Chairman of Balentine and author of First Generation Wealth: Three Guiding Principles for Long-Lasting Wealth and an Enduring Family Legacy.
Philanthropy is changing for the better, and I’ve found it’s being driven largely by first generation wealth creators—people who are building businesses built on new ideas. It’s no surprise that their approach to giving is based on fresh thinking, and that a lot of innovative ideas spill over into how they support their communities and how they align with charitable causes.
In researching our book on first-generation wealth, my co-author and I had the opportunity to think critically about the many clients we’ve worked with over the years, advising them on investing, family business, wealth planning and most interestingly—legacy building. I often say that wealth does not equal legacy and the reverse is also true—legacy does not necessarily require wealth. Increasingly, however, companies consider giving of time, money or both, to go hand in hand with a license to operate.
Many of our country’s earliest philanthropists left legacies that have more than stood the test of time—the Carnegie family’s legacy of public libraries; the Rockefeller legacy of national parks. Can today’s companies hope to leave the same kind of lasting legacy, and how?
Over the last 40 years, I’ve noticed the approach to philanthropy has slowly but subtly evolved. Today’s philanthropists want to do more than create change; they want quantifiable impact, and many times, they are creating it through collaborative means. Entrepreneurs are taking best practices from the business world and applying them to philanthropy—from measuring ROI to favoring charities that are streamlined, not bloated, where the vast majority of the dollars go directly to the cause and not operating overhead. We are also seeing efficiencies gained through partnerships.
Companies that have a social mission, like TOMS shoes-for-shoes model, have giving baked into their business model. Many companies point to this as a competitive advantage because they appeal to talent who want to work for a cause. It is widely reported that TOMS donates up to one-third of their profits, which means they show up on a lot of “most generous companies in the world” lists.
Perhaps the most interesting and creative example of a company that is redefining giving came last year when Patagonia made the planet it’s only shareholder, meaning that the company’s profitability—estimated at $100 million a year—would all go into a specially designed trust and nonprofit that will also ensure the company’s independence into the future.
If you’re intent to leave a legacy, consider investing in philanthropic or social causes that are established and building momentum so that you can become a force multiplier. Here’s how to get started:
Study what others have done.
If you’re passionate about creating a legacy to solve a particular problem, study how others have done it before you strike out on your own. Bringing additional resources—not just your money, but your time and your influence—to an established initiative can take you further, faster.
Explore your passions.
If you’re committed to leaving a legacy that transcends your business but don’t know where to start, think about the meaning behind the work you do. Just like TOMS and Patagonia, linking your mission to giving can be as creative and out-of-the-box as you can imagine.
Or, you can take a more direct path and become an intermediary for giving by offering your retail customers a chance to “round-up” their purchase for charity. There’s some interesting science to show that many donors are more likely to give a few cents consistently over time than they are to add a set dollar amount to their purchase price.
Be willing to get your ego out of it.
Today, philanthropy is less about putting your company name on a building and more about thinking about how you can multiply your impact through creative partnerships, collaborations or investments in existing initiatives to create change. Look no further than Warren Buffett’s decision to leave billions to the Bill & Melinda Gates Foundation.
Be strategic and create a mission statement.
Figuring out how to give money away thoughtfully can be just as hard as making it. It is well worth your time and energy now to make a plan that will support your company’s legacy into the future, by doing the work to identify your company mission or pursue, and by linking that mission to benefit the community in some way. Ben & Jerry’s is a great example of a company that walks the talk, aligning everything from the products they create and the way they market them to the social causes that they advocate for and support.
Of course, the best way to institutionalize giving into your business is to model it, and for many of us that means giving not just money but also our time and talents to the community organizations that we care most about. Serving on boards, chairing fundraisers, volunteering to sit in the dunk tank at the school carnival—all of it matters, and all of it shows your employees that you walk your talk, which can become a multiplying force all its own.
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