More Than Money
Issue #20

How Much to Give?

Table of Contents

“The One Percent Club: A New Tithing Strategy?”

Tom Lowe, the chairman of the Lyman Lumber Company, is used to making money in business. His current goal, however, is to get other Minnesota millionaires to give a minimum of one percent of their net worth every year to the nonprofits of their choice. So far, over a hundred individuals and couples have answered his call to join the One Percent Club, Minnesota's newest innovation in philanthropy.

Lowe hit upon the idea of promoting a "higher standard of giving" while reading Claude Rosenberg's book Wealthy and Wise. In the book, Rosenberg, the founder of RCM Capital Management, reviewed the giving statistics for the nation's top income group, ran some numerical tests, and came to the startling conclusion that the top 20 percent of wealth-holders in this country could easily afford to give over $100 billion dollars more a year without sacrificing their financial security or their current standard of living. Indeed, he argued that their fortunes would continue to grow even at this higher level of giving.

This claim--that wealthy people could afford to dramatically increase their giving--intrigued Lowe. Picking up paper and a pencil, he started to take a close look at his own financial situation by applying Rosenberg's logic and formulas to his income, assets, and current giving. He discovered that he did have a large, untapped giving potential. The trick was to look at the rising value of his "investment assets" from year to year, and not just look at his annual income, as encouraged by conventional tithing practices.

Inspired by the results of this personal financial analysis, Lowe then imitated Rosenberg's research on 1991 federal tax returns and analyzed the 1995 tax returns of Minnesota's wealthiest individuals. He discovered that Minnesota's 28,000 richest citizens donate an average of 0.6 percent of their net worth each year, rather than the two to three percent encouraged by Rosenberg. Lowe then figured out that if these people gave even one percent of their assets annually they could increase giving in Minnesota by $280 million dollars a year--or "five times the annual budget of the Minneapolis United Way."

Lowe fleshed out the idea of the One Percent Club with his friend Joe Selvaggio, a retired community organizer from Minneapolis who now serves as the group's volunteer staff member. Explaining his own motivation to help organize high net worth individuals seeking to promote more generous giving among their peers, Selvaggio notes, "If the wealthy of Minnesota succeed, we might be able to serve as a model for the entire nation. We wouldn't be flashy like Ted Turner, but we could really have an impact."

According to the Club's literature, giving away one percent of net worth annually means that you would only need 11 years, instead of 10, to nearly double your assets--assuming a modest seven-percent, after-tax return rate for income-producing assets. Selvaggio is thus quick to point out that giving one percent of net worth is the group's minimum standard. While valuing the commitment of all the Club's members, Selvaggio points with special pride to members who are giving two to five percent of their net worth a year, and to some, like Kenneth and Judy Dayton, who have decided to accumulate no more wealth and who annually give away all of the appreciation in their assets. "These people," observes Selvaggio, "have become passionate about making a real difference."

Club member Tom Warth is a good example of this growing passion. As a young immigrant from England, Warth started a mail-order book business out of his Minneapolis attic in 1965. "I never much thought about giving in the early years of my business," says Warth. "I thought giving people jobs and a share of the profits was enough." Later, after being challenged by some business friends who were members of the philanthropic Keystone Club, Warth began to give five percent of his profits to charity. This "peer-pressured" giving soon grew into a deep personal mission.

"I learned it was great fun to give, and became hooked," notes Warth. Asked about just one of his giving pleasures, Warth points to his support of a project that has sent four million books to literature-starved libraries in sixteen African countries. Warth, who is now 62 years old and semi-retired, now gives five percent of his personal net worth every year. He wants to give even more as he grows older.

Echoing Andrew Carnegie's famous line that "the man who dies rich dies disgraced," Warth says, "I'm trying to get rid of it all before I die." Warth does not seem too worried about disgrace, however. As he explains, "It just feels so damn good getting good stuff done, and my money can do that. What pleasure can it give me after I'm dead?"

For Warth, working with the One Percent Club gives him the additional satisfaction of helping others realize their giving potential. Phrases like "leverage," "multiplier effect," and "more bang for the buck" pepper his discussion of the Club's work. "I know I run the risk of being called a braggart or a big head by publicly discussing my giving and pushing the One Percent movement," says Warth, "but giving secretly only does so much good; inspiring others to give is absolutely essential."

- anonymous author


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