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Wealth Transfer: The Physics of Philanthropy

Paul McKay, CAE

January 8, 2005

Philanthropy is emerging as a powerful economic force mid-way through the first decade of the new millennium. Trillions of dollars are currently moving through the economic system, conveyed by the vehicles of estate planning and charitable giving. The following article serves as a summary of the key motivational forces, or the physics´ of philanthropy, identified by Dr. Paul Schervish, Director of the Center on Wealth and Philanthropy at Boston College, a featured speaker at CALU's 2005 annual meeting.

Table of Contents

Five Factors

In his essay Wealth and Philanthropy, Professor Schervish identifies five motivational forces at play on what he terms the supply side of philanthropy, that is, the people and organizations which hold wealth and who constitute the source or supply of wealth transfer and charitable giving. The first of these motivational vectors is the desire of wealth holders to find a deeper purpose for their accumulated riches. This factor would seem to be linked to, if not based on, the notion that populations, especially in North America, are increasingly driven by spiritual concerns and the urge to link their financial resources to philanthropic purposes.

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It is, in many cases, not a case of selflessness, but rather, the notion of self-connectedness that drives much of charitable giving. As we identify with the plight of others, we are motivated to give by way of our perception that we are helping others like ourselves, our parents, children or friends. Professor Schervish marks a clear distinction between the concept of pure altruism and its connation of acting for others without concern for one's self. The clarification here is that wealth holders, like all others who make charitable gifts, regard their philanthropy as an engagement of self, not an absence of self.

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The urge to shape the world around us can be seen as a function of our creativity as people and the motivation to form an individual and unique expression. This is often the case in the world of business, where entrepreneurs seek to allocate and direct their assets in a way that establishes a profitable, personal expression of their intelligence, skills and resources. In the same way, many people, especially wealth holders, find that philanthropy is an especially attractive outlet because it is a particularly welcoming setting. In responding to a call to offer care for others, many take an entrepreneurial approach to productively employing their resources to achieve an effective result.

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Financial Morality

As the level of wealth accumulates, and resources begin to exceed needs, including those shaped and demanded by contemporary levels of status and leisure-oriented expenditures, individuals recognize that a positive financial morality will require something more than instilling in their children the ethics of productive labor and conscientious consumption. As a result, people are responding to a sense of financial morality a need to identify and, perhaps justify, the accumulation of wealth through the application of monetary resources for purposes other than consumption for consumption's sake.

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Give Back

While Professor Schervish acknowledges the use of the term to give back', he feels the expression falls short of completely capturing the motivational force at play. For behind the desire to give back is a sense of gratitude, and behind that gratitude is the appreciation of blessing, gift, luck or fortune. Here, he touches on an intriguing insight, centered on the concept of merit - that is, that one's fortune is not entirely the result of one's own efforts, and that, by extension, others' misfortunes are not entirely their fault. This creates an important linkage between the donor and recipient and motivates those who have more than they need to share at least some of their resources with those in need.

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As the transfer of wealth, through bequests, inter-vivos giving, charitable gifting and estate planning, continues to emerge as a primary factor of economic importance, so too, public and private resources are created to respond to these needs and opportunities. Modern methods of fundraising and charitable giving are continually refining their capacity to seek out donors, and facilitate the transfer of wealth. Fundraisers and charities are finding that donors are more inclined to give, and to give larger amounts, to the extent the latter are allowed to find the point of convergence where what needs to be done coincides with what they want to do.

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Affluent Spirituality

In considering Professor Schervish's comments, analyses, and insights, one is taken with his consistent references to spiritual´ themes. Indeed, he concludes his essay with the new physics of philanthropy provide an increasingly important aspect of spirituality in an age of affluence. While this article is primarily concerned with the motivational factors influencing the wealth transfer phenomenon, and maintains a rather clinical, scientific point of view, it also leads to deeper reflection on the often strained relationship between material wealth and traditional spirituality. Paul Schervish has, in the process, touched on the identification of an important, emerging line of thought, perhaps more closely associated with metaphysics, than physics. That is, just as the economic marketplace adjusts over time to new influences and trends, we may be witnessing new expressions of spirituality which align traditional religious concepts with the contemporary reality of unprecedented levels of personal affluence.

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About the article

This article is a review of major concepts discussed in Dr. Schervish's contribution Wealth and Philanthropy to Philanthropy in America: A Comprehensive Historical Encyclopedia, Volume II, edited by Dwight F. Burlingame, and published by ABC/CLIO. Over the last twenty years, under the direction of Paul Schervish and John Havens, the Center on Wealth and Philanthropy at Boston College has become a recognized authority on individual charitable giving, philanthropy by the wealthy, and wealth transfer. Among their many works, Messrs. Schervish and Havens completed "Wealth with Responsibility" a study of wealth holders with net worth in excess of $5 million regarding their charitable giving and volunteering, attitudes about social issues, socially responsible investing, trust and estate planning, and the transfer of values to heirs. This article was prepared for calu.ca by Paul McKay, CAE.

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