Eight in 10 entrepreneurs in a study released Wednesday by Fidelity Charitable say charitable giving is a critical part of who they are, and nearly half consider themselves philanthropists.
Entrepreneurs who give to charity make a median annual donation of $3,577, compared with $2,383 for non-entrepreneurs, the study found.
In addition, 66% of entrepreneur donors volunteer three or more hours per month, while 55% of other donors do so. They are also likelier to contribute skills relevant to their expertise in business, such as professional services, helping with fundraising and serving on boards or committees.
Many entrepreneurs in the survey said their experience as business owners reflected how they approached their giving. They prioritize aspects of giving that align with a more hands-on approach:
- 61% appreciated the ability to be personally involved in a cause or organization
- 62% valued the opportunity to demonstrate leadership in their community through charitable giving, compared with 50% of non-business owners.
Some 550,000 Americans become entrepreneurs every month, Pamela Norley, president of Fidelity Charitable, noted in a statement, citing The Kauffman Index of Entrepreneurship Series, 2016.
“The sheer size of this group, coupled with an expressed interest in having a positive social impact, means they have a tremendous influence on the philanthropic sector,” Norley said
Fidelity Charitable surveyed 3,000 total respondents — including 708 entrepreneurs and 2,292 non-entrepreneurs — who gave to charity and itemized deductions on their taxes last year. Entrepreneurs were defined by having founded a business or owning a business directly through stock or direct ownership. Those who owned stock in public companies were excluded unless that ownership gave them a controlling interest.
Philanthropy is a top-of-mind consideration when business owners make plans to sell their business, according to Fidelity Charitable.
Three out of 10 current business owners in the study said they intended to sell or pass the business down to a family member within the next five years. Of those, 68% planned to donate to charity in conjunction with that transition.
Specifically, 31% planned to make a donation to charity with the proceeds of the sale, 27% to set up an ongoing way to make charitable donations via a donor-advised fund or foundation and 26% to donate shares of the business prior to the sale, which can help increase the amount they can give.
Just 14% of business owners had no plans in place to give to charity during the time of a business exit.
“With a significant number of individuals who have both a clear commitment to philanthropy and an in-depth understanding of charitable giving strategies planning to sell or pass down their business within the next five years, the philanthropic sector is likely to benefit substantially,” Karla Valas, managing director of Fidelity Charitable’s complex assets group, said in the statement.