Below the philanthropic radar that has focused on the gloom and doom of the ailing economy beats an underappreciated resource that offers huge potential for nonprofits.
Family-owned businesses represent nearly two-thirds of gross domestic product in the U.S., according to estimates, yet those closely-held firms are largely invisible to nonprofits, says philanthropy consultant Phil Cubeta.
“There is a tendency for philanthropy to be perceived as high-class and for these businesses to be perceived as low-class,” says Cubeta. “These are often blue-collar people who make good, and make good big-time.”
Many of those business owners are Baby Boomers who are nearing retirement, says Cubeta, who works with a national financial-services company’s advisers whose main clients are business owners with median net worth of $10 million to $15 million.
And if those business owners’ companies survive the economic downturn, they will need to make decisions about their companies’ future and what to do with the wealth and time they will have in retirement, says Cubeta, who in January will become the holder of the Sallie B. and William B. Wallace Endowed Chair in Philanthropy at The American College in Bryn Mawr, Pa.
That transition in the life of boomers’ businesses is “following a wave larger than the current economy,” he says. “It’s a demographic wave.”
So instead of panicking about the impact of the downturn on charitable giving, he says, nonprofits should look for ways to connect with Boomers who own small businesses.
Those business owners are rooted in their hometowns, where they often grew up, went to high school and even college, built their businesses and likely will die, he says.
“They really care about the community,” he says.
When asked, they typically voice a “heart and care for philanthropy, but it doesn’t come out that way,” Cubeta says. “They would like to do it but they’re not connected. They’re isolated from the world of people in town outside their business groups and church.”
One strategy for connecting with those donors might be to work in partnership with professional advisers to develop events likely to appeal to aging Boomers who own small businesses, he says.
Professional advisers who typically work closely with owners of small businesses include life-insurance agents, certified public accountants, estate-tax lawyers, financial planners, and chartered advisers in philanthropy, Cubeta says.
Working with those advisers, particularly those who serve on their boards or their planned-giving advisory committees, nonprofits should aim to develop events that will focus on topics business owners care about, such as “life after business,” “passing on their values as well as valuables to their children,” or “business-transition issues.”
Nonprofits also should work with advisers to find ways to introduce philanthropy, and their own organizations, to the business owners.
“Shirtsleeve businesses are where a lot of this country’s wealth is,” Cubeta says. “Those people still have the same issues this year as last.”
Todd Cohen, a veteran news reporter and editor, is editor and publisher of
Philanthropy Journal, an online newspaper published by the A.J. Fletcher Foundation in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.