The New Super Elite
“Of all the classes the rich are the most noticed and the least studied.”
John Kenneth Galbraith
There is something of the voyeur in all of us, I think, but especially among those who work with the wealthy – or at least in me. While the rich are being studied empirically more now than in the past, I also remain fascinated by them individually. After all, much of the success of my clients depends upon the engagement and largess of wealthy donors.
Several years ago I interviewed people I knew who were considered major donors, having made single gifts ranging from $100,000 to $5 million. I asked them what sum did they personally consider to be a major gift. Every single person gave the same answer! $100,000.
Using that as a guideline for a major gift, let’s first define the resources required to be able to make a gift of that size. The top 1% of households in this country has a minimum net worth of $5 million and earns on average over $1 million a year — a little over 1 million households comprising about 3 million people.
Top earners in the range of $500,000 to $2 million a year gave on average 8% of their income to charity in 2009 according to The Center on Philanthropy – an average of $100,011. And 98% do give something.
Also according to The Center on Philanthropy, households with net worth between $5 and $20 million gave .4% ($20,000 to $80,000) of their net worth to charity in 2009. This range was corroborated by Ledbury Research in a 2009 survey for Barclays Wealth that included ultra high net worth households with investable assets over $5 million. It found that only a third donated more than $16,400 – less than 1% of their net worth.
With that background, the lead article in the January/February issue of The Atlantic caught my attention. Reporter Chrystia Freeland focuses on the new super-elite, an interesting subset of the very wealthy. These are the “working rich” who are focused on creating wealth, not just spending it. She notes that many of these people represent first- and second-generation wealth.
The amount of wealth we’re talking about is staggering. As one example, the top twenty-five managers of hedge funds were paid on average more than $1 billion in 2009! Small wonder that between 2002 and 2007 65% of all the growth in income in this country went to the top 1% of households. She also reports that in 1916 the top 1% received just 20% of their income from work while in 2004 that had climbed to 60%.
Freeland writes, “Its members are hardworking, highly educated, jet-setting meritocrats who feel they are deserving winners of a tough, worldwide economic competition – and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly.” She goes on, “For the super-elite, a sense of meritocratic achievement can inspire high self-regard, and that self-regard – especially when compounded by their isolation among like-minded peers – can lead to obliviousness and indifference to the suffering of others.”
If this attitude reflects that of other wealthy individuals, does that in part explain the results of the 2010 Center on Philanthropy study? It shows a growing percentage of high net worth households giving to help meet basic needs from 2005 to 2009 but at a decreasing average gift size. This same study also reveals a substantial decrease in average gift size to religious causes. Is there a connection? Perhaps.
Illusion of self-sufficiency
It may illustrate the trend in our modern society set forth by philosophy professor Jacob Needleman in his 1991 book Money and the Meaning of Life. He observes that the masters of Christian teaching for centuries were of the belief that “under no circumstances was society to encourage man to feel self-sufficient, autonomous. This was the most dangerous of illusions….The amassing of material goods could not help but foster the illusion of self-sufficiency and, with it, the disease of self-blindness, the illusion of self-power, that…the Fathers of the Christian tradition called pride.”
Subscribing to the thinking of sociologist and political economist Max Weber, Needleman argues that “Protestantism brought Western civilization an entirely new attitude toward living in the world…the idea that man could be free from obedience to the laws of any institution: that he could be guided solely by the light of his own reason….Our modern economic system, as well as the ascendancy of science in our culture, springs in large measure from this view of the world; and our prevailing view of ourselves.”
A banker doing God’s work
Lloyd Blankfein, CEO of Goldman Sachs, could be categorized as one of Freeland’s super-elite. He grew up in a tough neighborhood in the Bronx, son of a postal worker, and was the first in his family to go to college. His stock in Goldman Sachs alone is worth $587.8 million today while his 2010 compensation was $13.2 million down from $86.5 million in 2007. The Lloyd and Laura Blankfein Foundation has made gifts averaging $1.3 million annually since 2000 compared to his salary and bonuses of more than $125 million.
Blankfein starkly provided some insight into Needleman’s “prevailing view of ourselves” in a November 2009 interview with The Sunday Times reporter John Arlidge at the time of public and political blame for the near financial meltdown. He portrayed himself as “just a banker doing God’s work.” While he may have made this spiritual connection somewhat tongue-in-cheek, he also stated that the bank has a social purpose in its role in assisting companies to grow and create jobs.
Reading the article from the interview, it seems that Blankfein is entirely genuine in his belief. Needleman believes that “money in the modern era is a purely secular force, reflecting the lower nature of man.” That seems more apt to Blankfein’s statements. Needleman goes on, “The challenge of economic life, the challenge of living in a way that is adequate to our material needs, is to make that life serve the spiritual aspiration…to make money secondary in our lives.”
How do we address this challenge to reconcile our two natures – the quest to finding meaning in our lives, to transcend our “lower” nature while pursuing the material needs for functioning successfully day-to-day? What are the most daunting or subversive struggles or barriers to make money secondary in our daily lives? In our relationships and conversations with the wealthy how can we introduce and explore this idea of the need or desire for a connection between our higher and lower selves? How can we most effectively communicate with these super-elite individuals?
What do you think? Do you have a story to share about how you’ve been able to accomplish these objectives? Or not?