entrepreneurs and the changing landscape of philanthropy james m. hodge associate chair, department...
TRANSCRIPT
Entrepreneurs and the Changing Landscape of Philanthropy
James M. HodgeAssociate Chair, Department of Development
Minnesota Planned Giving CouncilJanuary 12, 2010
Why does this topic matter?
Bank of America
Most generous individuals
How did they make their money?
How do they hold their money?
Most Philanthropic
Entrepreneurs give significantly more to charity than those whose income is dependent on their work, their inheritance, or their asset mix
Bank of America Center on Philanthropy Study
2006/2008
In households where 50 percent of moneyearned came from entrepreneurship, average annual giving was $232,206 in 2005 and $248,871 in 2007
Bank of America Center on Philanthropy
Study
2006/2008
Bank of America Center on Philanthropy
Study
2006/2008
In contrast, in households where appreciatedreal estate comprised half the income, contributions on average totaled $11,015 in
2005 and $77,485 in 2007
Individuals who earned their money from investments and asset growth gavean average of $35,680 in 2007
Bank of America Center on Philanthropy Studies
2008
Why Entrepreneurs Are More Generous
Can create wealth
Are grateful – to whom muchis given, much is required
Make decisions readily
Entrepreneurs as Philanthropists
Passionate Grateful In control of assets Reasonable risk takers Know how to evaluate business
and philanthropic ventures Curious Want to make informed decisions
not only about business, but about philanthropy
Gratitude and Entrepreneurs
Characteristics of Grateful People
Generalized trusters
Positive thinkers
Talk about meaning, difference, and legacy
Empathic
Tend to be religious or spiritualLead purpose-driven lives
Have a sense of curiosity and wonder
Are passionate about their work and lives
Manifestation of and Response to Empathy
Feeling
Thinking
This determines the approach and proposal – appealing to prominent expression of empathy
With entrepreneurs it is necessary to appealto both right and left brains
Engage Both Left and Right Brains
Caring/Sharing
(Dream makerscaretakers)
Four Basic Brain Drives*
Acquiring(Things/
experiences)
Defending(Assets/family)
Learning(Dreamers/innovators/
entrepreneurs)
Propensity towardaccumulators
Propensity towardgivers/philanthropists
*From Driven, Paul R. Lawrence and Nitin Nohria, Harvard Business School, 2002
Drs. Dharol Tankersley, C. Jill Stowe and Scott A. Huettel, “Altruism is associated with an increased neural response to agency,” Journal of Nature Neuroscience, 10:137-138, February 2007.
Are We Hardwired for Philanthropy?New Functional MRI Studies of Altruism
Drs. Dharol Tankersley, C. Jill Stowe and Scott A. Huettel, “Altruism is associated with an increased neural response to agency,” Journal of Nature Neuroscience, 10:137-138, February 2007.
Are We Hardwired for Philanthropy?New Functional MRI Studies of Altruism
Humans engage in complex social interactions, including altruism. A study in thisissue finds that watchinga computer perform an altruistic act, earning money for charity, is sufficientto activate a brain regionthat has been implicatedin the evaluation of others’ motives and goals, suggesting that this area may be involved in detecting agency in other creatures.
The New Landscape of PhilanthropyThe Philanthropy-Business Spectrum
What are entrepreneurs looking to accomplish with their philanthropy?
A. Give a person a fish
B. Teach a person to fish
C. Change the fishing industry
D. Ask: Do they, should they eat fish?
Business and
Philanthropy(Social
venturing/ Social Business)
BlendedPhilanthropy
Philanthropic Evolution
Charity Philanthropy EngagedPhilanthropy
Stages of Philanthropy
Transactions
Ownership/
Partnership
Obligation Gratitude Relation-
shipQuid Pro
Quo
Transitions
Transformations
How do entrepreneurs want to view their philanthropy?
A. A gift
B. A significant gift
C. A gift of significance
D. A high-impact decision that matchesall other decisions he/she madein business; a completely rationalway to give money for greatest good
What drives entrepreneurs crazy?
All talk – no action Committees Waste – time and resources Small ideas Anyone who is not the best
in her field – or striving to be An unwillingness to partner When their opinions don’t matter
as much as their money
PhilanthropreneursSocial Entrepreneurship
Philanthrocapitalists
Successful entrepreneurs trying to solve big social problemsbecause they believe they can andbecause they believe they should
Philanthrocapitalists
Strategic
Market-conscious
Innovative
Impact-oriented
Knowledge-based
Leverage-driven
What do entrepreneurswant to see in nonprofits?
Businesslike practices
Stewardship based on impact
Collaborative mind-set
Philanthrocapitalist
“If they can use their donations to createa profitable solution to a social problem, it will attract more capital, far faster, and thus achievea far bigger impact than would a solution based entirely on giving money away.”
Bill Gates
Philanthropists as “Hyperagents”
Think large scale
Think long term
Go against conventional wisdom
Take up risky ideas
Deploy substantial resources quickly
An unwavering commitment to impact!It’s all about results, not processes
Benefactors must participate in emotionalevents that allow them to take part in social
change … to witness NPO work close-up.This is experiential persuasion.
The Accumulating/Deaccessioning Reflection Point
“Every successful businessman has a tricky decision to make as he considers becomingan active philanthropist; it is not just aboutwhen to stop accumulating money and start putting it to work, but whether the social goodthat results from spending his days focusedon business is more or less than the good that would flow from spending time focusedon giving.”
Bishop & Green
Engaged Philanthropy
Blended Philanthropy Business Philanthropy
Philanthropy – Business Spectrum
VenturePhilanthropyDiscovery and Innovation Fund
Engaged Philanthropy
Blended Philanthropy Business Philanthropy
SocialVenturingMuhammad Yunus
Philanthropy – Business Spectrum
VenturePhilanthropyDiscovery and Innovation Fund
“A social entrepreneur may have some cost recovery; a social business entrepreneurreceives 100% or more and so can movefrom philanthropy to the business world.”
Muhammad Yunus
Social Business Enterprise“Saving the World With a Cup of Yogurt”
“We’re saying that profit maximization is notgoing to be the only way to measure value.”
Emmanuel FaberCFO, Group Danone
Marc Van Ameringen,Executive Director, Global
Alliancefor Improved Nutrition in Geneva
“The new wave in business is, forget corporate responsibility and philanthropy – how do you integrate this into your core business? The idea that Danone has of creating a social dividendfor shareholders – that’s cutting-edge.”
Engaged Philanthropy
Blended Philanthropy Business Philanthropy
SocialVenturingMuhammad Yunus
CreativeCapitalis
mBill Gates
Philanthropy – Business Spectrum
VenturePhilanthropyDiscovery and Innovation Fund
Bill Gates
“The genius of capitalism lies in its abilityto make self-interest serve the wider interest. There are two great forces of human nature:self-interest and caring for others.”
Bill Gates
Engaged Philanthropy
Blended Philanthropy Business Philanthropy
Venture
Capital
Bay City Capital
SocialVenturingMuhammad Yunus
CreativeCapitalis
mBill Gates
Not-Only-
for-ProfitSteve Case
Philanthropy – Business Spectrum
VenturePhilanthropyDiscovery and Innovation Fund
What Is Not-Only-for-Profit?
“Too many people still act as if the private sector and the social sector should operate on different axes, where one is all about making money and the other is all about serving society.”
Steve Case
What Is Not-Only-for-Profit?
“Whether you’re running a business that alsoserves a valuable social objective, or runninga nonprofit that earns part of its income through viable commercial activity, purpose and profit aren’t zero-sum, they’re mutually reinforcing.”
Steve Case
“We believe strongly that in the long run wewill be better served – as shareholders andin all other ways – by a company that doesgood things for the world even if we forgosome short-term gain.”
Larry PageGoogle
Philanthropy
Business
SocialVenturing
CreativeCapitalis
m
Not-Only-
for-Profit
VenturePhilanthropy
Venture
Capital
Engaged Philanthropy
Blended Philanthropy Business Philanthropy
48
OpportunitySea
OpportunitySea
How will this affect our work?
New Partners
Businesses
Countries – governments
Nonprofits
Philanthropists
OrganizingFramework
High-Impact
NonprofitAdaptationShared
Leadership
Forces for Good, 2008
Advocate to
Government
Collaborate with
Nonprofits
Work with Business
Engage Individuals
At Least Three ReasonsWhy It’s Not Smartto Manipulate DonorsThey…
…are smarter than we are…know how to make money…have witnessed every possible scheme
to separate them from their money
Stop Stop schemingscheming
Stop Stop schemingscheming
Start Start dreamingdreaming
Start Start dreamingdreaming
“Dreams, I have come to believe, are almostalways partnerships … they require both dreamers and dream makers. Someone with the visionto go somewhere and someone willing to help them get there.”
Robert PeytonDreams and Dream Makers
Sources
Bank of America – IUPUI Study
Forces for Good
Philanthrocapitalists
The Power of Unreasonable People
Money Well Spent
Thank you