What makes entrepreneurs give?
The Centre for Charitable Giving and Philanthropy (CGAP) has conducted a study to find out what motivates entrepreneurs to become philanthropic. Professor Charles Harvey presented the findings at a CGAP conference on 9 May.
Researchers looked at the backgrounds of major donors and identified certain characteristics and behaviour. Entrepreneurs’ motivation is often driven by personal values and triggered by a landmark event in their life, such as the death of a parent. Once they have made the decision, entrepreneurs like to apply the same rigour and discipline to their charitable giving as to their business dealings. Prof. Harvey said: “They don't like wasting money and like to be focused and planned.”
Andrew Carnegie, Bill Gates and Warren Buffett are cited as examples of rigorous entrepreneurs and philanthropists. Carnegie gave away almost everything he earned to a wide range of projects, from arts to education.
Prof. Harvey added: “Entrepreneurs tend to be gifted in recognising and consciously applying the principles of capital accumulation. This is critical to making philanthropy more effective at a time when there is increasing inequality of wealth and income.”
The research shows:
• Entrepreneurs wish to pursue big social objectives
• They use business-like methods when making social investments such as key performance indicators and rates of return.
• Entrepreneurs invest more than money to their causes: time, connections, the 'know-how', branding.
• They like to leverage investments and frequently partner with others, including governments.
• They don't believe in giving handouts. They want to help others to help themselves.
The research also shows that entrepreneurs derive benefit from philanthropy through recognition such as honorary titles or by making useful contacts.
The researchers conclude that philanthropists need to be encouraged to share their experiences to encourage others. Prof Harvey said: “The level of giving relative to wealth and also need is nowhere near as high as it could or should be. What we witness are some very generous individuals among a lot of people who do little or nothing.”