By Teresa Stohs

Small business is big business when it comes to philanthropy. As our economy has seen downsizing with mergers and closings in big business-small businesses have been on the rise.

In 2004, the U.S. Small Business Administration found that 99.7 percent of all businesses were small businesses (defined as having 500 employees or less). That same year, more than 50 percent of all wealth was held within privately owned corporations. Consequently, nonprofits are wise to court small business philanthropists.

Reasons for Giving
Experience shows that small business owners approach philanthropy in a nontraditional way. In addition to caring for the cause and wanting to support the mission, many traditional philanthropists give to secure their position in the community, gain recognition for their company and products or attach their name to a specific charity or cause. Entrepreneurs, on the other hand, tend to give to an organization because that organization:

• Impacts them personally (now or in the past)
• Provides service to their children or family
• Operates as a grass-roots group
• Advances their business interest
• Represents their personal ideals

Typically, entrepreneurs do not have a long philanthropic history, and so may not know how to become engaged in philanthropy. When they do give, they view themselves as shareholders of the organizations they support. Most often, they give goods and services, company assets and real property that may no longer have value to them.

Entrepreneurs give because they want control, and also to impart their views. They want the potential recognition and prestige. They also will give to help a family member or loved one. They believe their gift will leverage other donors' gifts and a nonprofit organization's resources.

It's hard to predict when entrepreneurs will give, as their giving is impulsive. It may be triggered when they have received a good quarterly or year-end financial report, or have been solicited by a peer who has made a similar commitment. It may be as a result of a life or company passage-birth, death, marriage, religious ceremony, acquisition, sale, new strategic focus or new product development.

Entrepreneurs Present a Mixed Bag
How do entrepreneurs compare with other philanthropists? Their pledge periods tend to be more fluid and irregular. Their gifts tend to be more strongly tied to personal experiences with ideological views of organizations, but do not tend to be motivated by social or peer pressure. They are harder to intentionally cultivate. They require more work of nonprofit staff as they often have many specific and technical questions. Their commitment to volunteer tends to run hot and cold, depending on the demands and state of their business.

Entrepreneurs can be philanthropic leaders because they can motivate others to give at higher levels than they otherwise would. They will often make lead gifts and understand the need to jump-start projects with major gifts. They are natural-born risk takers and have an easier time seeing the big picture. They require minimal hand-holding, and their confidence as volunteer fundraisers can embolden others.

The enthusiasm of entrepreneurs is tremendous; however, that zeal may need to be somewhat restrained. Their natural tendency to take control may stifle committee development and progress. Sometimes they need to slow down. Their ability to make quick decisions often leaves them confused and frustrated when others require more time for cultivation and commitment. They can become impatient with the fundraising process and politics and can be resistant to fundraising training.

The entrepreneurial mind-great and wonderful as it is-is sometimes difficult for nonprofits. When entrepreneurs have an exciting idea, they can implement it immediately when working within their own environment. However, change in nonprofits can require more time and often require board approval, regulation and compliance-concepts foreign to some entrepreneurs. "Just do it" doesn't often work in the nonprofit arena.

Social Entrepreneurs
Entrepreneurs can get more involved in philanthropy by researching organizations that have missions that are meaningful to them. "Lunch and Learns" and tours are learning opportunities that require a minimal investment of time. Asking friends and associates about their personal involvement in philanthropy or attending fundraising events and talking to those in attendance about why they support that organization are other effective means of researching organizations. A more direct approach to finding out about an organization is to talk to staff or sit in on a fundraising committee and listen to what is being discussed.

A term that is gaining recognition is "social entrepreneur." Pamela Hartigan, managing director of the Schwab Foundation for Social Entrepreneurship, and Jeroo Billimoria, founder of Childline India and Child Helpline International, define a social entrepreneur as someone who identifies practical solutions to social problems by combining innovation, resourcefulness and opportunity. Committed to producing social value, these entrepreneurs identify new processes, services and products, or unique ways of combing proven practice with innovation to address complex social problems. They seize on the problems created by change as opportunities to transform societies. Some famous examples of social entrepreneurs are Pierre Omidyar and Jeff Skoll of eBay, Bill and Melinda Gates of Microsoft and Michael and Susan Dell of Dell Computer Corporation.

Small business owners are in a unique position to make significant and positive changes through their philanthropy. Whether they tackle local problems or step up to national issues, they will pave the way for tomorrow.

Teresa Stohs is vice president for Hartsook Companies Inc., one of America's largest fundraising consulting firms.