Recent findings from a study by Fidelity Charitable shows that entrepreneurs give more money and time to charity than non-entrepreneurs. But why is this? And are entrepreneur philanthropists the same as entrepreneurs who partake in philanthropy?
Do Entrepreneurs give more?
The simple answer to this seems to be yes!
The Fidelity Charitable study found that, on average, entrepreneurs donated 50% more than non-entrepreneurs. The difference being €3087 ($3,577) annually, compared to €2057 ($2,383) given by others.
And they don’t just donate more money. The study also showed that entrepreneurs donate more of their time. It is said that 66% of entrepreneurs volunteer 2 per more hours a month compared to 55% of others.
It seems that these entrepreneurs fall into two categories. The first being ‘business minded’. Most entrepreneurs have started their business from nothing, having no money and working hard. Which means that they have learned to make every cent count, and this is the same in their philanthropy. Before donating they research the projects/causes. They are also more likely to experiment with their giving and take risks on certain projects otherwise ignored by foundations. These types of entrepreneurs thrive by learning along the way – as they did with building their business.
The second is the ‘expert’ route, with entrepreneurs seeking advice and guidance. Again, this is a way they would have grown their business and depending on the stage of their business development, these entrepreneurs may not have the time to research and find the right projects for them. Going through experts and building a team around them to help them make the correct decisions.
Entrepreneurs who donate to philanthropy are in fact different to Entrepreneur Philanthropist (EP). This is also known as social entrepreneurs or nonprofit innovators. Unlike the examples that are given above, these EPs creating ideas/concepts to fix a social problem. Therefore their philanthropic efforts do not involve money or volunteering, instead, it is about them giving back to society with an entrepreneurial solutional.
An example of this would be the Kaboom organisation in America. The creator of this, Darell Hammond, discovered there was an issue of limited playgrounds for children after hearing that 2 children died whilst playing in an abandoned car. His solution to this problem was to find a way to join sponsors and volunteers together to pay for and build new parks in a day.
The Most Famous Entrepreneurs in Philanthropy
Some of the richest people in the world are entrepreneurs, like Jeff Bezos. He is the richest man in the world due to the creation of Amazon, which started as a small online bookstore. Although he is the wealthest man in the world, he doesn’t make the list of top philanthropist. At least not yet, as his philanthropy efforts have just started, after creating his Day One Fund – concentrating on helping the homeless and building pre-schools.
After creating the Giving Pledge, entrepreneurs Bill Gates and Warren Buffett become top of the list. You can find out more about the Giving Pledge here. Both these men have promised to donate half or more of their wealth to charity.
Bloomberg Philanthropies, a foundation created by Michael Bloomberg, has donated over $330 million to charity in 2011 alone!
Mark Zuckerberg is probably the most well-known entrepreneur alive. With Facebook having over 2 billion active users a month. Zuckerberg has joined the giving pledge and has already donated around $45 billion to charity.
Why entrepreneurs become philanthropists
These points are taken from an article in the Guardian and explain the main reasons they found in a study as to why entrepreneurs become philanthropists;
- It is the pursuit by entrepreneurs on a not-for-profit basis of big social objectives through active involvement of their economic, cultural, social and symbolic resources.
• They apply business-like methods when making social investments: key performance indicators and rates of return.
• Entrepreneurs invest more than simply money to their causes: time, connections, the ‘know-how’, branding.
• They like to leverage investments and frequently partner with others, including governments.
• Businessmen and women don’t believe in giving handouts. They want to help others to help themselves.
The article goes on to say that philanthropy for entrepreneurs is not just about giving, as they also gain a lot from the experience. One of the main advantages for them is that the exposure from their giving helps their capital, therefore making them more money! As well as honorary titles, degrees, and recognition.
Other advantages for them include riches in the form of society. Meeting new, interesting people and joining certain social circles. As well as gaining new knowledge in a new sector can help them within their business.
There are many reasons as to why an entrepreneur takes part in philanthropy and not forgetting that giving does always make you feel good! The gap between the rich and the poor is growing, so without the help of these entrepreneur philanthropists (and entrepreneurs taking part in philanthropy), things would be a lot harder for the underprivileged.