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Opinion

Opinion

Latin America’s rich should be more generous

June 29, 2010

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A new report stating that Latin America’s rich have gotten richer despite the region’s economic downturn is likely to enrage populist leaders. But what should be more worrisome is that the region’s wealthy plan to give less to charity than their counterparts elsewhere.

According to the “World Wealth Report 2010” released by Capgemini and Merrill Lynch, the combined wealth of Latin America’s rich — defined as people who have more than $1 million in financial investments, excluding homes and art collections — grew by 15 percent last year, just below the 19 percent world average.

But if we measure the wealth of Latin America’s rich since the beginning of the 2007 world economic crisis, their financial investments grew by 8 percent, more than in any other region, the report’s authors say.

This is because while the U.S. and European rich lost a big chunk or their fortunes in the 2008 stock market crash, Latin Americans benefited from having safer investments, and from seeing their incomes rise because of their countries’ strong currencies and booming stock markets.

“Latin American high net worth individuals had very good growth rates,” Ileana Van der Linde, one of the study’s lead authors, told me. “Over the past two years, their combined wealth has grown faster than that of any other region of the world.”

Not surprisingly, Mexican telecommunications tycoon Carlos Slim became the world’s wealthiest billionaire in Fortune magazine’s ranking this year.

In numbers of people, the population of Latin America’s high net worth individuals grew from 400,000 people in 2007 to 500,000 people last year, the Capgemini-Merrill Lynch report says.

Should we get outraged by these data? Probably not, because in addition to benefiting from sounder investments and strong currencies in their home countries, the region’s wealthy are investing more at home than before. The report says the region’s rich increased their domestic investments by 2 percent last year, to 47 percent.

What should be a bigger cause of concern is that region’s wealthy are on average less generous than their counterparts elsewhere. An issue of the same report in 2007 said that Latin America’s wealthy devoted only 3 percent of their financial assets to charity, while the rich in the United States and Asia donated 12 percent of their money, respectively.

This year, the Capgemini-Merrill Lynch annual survey — based on information from international wealth management firms — did not ask respondents how much each country’s wealthy donated to charity. Instead, it asked them how much they plan to give to philanthropy in 2010. Again, the numbers for Latin America were disheartening.

Fifty-five percent of the rich in Asia-Pacific, 41 percent in Europe, 37 percent in North America, 35 percent in the Middle East and 33 percent in Latin America said they planned to give more to charity in 2010. The world average of anticipated giving was 41 percent, Van der Linde told me.

Granted, Latin America’s rich may be giving less to charity than their counterparts elsewhere because most of their countries don’t offer tax incentives to write off charitable donations, like in the United States or most European countries. Also, many of Latin America’s rich donate money anonymously, because they fear being targets of kidnappings for ransom.

There is also a cultural factor, charitable groups’ managers tell me. While giving to charity is a status symbol in the United States, the same cannot be said in most Latin American countries, they say.

My opinion: I’m not outraged by the fact that Latin America’s rich are getting richer, because they tend to create more jobs and be more helpful in reducing poverty than the radical populist leaders that lash out against them, and scare away investments. And raising taxes on the rich is a tricky proposition in some countries with a huge underground economy, where only wealthy business people are taxed.

But I do think that the region’s rich could be more generous. Has any of them pledged to donate at least half of their net worth to charity now or at their death, as U.S. billionaires Bill Gates and Warren Buffett did, and asked their peers to do earlier this month? I don’t know of any.

It’s time to begin thinking about new ways to encourage the region’s rich to give more.

— Andres Oppenheimer is a Latin America correspondent for the Miami Herald.

Comments

K_Verses_The_World 4 years, 6 months ago

Each man should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver. 2 Corinthians 9:7

They said it was the land of milk and honey Now they say it’s the land of money Who ever thought they could ever make that stick It’s unbelievable you can get this rich this quick

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