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Book Review | The Wealth Hoarders: How Billionaires Pay Millions to Hide Trillions

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In April 2021, Forbes reported that billionaires’ wealth increased by 35% (or $1.2 trillion) since January 1st, 2020. Now compare that with the significant hardship and income loss that non-billionaire Americans have faced since the start of COVID-19. For example, in June 2021, Jeff Bezos blasted off into space with his own rocket, despite criticism about underpaying his own workers.

Chuck Collins’ The Wealth Hoarders explores how people like Bezos and his fellow billionaires are using wealth management (or what Collins calls the Wealth Defense Industry) to avoid paying their fair share of taxes. His work is a stunning indictment of the wealth management system including the wealth managers, lawyers, real estate sellers, and more who help the Ultra High Net Worth (UHNW), which Collins defines as having over $30M in financial wealth, protect their wealth from taxes and debtors.

Even more striking, Collins makes the case that the US, not Cook Island or the Bahamas, is the biggest tax haven in the world right now.

Who Should Read This Book?

Prospect researchers are always trying to understand how people think about wealth and how they hold it. As researchers, we probably have come across some of the tactics that Collins talks about, such as finding property held by LLCs or discovering businesses incorporated in Delaware.

This book helps us better understand how the UHNW manage their assets and house their wealth.

The book provides a useful breakdown of the different ways of holding and hiding wealth. We’ve heard about the Panama Papers and the more recent Pandora Papers that told us what we already knew – that what we can see from publicly available sources is only the tip of the iceberg.

But what I found most impressive was his discussion about family offices in chapter 4. The “All in the Family Office” chapter does a deep dive into family offices, which are a way for families with over $100M or $150M manage their wealth. It’s not something we stumble upon frequently in our work but obviously, it’s a major wealth indicator. Experts estimate there are between 7K-10K family offices around the world with a good chunk originating in Boston, MA. I also found it fascinating to learn that families with $25M may participate in multi-family offices!

What was most stark and useful for the prospect researcher is an exploration of the attitudes that the UHNW have about their wealth. At the beginning of the book, Collins explains that he comes from a privileged background as an heir to a Midwest meat packaging company. He talked about attending an event for people like him to better understand how to manage their wealth. When he poses the question about the discomfort of having all this wealth, he is quickly advised that it would be class suicide to touch the principal of his fortune. Giving away to charity from your income is fine, but it would be selfish to touch the principle, he’s advised by his friend Dee, a very wealthy woman with her own family office.

This friendship with Dee in particular is quite striking. Collins may be young and idealistic, but he’s uncomfortable with the status quo. Dee, on the other hand, is quite philanthropic and has done her bit to “give back,” but assured with her place in the world and the right of wealthy people to keep their money. Their arguments about wealth and keeping it provide a starting point for Collins’ entire book.

Where Does It Take You?

He divides the book into 12 sections – three preludes, an introduction, seven chapters, and an epilogue. The first prelude explores his “origin story” where he is at a weekend conference put on by a local foundation and family office to discuss wealth. He also explores his relationship with a woman who has her own family office who tries to convince him that touching his principle is a big mistake.

The second prelude explores the Blue Hippo Swindle where CEO Joseph Resnin swindled low-income people out of a lot of money, was successfully prosecuted, but not a dime was paid out to his victims or the government because of his success in hiding his assets. The third prelude is an example of how Isabel del Santo, a wealthy Angolan, managed to extract millions of dollars from her country and squirreled it away, thanks to the Wealth Defense Industry.

The first chapter explores the cost of wealth hoarding, including the threat to democracy, shifting tax burden onto everyone else, and more. The second chapter then looks at the people who make up the wealth management including insights from Brooke Harrington, author of Capital without Borders, and a former attorney in the industry who is working to challenge their practices.

Chapter three looks at the “tools of the trade,” talking about shell companies and trusts with special consideration of Delaware and South Dakota.

Chapter 4 looks at family offices as discussed above. In Chapter 5, titled “The Wealth Hiding in your Neighborhood,” he explores other vehicles for housing wealth – specifically art and property. I watched this play out in the recent documentary about the recent Leonardo Da Vinci painting “Salvator Mundi,” where the painting was stored in one of these storage facilities. Storing art in a Free Trade Zone allows the wealthy to store their wealth in different assets and avoid having to pay duty taxes.

He also does a deep dive into the buying of real estate as a place to store wealth, rather than wealth generating (like renting them out or flipping them). He even explores how this practice erodes communities and city centers, drives prices up, reduces available affordable real estate, and hollows out neighborhoods.

Chapter 6 looks at the justifications that people make about these practices. Collins focuses on the excuse that many people make that these practices are legal, but points out that these same people are influencing the laws. The second justification is that the wealth industry is merely giving customers what they want. Collins argues that there is an interest in doing what is best for society as a whole, and not just a tiny portion of the populace.

Chapter 7 concludes with recommendations of the policy changes that end these practices and increase transparency. The epilogue is an appeal to people not to work in wealth management.

Is It Worth the Purchase Price?

At $21.99, this book is worth the price. Even if you may disagree with many of Collins’ points about the sources and causes of wealth inequality — the book has a blurb from Senator Bernie Sanders — the book provides some valuable insights into how the wealthy keep and hold their wealth as well as their thoughts about it. For me, the chapters on family offices and different ways of keeping wealth were well worth the price all by themselves.

The book also helps prospect researchers understand a little bit more about what we are seeing when looking at sometimes confusing property records or company incorporation documents. Sometimes the information is missing…on purpose.

It also made me realize that people who work in wealth management are worth a second look at themselves when we do profiles for our organizations. While they may not command the same amounts of money as their clients, they work in a lucrative industry and may be open to philanthropic giving.

Ultimately, the book is a welcome successor to Brooke Harrington’s Capital without Borders and well worth a read by anyone thinking about wealth in the United States.

Additional Resources

Book Review | Stop The Nonprofit Blame Game

Fundraising Insights,

In business school, most of my classes required group projects for the final. While it was a new experience to work in a team setting, I learned there were really three kinds of experiences. The first was magical; the group worked together harmoniously with each person bringing their expertise to the table. Ultimately, the final project was greater than the sum of its parts.

Then the second, where the group was held together by one or two people who ended up doing most of the work and/or pulling the other members together. It was very frustrating and maddening. I wanted to pull my hair out! The third is a mix of the two. Maybe most of the group was on point but then there was that one person who wouldn’t do their work or worse.

Years later, when I joined my first board, I realized that boards are a lot like group projects. In fact, they are what group projects are trying to instill in us. Sadly, my experience with a board resulted in me dropping out, frustrated, and angry that my voice hadn’t been heard.

However, when reading Hardy Smith’s Stop The Nonprofit Board Blame Game: How to Break the Cycle of Frustrating Relationships and Benefit from Fully Engaged Boards, I realized that my experiences are not unique or uncommon, but fairly typical.

His book gives step by step advice on how to end board member frustration (and vice versa — nonprofit employee frustration with board members), to make the board a positive experience for everyone, the board members, staff members, and most importantly, the nonprofit itself.

Who Should Read This Book?

Smith identifies two major populations that should read this book. The first are staff members who work with boards. That might mean the board liaison (if there is one), the top leadership, and major gift officers who work with board members. This book will help them understand what they need to do to create a positive board experience, including have clear expectations of what board members are supposed to do, communicate effectively, fundraising expectations, have measures in place to deal with issues on the board including board removal as a last resort.

Anyone who is a board member, or someone who is considering board membership, would benefit from reading the book as well. It will help them

figure out what how to communicate what they need from board members, what they need to hear from board members. It will help them understand where there may be breakdown in communications.

I would add that prospect researchers would benefit from this book. Since we are often asked to find prospective board members, write bios for them and current members, and even vet prospects, this book helps us understand a bit more about what goes on behind the curtain. Plus, the communication techniques might be helpful in our work with gift officers and nonprofit leadership, or even working with board members if our position requires it.

Where Does It Take you?

The book is divided into four parts: Break the Cycle of Dysfunctional Board Relations; Get the Right People; Create a Positive Board Experience; and Adapt to Meet New Challenges.

The first section explores the problem – why are boards not working for the nonprofits or for the board members? The section includes research that Smith conducted about the disconnect between boards and the nonprofits they purportedly serve. He determined that board members have a passion for volunteer work, but they are frustrated with their experiences. From his work, he explains that nonprofits systematically fail to inform board members about the expectations of their service, such as time commitment, fundraising requirements, etc.

The second explores the importance of finding the right people, or as Smith aptly puts it “recruiting” with purpose and process. Finding the right people at the right time for the right role is critical. To ensure a good board experience, nonprofits shouldn’t wait until the last minute to fill board absences; they should do the work well ahead of time to find the right people. (That probably means more work for prospect researchers, but I think we would all welcome that work). In other words, nonprofits

should recruit people not to fill a position that happens to be empty, but have a list of researched candidates for board positions at the ready.

Smith also talks critically about the importance of why prospective board members say yes or no. Listening is key!

The third section explores the board experience after the prospect has accepted the board position. While real communication is key to all of Smith’s recommendations, this section really dives into the many ways nonprofits and board members can work to make the overall experience a positive one.

What really resonated as a researcher was the section on getting to know your board members. Smith writes: “Understanding what your volunteer’s personal connections are to your cause and making sure those needs are being met will help your organization benefit from dedicated commitment.”

I think we as researchers would agree 100 percent! I also appreciate that there’s a chapter on the importance of diversity since that’s been a hot topic in nonprofits for several years.

The fourth section explores how boards need to embrace change. I particularly appreciate how he talks about how boards have to be intentional in changing the board. Intent is not the same as action. Board members and nonprofits have to move forward together to make the necessary adjustments in board recruitment, board expectations, meeting structure, etc. in order to make a positive experience for all people involved.

Is It Worth the Purchase Price?

Yes, this book is an important contribution to the world of nonprofits. It’s well worth a read though it is occasionally repetitive in its messaging. But given the disconnect between many boards and their nonprofits, the messages that Smith is trying to impart may need to reiterated until they are implemented. Communication, intentionality, forward thinking are all key parts of Hardy Smith’s message.

Hopefully armed with this knowledge, more board volunteers will have positive experiences that will enrich and deepen the work of the nonprofits that they serve.

Resources