entrepreneurs and the new engaged philanthropists james m. hodge vice chair, department of...

Entrepreneurs and the New Engaged Philanthropists

James M. Hodge

Vice Chair, Department of Development

Mayo Clinic

Why does this topic matter?

Bank of America

Most generous individuals

How did they make their money?

How do they hold their money?

Most Philanthropists

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


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



SocialVenturingMuhammad Yunus



“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.”




CreativeCapitalis

mBill 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



Venture

Capital

Bay City Capital


CreativeCapitalis

mBill Gates

Not-Only-

for-ProfitSteve Case



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

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


The Power of Unreasonable People

Money Well Spent

Thank you

entrepreneurs and the new engaged philanthropists james m. hodge vice chair, department of...

Documents

philanthropy slide

philanthropy study

philanthropists entrepreneurs

philanthropy studies

percent of money

increased neural response

jill stowe

dharol tankersley