Here are some tips for finding a satisfying way to give back.
Brian Hinman wasn't going to wait around until he was dead (or even old -- he's only 42) to start giving away his money. He co-founded his first company at age 22, and began bringing in serious cash with his second company, Polycom, a manufacturer of teleconferencing equipment. He then began exploring the sometimes tricky business of giving well.
Entrepreneurs can have a particularly difficult time finding a satisfying way to give, says Gayle Peterson, a consultant with Headwaters Group Philanthropic Services, which advises individuals, foundations, and corporations on charitable giving. Usually, entrepreneurs want to be in charge, says Peterson; they want to set goals and see results. If they've donated a significant chunk of change to a nonprofit, they get frustrated when the results take longer than expected. "Many entrepreneurs aren't aware of the fact that they have to have a different philosophy about getting things done," Peterson says. "Nonprofits don't necessarily have business plans."
But donating to a nonprofit is only one way to give. In fact, you might consider starting your own. In the '90s, a whole crowd of the newly rich started private nonprofit foundations. What the new philanthropists may not have realized, says Karen Green, managing director of the Washington, D.C.-based Council on Foundations, is that running a foundation can take just as much time and effort as running a separate business. A large foundation is required by law to make a high payout, and meeting that requirement often means administrators get caught up in approving and processing grants -- a process that can quickly generate enough paperwork to necessitate a full-time staff. A good rule of thumb, Green says, is that if you don't have at least $2.5 million or a plan for generating more money, you should probably not start a foundation.
If you've got $2.5 million or more, however, the possibilities are endless. You might start a family foundation and place your family members on the board, or an individual foundation, for which you would make all the decisions. But be warned: You may need significant help doling out funds.
If you don't have time to make giving decisions but want to have some say in where your money goes, look into donor-advised funds, which allow donors to funnel money to community foundations while supporting particular causes. You can, for example, give to a community foundation in your town or area and specify that your cash go only to charities or events that help support a specific cause.
Brian Hinman put his Polycom profits to work at his alma mater, the University of Maryland. He funds the Hinman CEOs program, a two-year entrepreneurship track for undergrads, in which around 100 students live and work in a state-of-the-art dorm. Hinman has committed $250,000 a year to the program for the next 10 years. He spends most of his time running his third company, 2Wire, in San Jose, and visits Maryland each spring to check in on the new students, who so far have helped start at least 17 new companies.