ENTREPRENEURSHIP AND PHILANTHROPY
TIGER 21 recently had a conversation among Members about making an impact through philanthropy. Naturally, TIGER 21 Members are thoroughly familiar with making generous donations to worthy causes, but this recent presentation focused on an action some successful entrepreneurs might consider the appropriate next step ‚Äì full immersion in philanthropic activity.
TIGER 21 New York Chair Joel Treisman moderated the discussion, which featured Gerald Chertavian of YearUp, William Foster of the Bridgespan Group, and Yotam Polizer of IsraAID. Beyond those individual commentaries though, a recurring theme to emerge from the discussion was the idea that entrepreneurship and philanthropy are becoming more closely related ‚Äì to the benefit of both.
The need for business skills
Traditionally, there has been something of a wall between the for-profit and not-for-profit worlds, but our conference call speakers stressed that this wall is breaking down. That’s a good thing, because there is a need for more business skills ‚Äì and particularly entrepreneurship ‚Äì to be applied to philanthropic pursuits.
Here are some of the examples our speakers cited of how business principles need to be applied to philanthropy:
- Business strategy. Just because an organization is not trying to turn a profit does not mean that elements of business strategy should not apply. After all, budgets need to be devised and followed, resource use needs to be optimized, and outreach efforts should seek to grow awareness and funding.
- Rigor. It’s too easy to fall back on the attitude that just because something is done in the name of a good cause that the effort is enough. The rigor of examining results and seeking improvement can make those efforts more worthwhile.
- Process improvement. Businesses actively pursue process improvement to an extent that any remaining room for further gains is often relatively small. In the not-for-profit world, the potential room for improvement is greater because traditionally there has been less focus on process.
- Use of data. In terms of both maximizing funding and measuring results, businesslike approaches towards data gathering and analysis are increasingly being applied in the not-for-profit world.
- Entrepreneurship and innovation. While business skills generally can help a philanthropic enterprise, entrepreneurial skills and experience are especially valuable because there is so much need for innovation to solve the problems these organizations have taken on.
- Attitude of striving to stay lean and make an impact. To some extent, size alone has too often been viewed as a measure of a philanthropic organization’s power. Entrepreneurs, on the other hand, have a bias towards keeping their organizations lean and focused on where they can make an impact.
- Opportunism. Often, it is the cause itself that attracts people to a philanthropic cause. While that is noble, let’s start with the assumption that there is no shortage of worthwhile causes around the world. What attracts an entrepreneurial mindset are those situations where there is the greatest opportunity to make a difference.
- Making a difference sometimes involves taking a risk. Speaking of making a difference, this often requires new approaches that entail taking a risk. Entrepreneurs don’t shy away from risks.
Philanthropy as a life decision
It’s easy to see how successful business executives, and entrepreneurs in particular, can benefit not-for-profit endeavors. However, our speakers also highlighted several ways in which philanthropic pursuits can benefit those executives and entrepreneurs.
Indeed, for a person who has found success in business, dedicating a substantial amount of time to social enterprise can be a meaningful next act in their lives. Here are some examples of how to approach that life decision.
- Extend involvement beyond writing checks. Since entrepreneurs are hands-on people, they appreciate the opportunity to extend their commitment to a cause beyond passively writing checks.
- Your next venture might be philanthropic. Following the sale of a business or other liquidity event, successful entrepreneurs are often left wondering “what’s next?” Besides considering new business opportunities, keep in mind that a social enterprise might be the best channel for your energies at this point in your life.
- Concentration of efforts to make a difference. One benefit of becoming actively involved with a cause is that when efforts are concentrated rather than spread around among several causes, there is a greater chance to make a difference.
- Necessity of a long-term perspective. Shaping a charitable organization into something that can make a lasting difference and pioneer breakthrough approaches is not an overnight activity. The need for a long-term perspective can mesh well with people who are looking for the next meaningful engagement in their lives.
- Take the time to engage in a few things on a small level until you recognize the right opportunity. This is akin to the early days of your professional career, when you are likely to have accumulated different work experiences before starting a venture of your own.
- Don’t view the not-for-profit world as foreign territory. One trend cited in the presentation was that young people are finding more mobility back-and-forth between the for-profit and not-for-profit sectors than was true a quarter century ago.
- View active engagement as an opportunity to learn and get better. Just like succeeding in business, committing your energies to philanthropic activities is a great opportunity for personal growth.
- Active engagement and concentration are where the joy and satisfaction come from. If you write a check, it will probably help the cause but you personally will have a hard time seeing where it made a difference. If you are directly involved and concentrate your efforts, the results should be easier to perceive.
TIGER 21 membership is not just a forum for sharing financial insights and finding your next big opportunity. The organization also actively encourages its Members to share their insights about philanthropic activities. Besides events like the one mentioned above, TIGER 21 also sponsors “philanthropic defenses,” modeled after our program of portfolio defenses. Philanthropic defenses are presentations where Members make and discuss not just particular causes, but also their broader approaches to philanthropy.
Clearly, such an approach can benefit from entrepreneurial spirit and know-how. After all, not-for-profit and for-profit do not have to have opposite meanings. As our conference speakers demonstrated, the tactics can be similar; it’s just the way that returns are measured that differs.