The Multiple Effects of Entrepreneurship on Philanthropy, Society, and Education

Abstract

Entrepreneurship has unexpected effects on philanthropy, society, and education. Entrepreneurs do not start out to become philanthropists but they often assume that role when a business becomes successful (direct effect). Entrepreneurs also enrich their associates and business investors, who also contribute to philanthropic wealth (indirect effect). The wealth of entrepreneurs and their associates is the main source of funding for private foundations, which often fund educational initiatives. There is a feedback effect from entrepreneurship. More entrepreneurship increases philanthropy, which in turn improves society and education. If this work also improves the business climate for entrepreneurship, there will be more entrepreneurs and wealth. Society and education also benefit from the taxes paid by wealthy entrepreneurs (tax effect). Even the consumption of wealthy entrepreneurs partially benefits society through jobs created and taxes paid (consumption effect). If an entrepreneur dies before spending all the accumulated wealth, the redistribution process starts over again with the heirs (inheritance effect). Finally, there is an innovative effect. Entrepreneurial thinking stimulates innovative ways of thinking about philanthropy and how to achieve the best results from the social and educational ventures it supports.