Venture Capital Firms - Charitable Giving
It is hard for many people to make a connection between venture capital firms and charitable giving. Return on Investment seems to be the guiding force of venture capital.
For those people who think that charitable giving has no part in the rapidly growing venture capital and angel investment fields, a look at the record will come as a very pleasant surprise. Charitable giving has been a part of the corporate environment of almost every successful business for the last half century. There are some very sound reasons behind this fact, and venture capitalist are very aware of them. For a major business venture, charitable giving represents a win/win situation.
If you get away from things that can not be counted on the bottom line first, you can start with a discussion of the tax advantages of charitable giving. Although bound by some stringent IRS regulations, charitable giving is a tax deduction that can be creatively used to lessen the tax burden. Many States join the Federal government in creating special tax credits to encourage ‘giving” toward selected and socially important charitable causes. From the tax sense, corporate charity is a sensible activity.
There is also the matter of positive public image and perception. This has been recognized as having nearly as much importance as product recognition in the marketplace. There is a bottom line assumption here that is unmistakable. It says that people prefer to spend their money buying from the good guys whenever possible. Public charitable giving is flat out good public relations.
It is easy to be crass on this subject, but doing so forgets the lesson learned from considering why people purchase products from companies that they perceive to be good guys. They do it because human beings are basically decent and more than willing to give up a little to make the world around them a better place. The reasons for this generosity of spirit may be religious in origin, or may just stem from a basic sense of decency and responsibility. Regardless, it is there in a majority of people. The venture capitalist and angel investor is a human being. It stands to reason they share the same moral fiber at roughly the same percentage as the rest of the species.
So, many venture capital firms and angel investors engage in charitable giving for reasons that go beyond the business sense. They do it because it is the right thing to do and they have the ability to give back to the community. The increasing amount of what is being called philanthropic venture capital is a case in point. Although the methods of philanthropic venture capital funds differ from direct giving, the motives usually do not differ at all. Charitable giving is a win/win situation and venture capitalist can not resist that combination at all.