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Self-Made Billionaire May Be More Likely to Donate Than Inheritors

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Self-made billionaires are more generous than inheritors, according to a recent study.

New research by economists at the University of Southampton found that billionaires who have built their own fortunes are more likely to pledge to donate a large portion of their wealth to charities, than those who are heirs to family fortunes.

For the study, researchers examined written testaments of wealthy philanthropists who have signed up to The Giving Pledge, a venture which encourages billionaires to donate at least half of their wealth to charitable causes. It was launched in 2010 by Warren Buffet and Bill and Melinda Gates.

"The written testaments of pledgers give us a fascinating insight into the philanthropic motivations of the extremely rich," said Mirco Tonin, one of the researchers. "They provide a unique window on a relatively small group of people who are key to the promotion of charitable causes."

Researchers performed a textual analysis of the pledgers' letters and classified the expressed motivations for their 'giving' into ten categories. These include the usual motives that have been associated with prosocial behavior, such as the desire to make an impact, or the joy one derives from giving. They also considered additional motives, such as, the desire to dispense family wealth so as not to spoil one's heirs, the desire to leave a legacy and provide an example to others, or the sense of moral obligation to share wealth.

They found that self-made billionaires are more likely to sign the Giving Pledge, compared to those who inherited their fortunes.

"The philanthropic activities of extremely rich individuals, such as, Andrew Carnegie, John Rockefeller and more recently Bill and Melinda Gates, have not only benefitted many people and causes, but have also inspired new generations of philanthropists," Tonin said. "We feel this report gives a valuable insight into the motivations behind the 'giving' behavior of the very rich, which will prove very useful for charitable organizations and fundraisers."

The researchers concluded that in order for fundraisers to maximize their effectiveness in engaging billionaire donors they should: target those with newly acquired fortunes, rather than heirs of dynasties, and develop a detailed "business plan" clearly pointing out the objectives behind any "giving" and set out the means to achieve these.

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