Mitt Romney’s campaign likes to trumpet its candidate’s generosity. The summary of Friday afternoon’s docu-dump of Mitt and Ann Romney’s 2011 tax returns hailed the couple’s “generous charitable donations”. They made $13.7 million and donated $4 million, which is impressively described as “amounting nearly 30% of their income”.
John Podhoretz, looking through the misleading income-to-donations lens, thinks Romney is an “extraordinarily, remarkably, astonishingly generous man”. Conor Friedersdorf is less hyperbolic, but still throws out praise: Romney “seems to be a very generous guy…good on [him] for giving lots of money to charity”.
Giving away almost a third of your annual income sounds laudable, but for someone of Mitt Romney’s wealth, charity should be assessed by net worth, not income. The Romneys’ net worth is currently estimated at $250 million. $4 million is just 1.6% of that net worth.
It’s an odd kind of generous for a man to be worth a quarter of a billion dollars, earn $13.7 million on that $250 million (a 5.5% return), and then donate 30% of that $13.7 million. No wonder he conflates paying taxes with giving to charity. Generosity is generally tied to the concept of relinquishing wealth — and that is not what Romney is doing. If Romney’s massive base of wealth continues to appreciate at its mediocre 2011 rate of return, and if he continues to give at the same rate as he did this year, then in a decade, he’ll have a net worth of $373 million and will have made $53 million in donations. $53 million is real money, but the trend here is all wrong. As Romney ages, his net worth should go down, not up.
If they really wanted to make an impact on causes they care about with the massive wealth they’ve accumulated, the best thing for the Romneys to do is give away as much as possible, as soon possible. Charitable contributions are most effective when they are front-loaded. Romney, at 65 years old, won’t end up with lower net worth than he has now unless he gives much, much more aggressively. Right now, he’s on track to just keep on accumulating.