Week 8: The Importance of Giving Back

It brought me joy to reach the end of the book It’s a Jungle in There by Steven Schussler and find the final two chapters focused on PHILANTHROPY. Clearly this is a subject that I am passionate about (note my website is NonprofitFoodTruck.org).

I have always argued that profitability and philanthropy are not mutually exclusive. Many companies find it to be good business to contribute to the communities in which they operate, and increasingly customers are expecting that the organizations they do business with demonstrate social responsibility.

One of my favorite models of corporate responsibility was developed by Archie Carroll (1991) called The Pyramid of Corporate Social Responsibility.

Image result for corporate social responsibility legal ethical philanthropic

Economic Responsibilities – Carrol suggests that the obligation to be profitable is the foundation on which all of the rest of a business’ responsibilities rest. If a company isn’t profitable, it eventually ceases to exist.

Legal Responsibilities – Businesses must play by the rules of the game. This means that operating one’s business within the parameters of of the law is essential.

Ethical Responsibilities – Businesses must do what is right, just, and fair, even when doing so is not explicitly required by law.

Philanthropic Responsibilities – These expectations go beyond what is legal or ethical to more discretionary activities. Contributions to the community to improve the quality of life for the citizens where you do business makes for good corporate citizenship.

The expectations of millennials are raising the bar for companies, as 81% say they expect a public commitment to good corporate citizenship from the companies they choose to do business with (Faw, 2014). As a result, companies are increasingly incorporating their philanthropy into the fabric of the company and/or products. This can be good strategy, as customers feel like buying your product or service is both meeting their need and contributing to a greater good.

A positive approach to philanthropy is moving from a simple “do good” model to one that is strategically aligned to the places that your stakeholders care about. Companies that use a matching gift program to support employee engagement helps retention efforts. In this case, the company is effectively allowing their employees to direct where their giving dollars go.

A similar approach can be taken with customers, where one might choose to support causes that match with your customers’ values or even to improve the value of their purchase. A good example might be Tesla donating banks of charging stations to cities where they have a dealership. It is in their interest to ensure that their customers have convenient access to charging, but this doesn’t minimize that they could be selling those stations rather than giving them away.

In short, doing good is good for business in many ways. As we are successful, it is important that we recognize the ways we can give back to support our communities, customers and employees. When these stakeholders thrive, we thrive.

References

Faw, L. (2014). Millennials expect more than good products, services to win their loyalty.

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