NEW YORK (Reuters) - Bill Gates and Warren Buffett are urging U.S. billionaires to give away their money, but economic uncertainty is deterring rich Americans from increasing their giving, say bankers to the very wealthy.
Chief executives of Wells Fargo Private Bank, Credit Suisse Private Bank, Bessemer Trust, Silvercrest Asset Management and Bank of America’s U.S. Trust told the Reuters Global Private Banking Summit that some rich people were reassessing their giving as the country recovers from its worst recession in decades.
“Whereas the typical American household is trying to figure out how to balance its checkbook and pay its bills, the wealthy (are) trying to do that, even with its philanthropy,” Wells Fargo Private Bank CEO Jay Welker said in New York.
“Philanthropy is a part of ... what can I afford to do this month, or this quarter, or this year?” he said.
Welker praised Gates and Buffett’s Giving Pledge campaign, which urges billionaires to give away at least half their fortunes to charity, but said that “what they don’t give away still makes them wealthier than everybody else in the world.”
The bankers said America’s wealthy were concerned about the economic recovery and whether Congress would extend tax cuts for richer U.S. households, enacted by former President George W. Bush, that are due to expire at the end of December.
“There is a fear that if the money is permanently lost, they might not be able to make it again,” said Moffett Cochran, chief executive of Silvercrest Asset Management.
“Our clients are probably not spending their money as freely as they once did. I think that’s motivated by a lot of things including guilt at having still a lot,” he said.
Cochran said that while many of his clients were involved in philanthropy, others were not interested.
He mentioned one wealthy Wall Street client, who when asked if he wanted to consider getting involved in philanthropy and including his only son, replied: “I want my son to learn how to make money before he starts giving it away.”
Keith Banks, chief executive of U.S. Trust, said that many wealthy Americans believed that “their wealth brings a desire, almost a responsibility, to do positive things with it” and that despite the economic woes, that mind-set had not changed.
“But I would say if anything they are being more selective in what they’re doing and what they’re supporting,” he said.
“In the past where some of them might write 10 checks, they may give the same amount of money, but they they’re going to write five checks ... as opposed to more generic philanthropy, its more targeted philanthropy,” he said.
Individual Americans gave more than $227 billion in 2009, according to a the Giving USA report by the Center on Philanthropy at Indiana University, down just 0.4 percent from the previous year, despite the U.S. recession.
“What we have seen in the last two years is that people are probably pretty flat on their commitments, we haven’t seen too much aggressive behavior there about getting bigger,” said Anthony DeChellis, chief executive of Credit Suisse Private Bank (Americas).
While the philanthropy of the rich was designed to take advantage of tax breaks, the private bankers said this was rarely a key motivation and that wealthy Americans were becoming more involved in their giving.
“So many of our clients want to give back,” said John Hilton, chief executive of Bessemer Trust. “It really is to share their success with others who can benefit from that gift. I really don’t think it’s tax driven.”
He said philanthropy among his clients was flat.
“Because of the uncertainty, people are living longer, there are expectations their wealth may not grow as much in the future as it has in the past,” Hilton said. “People are just making decisions in a much slower, measured manner than maybe they had in the past.”