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Capital Acumen Issue 33

Making Business a Force For Good

The owners of successful companies give back to society in ways that extend beyond writing checks.

3 men working hand in hand and building a staircase

Jing Jing Tsong/theispot.com

Like many people of means, owners of successful businesses often make personal donations to nonprofit organizations, but many wield more than their checkbooks to advance the work of their favorite charities. They make the business itself a change agent, leveraging assets like the skill sets of their employees, office equipment, unsold inventory and even the corporate jet to help nonprofits achieve their missions.

“Many people equate philanthropy with making large donations — the kind that get people’s names on the wall of a hospital wing or a new college dormitory at their alma mater,” says Gillian Howell, philanthropic consulting and advisory executive at U.S. Trust. “Business owners do write checks, but they also provide expertise and other company resources that are invaluable to nonprofits.”

Lending Time and Talent

The 2017 U.S. Trust Insights on Wealth and Worth® survey,** an annual query of the attitudes, goals and behaviors of high-net-worth individuals in the United States, revealed that 95% of business owners actively support nonprofits. For many, this means serving on a nonprofit board. More than 30% of survey respondents who own businesses serve on at least one nonprofit board, with many serving on six or more — an astounding figure given the demands placed upon board members.

The presence of business owners on nonprofit boards is particularly helpful to charitable organizations because, while their missions may differ, businesses and nonprofits face similar challenges. Each must define their organization’s strategic goals; identify the metrics by which they assess progress; develop effective marketing and communications programs; and attract top talent. Business owners understand those challenges, and they can impart the lessons they’ve learned in the business world to charitable organizations, says Karen Reynolds Sharkey, national business owner strategy executive at U.S. Trust.

"More than 30% of survey respondents who own businesses serve on at least one nonprofit board, with many serving on six or more."

“Successful business owners know how to market their businesses, keep expenses under control and get strong performance from their employees,” she says. “They can leverage that real-world experience to help nonprofits in ways board members without business backgrounds might not.

Giving More than Dollars

As valuable as it may be to an organization, serving on a nonprofit board is by no means the only opportunity for business owners to effect positive social change. Many owners harness resources unique to their businesses to support nonprofits or to directly address important social and environmental issues. Some business owners donate unsold products, office furniture, retired computers and printers, and even office space. Others give their employees time off to volunteer at nonprofits or engage customers in their charitable initiatives.

"One of our clients, who operates a retail business, gives his customers the option of adding a dollar to their bills at checkout to raise funds for a local charity,” Howell says. “The initiative not only raised a lot of money for the nonprofit, but it also raised the charity’s profile in the community.”

A client recently donated his company’s jet to a local vocational school. In doing so, he enabled students in the school’s aircraft maintenance program to gain hands-on experience servicing the engines and mechanical systems on the technologically complex aircraft.

“Giving vocational education students the opportunity to work on machinery they’ll see in the field gives them a real leg up when they move into the workforce,” Howell says.

Cutting Out the Middle Man

While many owners channel their giving through nonprofits, they need not work through charities to improve their communities. Some owners tackle urgent social or environmental challenges by creating companies focused on fighting disease or making advances in sustainable energy. The survey found, for example, that a quarter of business owners consider themselves “social entrepreneurs,” who started their businesses to make a positive social impact.

"Many owners harness resources unique to their businesses to support nonprofits or to directly address important social and environmental issues."

Of course, a business does not need to focus on finding a cure for cancer or reducing reliance on fossil fuels to make a positive contribution to society. Simply by creating or growing their companies, business owners create employment opportunities, provide necessary goods and services, and generate tax revenues that fund community programs.

“Creating a business provides people with stable jobs, good wages, job training and, in many cases, healthcare and retirement benefits,” Reynolds Sharkey says. “That’s the wonderful thing about owning a business; you make a difference in people’s lives just by getting up every day and going to work.”

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