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Embarrassment of riches

Wealthy Californians are generous. But on average, are they as generous as the not-so-rich?

December 27, 2006

THE RICH ARE different from you and me, F. Scott Fitzgerald is supposed to have said. Yes, Ernest Hemingway is said to have replied, they have more money.

The exchange is apocryphal -- although it gets across the gist of their basic points of view -- but a new analysis of the giving habits of Californians earning more than $200,000 a year brings it to mind. The study, released Tuesday by an organization called NewTithing Group, examines how well-off Angelenos differ from their counterparts in other parts of the state.

Many Californians in households earning $200,000 a year may not feel rich, especially if they have children in college or private school or bought their homes at the height of the real estate boom. But they are in rarified air: Only 450,000 California households earned that much in 2004, out of a total of 13.6 million filing state tax returns.

The study found that Angelenos in this bracket donated a higher percentage of their incomes to charity than those in any other region except the Silicon Valley. And looking at the median contribution, or the minimum amount given by half the donors, L.A.'s wealthy were more generous than those in any other part of the state.

There's no definitive explanation for the difference. The wealthy in the Silicon Valley probably are younger and their riches more volatile than their counterparts in Los Angeles. And the wealthy in the Silicon Valley have a higher median value for investments but a lower median income than the rich in Los Angeles, leaving them with less cash despite greater overall wealth.

The regional differences highlighted by the study made headlines. Less heralded was the relatively low percentage that this class of taxpayers contributed to charity, at least in terms of donations that were tax deductible. Half the Angelenos with taxable incomes over $200,000 donated less than $5,000 in 2004. That represented less than 1.6% of their incomes and less than 1% of their stocks, bonds and other investments. That's higher than the median in any other region; in the Silicon Valley, for example, half the wealthy filers gave less than $2,800.

By contrast, other studies by the same group have found that working-class and middle-class families gave away a higher percentage of their assets than all but the wealthiest taxpayers.

So maybe Fitzgerald and Hemingway had it backward. The question isn't so much how the rich are different from everyone else, it's how everyone else is different from the rich. One answer may be that, on average, the not-so-rich are more likely to give away more of what they have.

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