Why Entrepreneurs Make Good Philanthropists

Entrepreneurs are often celebrated for their ability to innovate, take risks, and build successful businesses. However, beyond their entrepreneurial prowess, many successful business leaders also possess a deep commitment to philanthropy and are emerging as powerful philanthropists (think Bill Gates, Mark Zuckerberg, Pierre Omidyar). 

According to a study by Fidelity Charitable, entrepreneurs are more likely to donate to charity than non-entrepreneurs, with 75% of entrepreneurs donating to charity compared to 52% of non-entrepreneurs. Additionally, the median annual donation of entrepreneurs is 50% higher than that of non-entrepreneurs. Lastly, entrepreneurs tend to give more of their time than non-entrepreneurs do: 61% of entrepreneurs want to be personally involved in charities, as opposed to just making financial contributions. 

In this blog post, I’ll explain why entrepreneurs make good philanthropists and how certain unique qualities contribute to positive social change (backed by some real-life examples):

Vision and Innovation:

Entrepreneurs are known for their ability to see opportunities where others might see challenges. This visionary mindset doesn't just apply to business; it extends to their philanthropic efforts as well. Entrepreneurs are often at the forefront of identifying innovative solutions to societal issues. Whether it's developing new technologies to address environmental concerns or re-imagining what corporate social responsibility looks like, entrepreneurs bring a fresh and forward-thinking approach to philanthropy.

Real life example: Mark Benioff, founder of Salesforce, created a new approach to corporate philanthropy that he calls the "1-1-1 model." Through this model, he encourages companies to contribute 1% of their product, 1% of their equity, and 1% of their employee hours back to local communities. Countless tech companies have adopted this model and are driving social change as a result.

Risk-Taking and Bold Action:

Successful entrepreneurship is inherently tied to risk-taking and the ability to make bold decisions. This same courage translates seamlessly into philanthropy. Entrepreneurs are willing to take calculated risks to support unconventional projects and initiatives that have the potential to bring about meaningful change. Their fearlessness in the face of uncertainty allows them to tackle some of society's most pressing issues head-on.

Real life example: Elizabeth Funk’s career blends Silicon Valley high-growth start-up and entrepreneurship, and she has been actively involved in one of the toughest challenges - homelessness - for several years. Her most recent initiative, Dignity Moves, is an unconventional test on solving this crisis: she finds unused parking lots to rent out, and builds low-cost, temporary modular housing units (with locks on them) to provide a dignified place for those suffering from homelessness to stabilize and recover. Her innovative model enables a ½ acre to accommodate 70 rooms, including ample common areas, and the modular units can be picked up by forklift and relocated at any given time. It is more cost-effective, more scalable, and embodies what a bold new approach to a major societal crisis can look like.  

Results-Driven Approach:

Entrepreneurs are inherently driven by results. In the business world, success is measured by profit margins and growth. When applied to philanthropy, this results-driven approach ensures that entrepreneurs are focused on achieving measurable and sustainable social impact. By setting clear goals, tracking progress, and adapting strategies based on outcomes, entrepreneurs bring a fresh level of accountability and efficiency to their philanthropic endeavors.

Kahn Academy is a a non-profit educational platform started by social entrepreneur Sal Kahn that employs a “mastery based learning” methodology. The platform uses data analytics and algorithms to track students' progress, identify strengths and weaknesses, and provide personalized recommendations. This personalized approach allows students to focus on areas where they need improvement, ensuring a more efficient and targeted learning experience. It is exactly Kahn’s business-savvy approach that enables this nonprofit to drive clear results with measurable impact.

There are groups such as Founder’s Pledge that have emerged recently to help entrepreneurs foster their philanthropic curiosities and goals. We at Rise Together are big believers in the outsized impact that creative and innovative entrepreneurs can have, and are excited to continue to support those brave enough to tackle some of the most challenging issues we currently face.