Why and How Entrepreneurs Give to Charitable Causes

Entrepreneurs and the companies they lead are more inclined to give to charitable organizations, according to a recently released study by the Fidelity Charitable Gift Fund. The study, Entrepreneurs & Philanthropy: Investing in the Future, was compiled from an online survey of 146 entrepreneurs by Harris Interactive in cooperation with Ernst & Young.

The majority of respondents (61 percent) say that they are more inclined to give because they are entrepreneurs, and companies led by entrepreneurs allocate more than twice the percentage of profits to charity than many of America's largest companies, according to the study. Also, nine in 10 entrepreneurs donate money, both personally and through their companies, and 70 percent also donate their time.

Other key findings include:

Many entrepreneurs believe philanthropy makes their companies more successful

• 62 percent of respondents say giving back makes their companies more successful in the long run.
• 26 percent say corporate philanthropy was built in to the original business plans.
• 62 percent want to be recognized for their charity work.
• 43 percent believe corporate philanthropy helps attract and retain talent.
• 29 percent made grants based on how charities' causes align with their companies.
• 73 percent encourage their employees to volunteer, and 53 percent offer programs that encourage donating.

Reasons for supporting nonprofits on a corporate level
The top reasons entrepreneurs cite for corporate giving include integrating their personal philosophies for giving into their corporate cultures, helping the less fortunate, believe it's part of a company's corporate citizenship responsibility, it generates good will, it feels good to give, and to support causes that they or people close to them have been affected by.

Local impact is key
The majority (71 percent) of respondents indicate that supporting local charities is a key criterion for selecting which organizations to support. Other criteria cited include:

• Efficient use of donated funds
• Proven track record or results
• Personal employee referrals
• Must be IRS-qualified public charity
• Grants to the organization may benefit their companies — drive business/alignment of cause with business mission
• Company may have ability to direct grants to specific programs
• Strong third-party rating

Entrepreneurs are early adopters of strategic giving vehicles
More than a third of respondents facilitate employee giving through company match or payroll deduction, and about 30 percent would consider establishing company match, payroll deduction and/or fund charitable accounts for employees.

Personal reasons and attitudes for supporting charities

• 48 percent say charitable giving was part of their upbringing.
• 42 percent have personally benefited from the charity of others.
• 90 percent donate time through volunteering, board service, lending expertise, etc.

To download the full study, click here.