million. None of them are donating anywhere near these levels.
Keep these numbers in mind as we move on.
The second list is the AFR list of the 50 most philanthropic people. However there is a caveat. In this list, the top two positions — Ramsey Foundation (donations last year of $83 million) and the Ian Potter Foundation (donations last year of $35 million) are both dead guys. In fact there are others in the list of donors (top 50) that are also donations from the foundations of dead guys. And when you are looking at comparing the living wealthy and philanthropy you probably should exclude the foundations of dead guys.
Nonetheless, let’s do some maths and assume everyone in the giving list is living (even if they are not!). The top donor is (as mentioned) the Ramsey Foundation ($83 million) and coming in at number 50 is The John Reid Charitable Trust with $3.3 million. Total giving last year from the 50 was $459 million. Good? Yes. Impressive? Maybe not.
In the Rich List, the wealth of the top 50 was $144.84 billion (number 50 was $1.14 billion). Taking the Petre Benchmark and applying it to this group as a whole you get 20% of $144 billion = $28.8 billion. Assuming this was in 50 charitable trusts each throwing off 5%, this would result in $1.44 billion total in charitable gifts annually.
So the aggregation of the 50 biggest donors (including a bunch of dead guys) was $459 million (exclude just the top two dead guys and this drops to $341 million) and the Petre Benchmark of possible giving (that does not change the life of the givers) would suggest $1.44 billion in gifts — around 30% of the potential. Hmm …
Of our 10 most wealthy only three appear in the 50 top givers: the Lowys with a wealth of $8.2 billion gave $18 million, the Forrest Family with a wealth of $6.8 billion gave $18.3 million, the Gandel family with a wealth of $6 billion gave $10 million, the Packers with a wealth of $4.7 billion gave $10.3 million, and the Pratts with $12.6 billion seem to have donated only $7.6 million.
In the top 50 for giving but well outside the top 50 for wealth are the fine families of the Tuckwells (wealth of $62 million) who gave $30 million, the Kinghorn family (wealth of $353 million) who gave $15 million and the Berghofer family (wealth of $374 million) who gave $10 million.
Below is a table that tries to make sense of all these numbers. It takes the top 10 most wealthy families, how much they could have donated under the Petre Benchmark, what this would be as a % of their net worth, what they are reported as giving (last year) and what their giving last year was as a % of their net worth.
Our most wealthy and their philanthropic donations
Of course in some cases maybe the size of the family’s (in the table above) donations made them fall out of the AFR top 50 donors (which means they gave less than $3.3 million) and/or their donations were done very secretively and not using any tax structured foundations. Possible.
The table shows that none of our top 10 are close to giving away anything substantial. With annual giving in the range of 0.06% to 0.29% of their net worth I am not sure any of these donations count as philanthropy in the true sense of the word. I also feel that this data suggests our most wealthy do not appreciate how fortunate they are and the responsibility of those most fortunate to give back to the society from which their wealth came.
Let’s go back to the Forrests. In reviewing their data I want to make sure one thing is acknowledged: it is truly wonderful that they have signed up for The Giving Pledge (to give most of their wealth to charity before they die). This is a big deal if they follow through as they seem to be planning to.
Their net worth is $6.84 billion. 20% of this is $1.36 billion. Last year in a massive announcement including the Prime Minister the Forrests put $400 million into their foundation (so 5.8% of their wealth). Last year they gave $18 million from this foundation. Is this a huge gift; in absolute terms it is. Especially if it represents a massive part of your net worth which in this case it is not.
In relative terms, this donation is not so newsworthy. In the Forrests case, $18 million in donations last year represents 0.29% of their net worth.
Good, great and outstanding: rethinking the way we praise philanthropy
To be clear, the Forrests are doing good things. Moving 5.8% of their wealth into a foundation is a good start. Giving away the equivalent of one quarter of 1% of their net worth in one year is a good start (at this rate it would take around 400 years for them to give their money away). To be fair to them they are the standout family of our 10 most wealthy families (in terms of giving) but 0.29% of net worth being donated in one year is not something to make a big deal about nor is moving 5.8% of your wealth into a foundation. Good, but not great.
Great is someone allocating more than 50% of their net worth to a foundation on their death. Paul Ramsey did this (he donated nearly all his wealth on his death to his foundation). Also Ian Potter (creator of the Ian Potter Foundation) and many others have done similar things.
Outstanding is someone allocating more than 50% of their worth to a foundation while they are alive. Bill Gates has done this as have a number in The Giving Pledge list.
Honorable mentions would have to go to the Tuckwell family (gave away 6.5% of their net worth in one year and have allocated more than $100 million — 18% of their net worth to scholarships), the Kinghorn family (who gave away 4.25% of their net worth in one year) and the Berghofer family (2.7%). If each of these families keep up this level of giving then they clearly move into the great and outstanding category and worthy of praise.
In our case (Petre family) we have a lot less than anyone on the AFR Rich List and yet my wife and I have allocated around 35% of our net worth to our foundation — with more coming in the next few years.
Is this great? Nope. However better than average and better than most on the Rich List who have far more discretionary wealth than we do. Still our efforts are not great and the efforts of most of our wealthy are somewhere between sad and disgusting.
Great is an average Australian who has less to give (as they have a very tight budget) and yet they give money to charities. I suspect thousands of regular Australians give away more than 0.06% or even 0.29% of their net worth each year to charities and they do not get any fawning articles written about them not catch-ups with the Prime Minister.
We need to acknowledge the donations provided to worthwhile charities by our most wealthy but can we please keep the fawning press coverage until someone actually moves more than 50% of their wealth into a foundation which then allocates donations at the required levels (5% of the corpus which means you are donating around 2.5% of your net worth to charities each year) while they are alive.
Can we please always look at the percentage of net worth being donated and not focus on the absolute numbers because the test of true philanthropy is how much it hurts or impacts your life (as a donor). At anything less than 1% of your net worth being donated each year is simply not worthy of accolades nor attention.
This article was originally published at Medium