Entrepreneurs are More Likely to Give to Charity
New Study Shows That Entrepreneurs' Active Approach to Philanthropy Is Personal as Well as Practical
PALM SPRINGS, California, November 12, 2010 — The Fidelity® Charitable Gift Fund ("Gift Fund"), the nation's largest donor-advised fund program, and Ernst & Young, a global organization of professional services firms with a long-standing commitment to entrepreneurship, today released Entrepreneurs & Philanthropy: Investing in the Future, a comprehensive study which examines how entrepreneurs apply their personal passion for giving to their corporate philanthropy.
Released at the annual Ernst & Young Strategic Growth Forum, the survey of nearly 150 CEOs and founders, including previous winners of the Ernst & Young Entrepreneur of the Year® Award, reveals that nine in 10 (89 percent) entrepreneurs donate money, both personally and through their companies, to support charitable causes, while 70 percent also donate their time. The majority (61 percent) of respondents believe that being an entrepreneur makes them more inclined to give to charity. Whether corporate or personal, entrepreneurs view "giving back" as an opportunity rather than an obligation.
"Just as they put their hearts and souls into their businesses, entrepreneurs pour themselves into the causes they care about," said Sarah C. Libbey, president of the Fidelity® Charitable Gift Fund. "They are passionate about investing not just money, but time and energy, in the causes most important to them and their companies."
Charitable Giving Integrated into the Business Plan
The study found that companies led by entrepreneurs allocate more than twice the percentage of their profits to charity than many of America's largest companies1. Six in 10 (62 percent) feel that giving back makes their companies more successful in the long run and one-quarter (26 percent) incorporated corporate philanthropy into their companies' original business plans. Additionally, nearly 70 percent did not wait for "success" to give back, noting they started supporting charities while building their businesses.
According to the study, nearly three-quarters (73 percent) of the entrepreneurs surveyed say that their companies' policies actively encourage their employees to volunteer their time and/or expertise to charitable causes, and more than half (53 percent) offer programs that encourage employees to support charitable causes financially.
"Entrepreneurs have long been committed to giving back, but this study sheds light on the growing number of entrepreneurial business leaders who are incorporating charitable commitments into their business strategies and company cultures," said Bryan Pearce, Americas Director, Entrepreneur Of The Year®, Ernst & Young, LLP.
In addition to being part of the business plan, nearly three in 10 (29 percent) entrepreneurs are seeking to engage with causes that align with their company's core mission.
Business benefits aside, entrepreneurs said their No. 1 reason for supporting corporate giving is the fact that it enables them, as leaders, to integrate their personal philosophies for giving into their corporate culture. More than half (55 percent) of entrepreneurs personally select the charities their companies will support.
Personal Giving: Hands-on and From the Heart
While often more public in their corporate philanthropic efforts, the majority (66 percent) of entrepreneurs describe their personal giving style as "quiet/passive." They may be known for their generous financial support of charities, but prefer not to be overtly recognized. Entrepreneurs also say their personal giving is driven by three key factors: gratitude for help received, empathy for those less fortunate and the financial resources and freedom to make a difference. More than half (53 percent) report that charitable giving is now a key component of their overall personal financial plan.
For entrepreneurs, philanthropy often involves giving more than just money, but also providing their time and knowledge. According to the survey, most entrepreneurs (61 percent) currently sit on the board of a non-profit, and half (50 percent) currently chair a board or have chaired a board in the past.
"Getting personally involved with a charity — whether through board membership or volunteering — is one of the best means for donors to conduct due diligence, while also benefiting the charities," said Libbey. "We know that people who volunteer their time also typically donate 10 times more than non-volunteers2 and this is especially true for entrepreneurs."
Just as they've started their own businesses, more than four in 10 entrepreneurs (43 percent) have formed their own charities.
"The current trends in philanthropy toward 'impact giving' and 'social innovation' are entrepreneurial at their root, so it is a natural progression for these leaders to launch their own charitable organizations," explained Pearce.
Entrepreneurs are Early Adopters of Strategic Giving Vehicles
Although increasing in popularity, donor-advised funds currently account for just 3 percent of America's $300 billion in giving3; yet, 16 percent of entrepreneurs report that they use these strategic giving vehicles in their own personal philanthropy.
Ideally suited for entrepreneurs, donor-advised funds, such as the Giving Account® offered through the Gift Fund, provide donors with immediate tax deductions for their charitable contributions and accept a variety of non-publicly traded assets such as private company stock (S-corp and C-corp), restricted stock, LLC and limited partnership interests, pre-IPO shares and certain other assets. By donating these types of assets to a donor-advised fund, donors are able to diversify their giving with a single contribution, recommending multiple grants to different organizations on their own timetable.
"This study validates that entrepreneurs are not only forward-looking about their businesses, but many also apply the same level of strategy to their charitable giving," said Libbey.
Entrepreneurs & Philanthropy: Investing in the Future was designed to explore the personal and corporate giving philosophies of entrepreneurs. The study was compiled from an online survey of 146 entrepreneurs by Harris Interactive between September 17th and October 6th, 2010. The study was conducted in cooperation with Ernst & Young, which invited their Entrepreneur Of The Year® Award Winners Network to participate in the survey. Award winners must be the CEO/Founder, and his or her company must be at least 3 years old.
About the Fidelity® Charitable Gift Fund
The Fidelity® Charitable Gift Fund is an independent public charity, established in 1991, with the mission to further the American tradition of philanthropy by providing programs that make charitable giving simple and effective. Since its inception, the Gift Fund has helped donors support more than 136,000 nonprofit organizations with over $10 billion in grants.
About The Ernst & Young Entrepreneur Of The Year®
Ernst & Young's Entrepreneur Of The Year® is the world's most prestigious business award for entrepreneurs. The award makes a difference through the unique way it encourages entrepreneurial activity among those with potential and recognizes the contribution of people who inspire others with their vision, leadership and achievement. As the first and only truly global award of its kind, Ernst & Young Entrepreneur Of The Year® celebrates those who are building and leading successful, growing and dynamic businesses, recognizing them through regional, national and global awards programs in more than 135 cities in more than 50 countries.
About Ernst & Young®
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
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Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity.
Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited located in the U.S.
The Fidelity® Charitable Gift Fund ("Gift Fund") is an independent public charity with a donor advised fund program. Various Fidelity companies provide investment management and administrative services to the Gift Fund. The Charitable Gift Fund logo is a service mark, and Giving Account is a registered service mark, of the Trustees of the Fidelity Investments® Charitable Gift Fund. Fidelity and Fidelity Investments are registered service marks of FMR LLC, used by the Gift Fund under license.
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1 Entrepreneurs reported that their companies allocate a median of 3 percent of their company profits to charitable causes; this compares to a median 1.2 percent cited by the Chronicle of Philanthropy's annual corporate giving survey of America's largest companies. August 7, 2010.
2 Survey conducted via telephone by Harris Interactive from Oct. 21 to 25, 2009. It included 1,005 respondents at least 18 years old. Volunteers are defined as those who volunteer currently or have volunteered within the last 12 months.
3 Giving USA FoundationTM, estimated total charitable contributions from American individuals, corporations and foundations was $303.75 billion in 2009; $5 billion to donor-advised funds.