The business of giving: meet the entrepreneurs who want to give their money away

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The lines between philanthropy and business are blurring.

Now entrepreneurs build philanthropy into their businesses from inception and social enterprises operate as successful stand-alone businesses.

What’s more, those who give – whether businesses or individuals – increasingly want to ensure their gift delivers.

They also appreciate that while anonymous philanthropy has its benefits, visible philanthropy can have even greater impact by inspiring others.

This changing world of philanthropy is the subject of discussion at the biennial Philanthropy Australia conference which starts in Melbourne today. 

Lucy Bernholz, senior fellow at Stanford University’s Center on Philanthropy and Civil Society, is a keynote speaker at the conference.

She says it is increasingly common for entrepreneurs to be involved in philanthropy.

“Some sense of social good is becoming more the norm than the exception,” Bernholz says.

Building philanthropy into your business plan

Increasingly Bernholz is seeing businesses include philanthropy in their business plans.

“Folks are building in all kinds of social and environmental strategies into their business plans,” she says.

Bernholz says an “audacious” example of this is Salesforce’s 1/1/1 mantra. 

From the day it was founded Salesforce had a commitment to give 1% of its employees time, 1% of its sales and 1% of the equity of the company to philanthropy.

“Philanthropy has been built in from the get go and it is a model more and more entrepreneurs are following,” she says.

“That’s a big change from 25 to 35 years ago where the model is make your fortune and then give it away”. 

Bernholz says this is being driven by younger entrepreneurs like Mark Zuckerberg who have been raised in an age where there is a lot more awareness about social enterprise.

Closer to home, entrepreneurs Scott Farquhar and Mike Cannon-Brookes of Atlassian set aside 1% of the equity in their tech business to the Atlassian foundation when they started the company.

Farquhar told SmartCompany the foundation is part of the “untold” story of Atlassian and the latest valuation means it is now a $35 million foundation on paper.

Using philanthropy as an employee retention strategy

Bernholz’s research in the United States has revealed a lot of small businesses are very focused on social and community engagement as an employee retention strategy.

“They are not just giving away money, they are trying to find meaningful opportunities for employees to do things that are exciting and different,” she says.

Bernholz is seeing more creative partnerships between community and philanthropic groups and small businesses where employees are engaged in an ongoing way rather than just in one-off events.

For example, businesses may engage with a single school over a long period of time.

“It’s as much about keeping the best human talent as helping the community,” she says.

Geoff Harris, co-founder of Flight Centre, sees a big benefit from entrepreneurial involvement in philanthropy.

“As a business you are getting your profits from the community, so why wouldn’t you work with your community and community partners?” he says.

Harris says at a basic level involvement in philanthropy means staff feel their boss is a good person and feel pride in the business.

“Are they more likely to stay on? Are they less likely to leave? I would argue: yes.” 

Harris says a dollar value can be put on this as the cost to a business of losing a good person is usually $30,000.

The business of philanthropy

Another increasing trend in philanthropy is the number of people creating businesses that are specifically designed to accelerate philanthropic giving.

“We see this in the online giving space where you can’t even keep a count of the businesses built to provide people with online giving platforms,” Bernholz says.

But she warns this area is a bubble and “a bubble I believe will pop”.

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Cara Waters is the former editor of SmartCompany. Previously, Cara was a senior reporter at the Financial Times website FT Adviser in London and she also worked for The Sunday Times in London.

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