Richard Branson may be one of the world’s most visionary entrepreneurs, but for him, success lies more in making a difference than in receiving material benefit per se. Branson hit the nail on the head when he said, “When you see the impact giving can have, it becomes the best feeling in the world.”
On a purely monetary scale, donations may result in tax relief and gift aid in the UK, but entrepreneurs who are ‘serial givers’ will often speak of an entirely different set of values when explaining their motivation. Success often accompanies qualities like intelligence and the desire for connection. Indeed, Branson himself has said on various occasions that the reason why he got into business in the first place, was to offer products and services that would make a positive change in people’s lives.
Giving Makes Individuals Happier
Research published in the International Journal of Happiness and Development has shown that giving money to charity increases happiness measurably – especially when giving boots social connection. In other words, entrepreneurs wishing to obtain the maximum psychological benefits from giving should try to give via a friend, relative, or social connection rather than simply donating to a worthy cause.The researchers stated, “if donors have a greater sense of happiness when giving involves making a social connection one might imagine that the positive emotions might even lead to more frequent and perhaps bigger donations.”
Another study published in the official journal of the American Psychosomatic Society came to similar results: “Humans thrive off social connections and benefit when they act in the service of others’ well-being,” wrote the researchers.
Giving is Great for Company Morale
Research has shown that millennials are deeply interested in jobs that have meaning. A 2016 Deloitte study has shown, for instance, that millennials were twice as likely to give their corporate culture a ‘very good’ rating if the company took part in volunteer activities.
Emmy award-winning philanthropist Erik Gordon points out that some of the issues that are most in need of a helping hand currently include climate change, animal welfare, and social change. All these causes resonate deeply with generations who feel the need to connect both with their corporate culture and their leaders.
Cause-Related Marketing is a Win-Win for Companies and Recipients
Research by AH Hunjra et al has found that cause-related marketing (CRM) is an excellent marketing tool that has a significant effect on sales. It has a positive effect on customers’ intentions to purchase and it causes a rise in brand loyalty.
The researchers stated that CRM was “a more effective tool than free sampling, coupons etc,” despite costing the company little. Not only did CRM improve purchases among existing customers but it also makes it easier to break into completely new segments.
The Tax Benefits of Giving
Some entrepreneurs consider important tax advantages from the point of view of succession. In the UK, individuals leaving a charitable legacy amounting to at least 10% of their net estate, can cut the inheritance tax on the rest of their estate from 40% to 36%. For those wishing to continue making a difference after they are gone but who also want to benefit beneficiaries, this type of legacy can be an interesting way to significantly reduce or even eliminate inheritance tax liability.
Giving Has a Butterfly Effect
Companies that ‘pay it forward’ set a good example for employees, who can then carry the baton in their daily lives. This is especially true if companies engage employees in active giving- including sporting and fundraising charity events.
Being in a company that seeks to make a difference to local communities or international problems can spark one’s own interests in these and other causes. Indeed, entrepreneurs should pay heed to recent research indicating that people prefer to donate time rather than money. They should also work to build awareness of the impact of different types of giving. As stated by one researcher, “If you make $100 an hour, then you go work in a soup kitchen and don’t provide $100 worth of service in an hour, they would be better off if you just gave them $100.”
Charitable pursuits provide a welcome boost of happiness to the giver. They also boost company morale and, of course, are a great exercise in marketing as well. Finally, giving has tax advantages that can come in handy – both for the entrepreneur and future generations.