What motivates businesses and their owners to involve in philanthropic activities?

Fundraising workers are constantly returning to a key issue of their activity: how to talk to business organizations, their CEOs, and owners to make a positive decision regarding the provision of support. What are the factors that encourage the personal involvement of business owners and organizations and philanthropic activities?

Let’s take off our pink glasses: business is looking for benefits

The academic literature marks that the self-determination of business to participate in philanthropy can be determined by egoistic factors when seeking direct or indirect benefits for business; egocentric, where business participation in philanthropy is linked not to the aim of obtaining a specific benefit but also to the desire to strengthen an existing relationship with the beneficiary; altruistic, when participation in philanthropy is usually based on the personal values ​​of the decision-maker representing the business – the desire to share the accumulated good things for the good of public and without seeking any reward.

Understanding the real motives of business – while they are often pragmatic – is the first step towards success. No matter how much we would like to believe in altruistic incentives of business, business involvement in philanthropy activities is in many cases based on egoistic goals: I seek to improve our profitability indicators, attract additional clients, increase product demand, grow sales or income, improve the company’s image, and so on. Such criteria as personal qualities of the decision-maker representing the business, the budget allocated to advertising, the industry in which the business operates, and the activities of non-governmental organizations in a particular field may have the greatest influence on the decision to participate in philanthropy.

The size of the company and the gender of the decision-maker can also be a decisive factor: studies have shown that medium-sized companies devote (as a percentage) the most financial resources to philanthropy activities, while women (the companies’ top managers, board members) – representing business – are more likely to be involved in philanthropy activities.

There is relatively little empirical research investigating the factors that motivate business owners to involve personally in philanthropic activities. The desire of business representatives (owners and/or CEOs) as individuals to contribute to philanthropic activities ranges from egoistic interests (seeking to create economic benefits for their company) related to strategic and/or marketing goals to altruistic ones when involvement in philanthropy activities is random and spontaneous.

From theory to practice: what motivates Lithuanian business and its owners?

Identifying the factors that motivate business owners to get involved in education philanthropy in Lithuania was the main aim of my empirical research “Factors That Motivate the Involvement of Business Owners in Philanthropy in Lithuania” (Lith. “Veiksniai, skatinantys verslo savininkų įsitraukimą į filantropiją Lietuvoje”) I carried out. For this purpose, 12 business owners of different size companies, fields of activity, countries of residence, who are involved in education philanthropy activities, i.e. allocate funds for education, were surveyed.

What did the research show? To sum up, it can be stated that the motivation of Lithuanian business owners to contribute to education philanthropy activities in Lithuania at the organizational level does not differ from the general tendencies of business philanthropy prevailing in the global context.

Among the factors motivating involvement in education philanthropy activities at the organizational level, such egoistic factors as tax benefits, organization’s awareness, the image of an attractive employer, organization’s social responsibility, publicity about organizations developing support activities dominate.

Among the altruistic factors that motivate business owners and their organizations to contribute to education philanthropy activities, the empirical research identified the following ones: concern for public welfare and national sponsorship traditions.

At the individual level, business owners are motivated to involve in philanthropic activities by altruistic, egocentric, and egoistic factors that are evenly distributed. Among the altruistic factors, the desire to contribute to the development of the public welfare has the greatest influence; among egocentric – a feeling of inner satisfaction; among egoistic – personal welfare.

The research revealed that female business owners were more active in sharing experiences about business owners’ involvement in education philanthropy activities at the organizational level, and male business owners on the contrary were more active in sharing insights about involvement in education philanthropy at the individual level.

Among the obstacles hindering to involve in education philanthropy, business owners named reasons at the national and individual levels, of which obstacles at the national level were more frequently mentioned: national identity, no education vision.

Practical pieces of advice: more inclusion, cooperation, and publicity

Summarizing both the scientific literature and the ideas expressed by the entrepreneurs themselves during the interviews, I would recommend organizations working in the field of philanthropy and involving business owners in it to:

  • Cooperate, form associations, look for common goals. There are many charitable foundations, non-governmental and public organizations operating in Lithuania that develop philanthropic activities in Lithuania. Often, the activities of such organizations are focused on short-term goals and do not create the sustainable contribution needed to create positive changes. Initiating the formation of associations of different directions or other forms of cooperation would provide an opportunity for such organizations to communicate with each other regularly, share experiences, and cooperate more closely with businesses and decision-makers representing them.
  • Build traditions of philanthropy by actively involving the business community and other members of the public. According to the good practice of foreign countries, the active involvement of members of the society in philanthropic activities has an important influence on the development of philanthropic traditions. Unfortunately, an organization often has short-term goals in its activities – to gather as much support as possible from business entities, rather than to establish long-term partnerships with them. Thus, plan as many initiatives as possible in your activity that would help to create sincere, open, and trust-based communication with decision-makers (business owners, business owners-CEOs) representing the businesses, educate them about the benefits created of such activities not only for the welfare of the public but also for their businesses. Moreover, public leaders and influencers should be actively involved in philanthropic activities as they would help to create a phenomenon of sharing culture and trends not only in the business community but also in the public in general.
  • Communicate actively and do not compromise on the transparency of the activity. According to both global and Lithuanian philanthropic practice, only the undoubted transparency of the activity of organizations developing such activities, the provision of constant feedback to donors, and, in general, public communication to the public about the activity implemented can motivate decision-makers of business, their businesses – as potential donors – to get involved into philanthropic activities. It is important that organizations developing philanthropic activities set the highest standards of transparency from the moment they are established until their goals are achieved and actively communicate about this not only with business owners, the businesses they represent – as donors – but also with beneficiaries and the general public.
  • Involve business owners in volunteering to increase the efficiency and performance of your organization’s activities. There is still a prevailing opinion in the public space that organizations developing philanthropic activities lack human resources that would be able to carry out the activities of such organizations efficiently and effectively. It is because often the CEOs and members of their teams of such institutions have limited financial means to attract experts with the required competencies. In this context, the phenomenon of the growing popularity of volunteering, which is increasingly inspiring business owners to undertake self-realization by devoting time to unpaid activities should be exploited more insightfully. They could help organizations developing philanthropic activities to implement their long-term visions, not only by participating in the boards of such organizations, as it is already becoming a norm but by dedicating time to volunteering in the day-to-day activities of the organization.

I will present the more detailed results of the research “Factors That Motivate Businesses and Their Owners to Get Involved in Philanthropy Activities” (Lith. “Veiksniai, skatinantys verslus ir jų savininkus įsitraukti į filantropijos veiklas”) and share my successful practical experience in the field of fundraising at the upcoming conference “Fundraising @ LT. reSTART” on September 23, 2021.

See you soon!

Aneta Šlekytė-Kaminienė – the author of the research “Factors That Motivate the Involvement of Business Owners in Philanthropy in Lithuania” (Lith. “Veiksniai, skatinantys verslo savininkų įsitraukimą į  filantropiją Lietuvoje”), fundraising expert and consultant, Head of Strategic Business Partnerships at VUBS (Vilnius University Business School) – has accumulated unique practical experience in both community-building and projects of national significance organizing business, municipalities and private persons’ sponsorship.

During her more than 15 years of experience accumulated in Lithuanian education: from volunteering by fundraising support for the studies of talented and/or socially disadvantaged young people to managing one of the foundations dedicated to education, she has implemented several successful fundraising initiatives.

In her professional activity, in addition to fundraising support for higher education projects, she consults non-governmental organizations, foundations, and other institutions on the issues of fundraising support.