A recent study by the RKD Group and the Nonprofit Alliance found that seventy-seven percent of donors said they’d already given as much or more this year than in all of 2019 and more than a third of donors plan to give more in December than they did during last December. This is supported by Fidelity Charitable’s research into how donors are responding to COVID-19 which found that donors nationwide recommended 16% more grants through donor advised funds in the first four months of the year than during the same time period in 2019. Pamela Norley, President of Fidelity Charitable, said it best - “despite the economic environment, all the uncertainty at a personal level, people looked outside of themselves and gave to charity.”
McKinsey and Company noted what a transformative moment 2020 has been for philanthropy through the sheer scale of funds donated as well as nimbleness and collaborative nature of support which we saw locally through efforts like through the Massachusetts Covid-19 Relief Fund. With 69% percent of all United States charitable giving in 2019 funded by individuals, that adds up to major and necessary support during a time when half of all non-profits expect less donations in both 2020 and 2021.
Where to Give in Tumultuous Times
Maybe you are already a regular donor to a few non-profits or maybe you’ve dabbled with a crowdfunding campaign or an undergrad on the phone charmed you into donating $50 to your alma mater while you were making dinner but have no doubt that your support is needed this year at any amount. The New York Times notes that supporting COVID-19 related charities is important, but so is continuing to fund organizations you typically support; you will help keep alive a part of the economy that rarely has reserves for a crisis of this magnitude and length.
Philanthropist and Giving Pledge donor, Melanie Lundquist recently spoke with the Chronicle of Philanthropy about the role our community should play during this historic moment. She made a call to donors that, “we must commit to giving more, giving sooner, and giving smarter,” and that it is the time to make big bets, “we can’t solve [systemic] problems without big bets”. When Melanie and her husband Richard think about where to direct their philanthropic support, they “look to develop new, cost effective, and results oriented solutions.” They are “driven by the most difficult challenges out there,” and putting the pieces together to see the big picture and create, “the systemic change that we need.”
What’s striking about the Lundquist’s philosophy on philanthropy are the parallels in motivation and vision for many entrepreneurs and founders when they think about building their businesses. Entrepreneurs see a need or a gap, put the pieces together to solve it, and create meaningful change.
Philanthropy and entrepreneurship go hand in hand. Both philanthropists and entrepreneurs choose to tackle specific problems that are often ignored or left underdeveloped by both the public and private sectors. In fact, America has a long history of philanthropy. Ben Franklin, considered the father of philanthropy, famously said “It is prodigious the quantity of good that may be done by one man if he will make a business of it.”
Entrepreneurship and Philanthropy in America
While we have a culture of philanthropy dating back to the founding of our country, there is also a long history of philanthropist entrepreneurs in America. Some of the most well-known include Andrew Carnegie, Cornelius Vanderbilt, and John D. Rockefeller as well as present day philanthropreneurs Warren Buffett, Bill Gates, Mark Zuckerberg, Sean Parker, Pierre Omdiyar, Mark Beniof, Jack Dorsey, and Oprah Winfrey who often measure the success of their giving by impact, sustainability, and scalability. They believe that the same entrepreneurial and business skills that lead to success can be applied to solve society’s problems.
Entrepreneurs are already attuned to creating solutions to solve the world's problems and philanthropy helps fill the gap in public funding to support social efforts and in many cases economic development.
Last year, the Nonprofit Quarterly explored the relationship between philanthropic and regional economic activity which is especially relevant now as we collectively work to not only support communities and small businesses impacted by Covid-19, but also spur economic development. What they found is that most donors “view their philanthropic investments as part of a feedback loop of philanthropic and industry successes that mutually reinforce regional economic advances.” This workforce development can make a region a quality place to live and work, create strategic impact investing, and activate local innovator and investor connections.
While more than half of entrepreneurs consider themselves philanthropists, you don’t have to consider yourself a philanthropist or be in the top 1% to do good by giving back or reap the benefits of doing so.
So why do entrepreneurs choose to support causes and organizations?
9 Reasons Why We Give Back
People choose to be philanthropic for a variety of reasons and they can vary based on where you are in your life, the organization, or even the amount of a donation. It’s not one size fits all, but you will likely recognize yourself and an organization you care about in the list below.
1. You feel a personal connection
It starts with the heart. People typically give to causes that are deeply personal. Maybe you founded a HealthTech company focused on making diabetes medication accessible to everyone who needs it through your product. You probably have a personal experience that inspired you to go through the hard work of becoming a founder. That same experience inspires you to support a local non-profit that subsidizes diabetes medication costs for at risk populations. What is incredible is Fidelity found that 61% of entrepreneurs desire personal involvement in the non-profits they support in addition to donating. Entrepreneurs want to be hands on as well as see value alignment.
2. You know the impact
You also give with your head, but maybe not in the way you’d expect. Of course, you want to make sure that you know why the organizations needs your support, how they will use it, and that they are a well-run organization, but studies show pleasure systems in our brain activate when we are altruistic. Furthermore, a Harvard study found a strong correlation between the act of donating and happiness and that happiness is most likely to be experienced when donors know they’ve made meaningful, specific impact. In short, science says giving makes you feel good.
3. You can demonstrate your leadership
Giving back can elevate you as a leader in your community or field. Not only do you have the vision and tenacity to run a startup, but you are a leader who can identify a cause worth championing.
4. You want Public Recognition (or maybe you don’t!)
Some donors enjoy the public recognition and brand association that comes with philanthropy whether it is through event sponsorship, speaking opportunities, donor walls, named gifts, or a myriad of other ways you can choose to be recognized. It can feel nice to be seen for your good deeds.
On the flip side some donors prefer anonymity. Maybe you prefer to be the incognito non-profit hero. Both options are always available.
5. You Trust the Organization
You wouldn’t invest in a company if you didn’t see strong leadership and a track record of success and good management. The same goes for where you invest your philanthropic support. In Fidelity Charitable’s 2018 study on Entrepreneurs as Philanthropists they describe philanthropic entrepreneurs as “venture philanthropists” similar to the term philanthropreneur defined above. Entrepreneurs see their “philanthropic activities as investments driving systems change and are more willing to take risks on innovative nonprofits”. Furthermore, 59% of entrepreneurs say their business approach influences their giving.
6. You define part of your identity by giving back
79%of entrepreneurs say that charitable giving is a critical part of who they are.
7. You want to support something specific
You care about the overall mission of the organization, but get really jazzed about supporting a specific project they are working on or you want to fund a specific project they couldn’t do otherwise. This can be one of the most rewarding and if you desire it hands on experiences you can have as a donor.
8. You care about access to the community they serve
Within reason, philanthropy can open doors to connections with leadership, other donors or sponsors, and the community the organization serves which can help you grow your business or leverage your connections to deepen your impact for the non-profit.
9. You want to leave a legacy
You are committed to a cause or solving a problem for your whole career. Let your good work live on through a bequest or other planned gift to the organizations that mean the most to you. There are a variety of estate planning tools that can help you leave a legacy for your loved ones as well as the communities you support through your magnanimity.
While philanthropic donations are vital, it’s not the only way to support a non-profit organization.
In line with the “philanthropreneur” mindset, entrepreneurs also choose to give back to organizations they care about with their time and expertise. Fidelity Charitable found that sixty-six percent of entrepreneurs volunteer three or more hours per month, compared with fifty-five percent of other donors and, we see the same with our donors at MassChallenge. All our donors are entrepreneurs and the majority of them also give back with their time and expertise, mentoring the next generation of innovators, speaking at events, judging our cohorts, or serving on boards.
Beyond giving being a good thing to do and making you feel good, there are many career and social benefits to be gained from giving back as an entrepreneur. It takes a community to create real, effective, systemic change. Entrepreneurs are do-ers. You take the moonshot in your businesses, why not also with your philanthropy?
THE ROLE YOU CAN PLAY:
Figure out where your philanthropic interests lie and identify a few organizations that look interesting to you. Sign up for their newsletters, go to their events, talk to staff and get to know the work they are doing.
If you are moved, impressed, see a need as you get to know the organization, then donate, volunteer your time and expertise, help make connections to your network that would be beneficial to the organization.
Remember, no gift is too small or too big. Give the amount that works for you. Do it often and do it proudly knowing you are supporting a worthy cause that truly needs your support. The end of 2020 and all of 2021 are going to be incredibly difficult for non-profits and the communities they serve, but you can make a difference.
Giving at MassChallenge:
At MassChallenge, we are grateful to partner with an incredible community of individual and corporate donors as well as city and state partners. When we partner with corporations, we help them innovate and invest and when we work with governments, we help them create jobs, but when we partner with individuals it's all about you and helping you create the impact you want to see in the area of innovation and entrepreneurship that means the most to you.
If MassChallenge’s mission of equipping bold entrepreneurs to disrupt the status quo and create meaningful global change by connecting startups, experts, corporations, and communities to grow and transform businesses and economies speaks to you, check out this page to see how you can get involved or contact Hillary Babick, Director of Development, at [email protected].