Why do the rich give after they exit their ventures?

Entrepreneurs acquire enormous wealth after exiting their businesses through sales, IPOs or liquidation. But what happens after they exit their ventures?

In a study, “After the harvest: A stewardship perspective of entrepreneurship and philanthropy,” in the Journal of Business Venturing (2017), authors Blake D. Mathias, Shelby Solomon and Kristin Madison found 4 key reasons why the rich redistribute their wealth after exiting successful ventures.

  1. Intrinsic motivations: They want to do meaningful work after making large amounts of money.
  2. Identification: The rich want to have a sense of identity and advance a cause they believe in.
  3. Personal power and long-term orientation: They crave for an opportunity to influence future generations.
  4. Stewardship norms: Most feel they have a sense of obligation to give back.

This award winning study analyzed “The Giving Pledge” letters of 99 entrepreneurs and separately conducted in-depth interviews with 19 of them. In 2017, when the study was conducted, there were 142 individuals, 70% of whom were entrepreneurs who had signed on to the “The Giving Pledge.”

Today, there are over 200 individuals from 23 countries who are part of the “The Giving Pledge,” and have committed a majority of their wealth to philanthropy or charitable causes.

The study found that the rich display an innate responsibility to “act as stewards of their communities.”

And, this is very evident in the way latest entrants to “The Giving Pledge” like MacKenzie Bezos have committed to pledging over half of the $36 billion she inherited in Amazon stocks. “I have no doubt that tremendous value comes when people act quickly on the impulse to give. No drive has more positive ripple effects than the desire to be of service,” she says in her Giving Pledge letter.

“In addition to whatever assets life has nurtured in me, I have a disproportionate amount to share,” Bezos adds.

This reminds me of a well cited Princeton study “High income improves evaluation of life but not emotional well being,” that showed the world that anything beyond a $75,000 annual income will not buy you emotional well-being. Authors Daniel Kahneman and Angus Keaton found that emotional well-being rises with income but anything beyond $75,000 is not going to buy you happiness.

However, for those who have made so many more multiples than $75,000, their entrepreneurial exits, often called harvests, trigger their ability to give.

And, social expectation will prompt them to give, be good stewards of society and perhaps buy a little happiness on the way. But one thing is very clear: it is insanely difficult for the mega rich not to give!

Blind Date with Sabriye: One of Oprah’s Phenomenal Women

IMG_1210Sabriye Tenberken is legally blind and loves talking about colors.

One of Oprah’s “must-see” women, I recently had coffee with her at kanthari, an organization that she and her partner, Paul Kronenberg, has created in India to give leadership training for  social visionaries around the globe.

The setting is  picturesque. Fresh water lakes filled with lotus flowers surround her brick-layered office where she works tirelessly to nurture a cohort of people who she hopes will become the next change agents, social visionaries or great entrepreneurs.

Growing up in the margins of society in Germany, as a young, girl, she was told that she wouldn’t do much in life because of her blindness. After taking classes at Bonn University, she trekked the Himalayas on horseback and moved to Tibet alone when she was 27. Here, the ill-treatment of the blind made her radically change how Tibetans’ viewed people with blindness. Together with Paul, she founded  Braille without Borders and established scores of schools for the blind in Tibet.

Budding change-makers at Kanthari.
Budding change-makers at Kanthari.

After a seven-year stint, Sabriye and Paul moved to Kerala, India, to start kanthari. In the local Malayalam language, kanthari is  an extremely spicy  green chilly commonly seen in the backyards of homes in India’s southernmost state. They chose Kerala as the Indian state sits like a springboard to Asia and Africa on the world map.

Sabriye passionately told me about her fondness for colors and the 5 colors of Kanthari. These are her tenets for social change and her views on creating change-makers. The first color, orange, consists of social entrepreneurs like one of her graduates, Ojok Simon, a blind person from Uganda who endured torture. After receiving leadership training at kanthari, he returned to Uganda and has set up a highly successful bee co-operative.

Her second color, red, symbolizes social activists like one of her students, Jane Waithera, a person with albinism who fights discrimination faced by albinos in Tanzania and Kenya.  The third is green, showing individuals who want to set up new initiatives within their communities like schools and training centers. One of these green kantharis is Tiffany Brar who runs a mobile school for the blind in Kerala.

Sabriye’s next pick is yellow. Yellow kantharis create new products, strategies or concepts for social change. They can be active in the areas of environment, computer technology, accessibility for people with disabilities, agriculture, education and many more.

The final color is purple, representing artists who use their skills to create awareness and social change. Tamas Barko from Hungary is a purple kanthari who uses dance to create a positive impact.

Today, kanthari takes people from margins of society and empowers them to become social catalysts through a 7-month intensive program. They can turn out to follow paths shown by any one of the 5 colors.

Over the past 5 years, 98 participants from 35 countries have graduated from the kanthari course. This has resulted in 60 plus social initiatives and projects.

The organization relies on donations to partially fund learning opportunities for students to become transformative social change agents.

Entrepreneurship has become a commonly abused term in the West.  It was refreshing to see real social entrepreneurship in action without the noise. For those interested in creating transformative social change, visit http://www.kanthari.org.