Giving and Growing

Business can step up by reaching out, but it needs to adopt a new approach

Shared Value

THE OLD MODEL of corporate giving involves the CEO championing a particular charity, and then writing a cheque.

The old model is broken.

Broken because it relies on the whim of the CEO, who could change her priorities at any time. And, while the generosity continues to flow, the beneficiaries of this corporate largess become dependent on hand-outs rather than learning to catch their own fish.

Broken because it fiddles shareholders, who pay the CEO to reinvest profits or pay a dividend. And, if the CEO instead uses shareholder money to champion her favourite charity, then there would seem to be a problem. Would it not make more sense to pay a dividend and allow shareholders to decide which charities to support?

Supporters of the old model will tell you that it works just fine, so long as the chosen charity prominently displays the firm’s logo on the charity’s website or at a high-profile community event.

We agree. This works. But it’s not charity. It’s advertising, it’s marketing, or it’s a PR campaign.

Call it what you will.

If you care about charity, there is a better way.

Shared Value – the new approach to charity

The new approach to charity is to tie it in with what your firm already does, and to use your existing resources and capabilities to reach out to the community (people, charities, government agencies, and existing suppliers and distributors). For example, if you run a private healthcare centre, or a pharmaceutical company, then there may be opportunities to help the growing number of people who are struggling with substance abuse problems.

The naysayers will tell you that charity is for the Church and solving social problems is a role for government (and fortunately there are already public support services for addiction), but this kind of thinking is both defeatist and short sighted.

There are three good reasons why reaching out to help the community makes good business sense:

  1. Motivation: By giving back to the community, you can create a higher purpose for the work you do and increase employee motivation;
  2. Learning By Doing: As early as the 19th century, German psychologist Hermann Ebbinghaus identified that (as you would expect) people become more efficient the more times they perform a particular task. And so, by helping the community, by doing what you do best, you are actually helping your employees learn by doing;
  3. Connections: Friendships are valuable, and you never know who you could meet by reaching out to help others.

So, take some time to consider your core values, investigate what your competition is doing, and consider your options for embracing the new model of charity.

Who do you plan to help, and why?

Free Charities from The Idea of Charity

“We’ve put charities in a box for far too long, let’s set them free.”
~ Nat Ware, CEO of 180 Degrees Consulting

IN an informative and timely TED Talk, Nat Ware explains how society’s traditional notions of ‘charity’ often constrain the ability of charities to have a meaningful social impact.

Below we highlight three beliefs about charity that Nat argues are holding us back:

  1. Measuring social impact: we tend to assess a charity’s effectiveness in superficial ways. For example, we tend to measure a charity’s effectiveness based on whether it has low administration costs, ignoring the fact that higher administration costs may also mean much higher social impact. We also tend to assess a charity’s worth based on anecdotal evidence rather than objective data driven analysis. This is a problem since it means that we are probably misdirecting our charitable dollars and having less impact than we think.
  2. Operating for profit: we wrongly believe that a charity should never operate for profit.  This belief ignores the fact that organisations often need to generate profit so that they can attract investment to scale their operations and have a meaningful impact.
  3. Taking risks: we expect that charities will exist forever, however we don’t have the same unrealistic expectations about for-profit businesses. Nat explains that even the most successful business leaders (e.g. Steve Jobs, Bill Gates and Richard Branson) have experienced countless failures in the process of building remarkable and world leading businesses. By not allowing charities to fail, we are limiting the entrepreneurial innovation which is needed to solve many of the world’s biggest problems.