Why Businesses Should Balance Profits And Philanthropy
The adage “do the right thing” doesn’t only apply to individuals who advocate for social change; it can also apply to running a business that has the vision to create social impact. Generally, when you think of a corporate entity, you think about commercial profits, while the term “social impact” brings thoughts of philanthropy. Businesses for social impact combine generating financial returns with endeavoring to achieve a change in society. But can they co-exist successfully?
Never has there been such a time when many believe in both the responsibility and capability of businesses to address today’s greatest social issues. According to the Urban Institute and the National Center for Charitable Statistics, the number of nonprofit organizations has nearly doubled over the last 20 years from 571,634 in 1997 to 1,097,689 in 2017. Yet their impact has not had the same level of effect on the burgeoning challenges of poverty, homelessness and access to healthcare, education and other life-enhancing resources.
In the same 20-year span, we have seen the creation of new purpose-driven business models across the globe providing consumer goods and services. We can credit TOMS shoes for its one-to-one business modelthat not only gave greater meaning to an everyday purchase but also fueled the creation of locally run and sustainable businesses in the communities where they were needed the most. This growth has also been accelerated by the emergence of digital technologies that bring benefactors and beneficiaries closer together, demonstrating authentic, significant and more meaningful commitment to their shared purpose.
Cause-Driven Business Models
We have seen that today’s leaders and the next generation of entrepreneurs aim to build their businesses around initiatives to fight hunger, deliver clean water and bring health services and education to the world’s poor and homeless. Plenty of examples exist from around the world of social enterprises that are trying to change business paradigms to generate profits while also creating significant impact. Some are even changing the face of business as we know it. A few companies that are challenging the status quo with socially conscious business models include:
• Mealshare (one for one): This Canadian company partners with restaurants and places their logo next to a few menu items. When someone orders an item, they get their meal and the company also gives one meal to a child in need. Since 2013, Mealshare has provided more than 1.5 million meals to children and have contributed toward the decline in childhood hunger.
• NFL (corporate partnership): The NFL and American Cancer Society get together for Breast Cancer Awareness Month in October. Since its Crucial Catch campaign, the partnership has raised more than $15 million and conducted 120,000 cancer screenings. With its Go Pink campaign, athletes don pink merchandise for sale and encourage fans to get screened, participate in local community events or donate to the cause.
• The Skoll Foundation (grant-giving foundation): Over the last 15 years, former eBay executive Jeff Skoll has funded Kiva.org, Water.org and World Health Partners, each with a distinctive social catalyst. Together, these organizations drive social change by investing in social entrepreneurs.