Philanthropic Endeavours for Business Growth

It’s a long-standing assumption that philanthropy work and business activity are somehow mutually exclusive. It probably has to do with the fact that traditionally we’ve always had two distinct entities: charity organisations dedicated to helping those in need and business organisations existing to make a profit.

This standpoint has probably been nurtured by statements such as Milton Friedman’s from the New York Magazine in 1970 where he says: “The only corporate social responsibility a company has is to maximize its profits.”

While such a statement might have held in those days, in today’s interconnected, globalised world, businesses, communities, individuals and the environment have never been more connected and interdependent. It’s no surprise then that the distinction between business and social objectives and roles in societies throughout the world has started to gradually disappear.

And I think we can all agree, given the apparent link between corporate actions and our well-being as individuals, that a company’s role and societal responsibilities should go far beyond generating profits.

This is what Harvard Business Professor and business guru, Michael Porter says on the topic in his paper The Competitive Advantage of Corporate Philanthropy:

“It is true that economic and social objectives have long been seen as distinct and often competing. But this is a false dichotomy; it represents an increasingly obsolete perspective in a world of open, knowledge-based competition.”

Michael Porter claims that Friedman’s view of a business’s role in society applies only when corporations engage in unfocused and piecemeal giving, which ultimately does no good in the long run.

Fortunately, an increasing number of businesses today are starting to understand that when planned and executed properly, with a genuine intention and a plan in place, corporate charitable acts can and do improve the so-called competitive context of their marketplace.

In other words, when philanthropy is made a part of corporate strategy, it does lead not only to benefits for society but also to business growth and competitiveness.

Thus Michael Porter continues to say:

“Social and economic goals are not inherently conflicting but integrally connected. Competitiveness today depends on the productivity with which companies can use labor, capital, and natural resources to produce high-quality goods and services.”

Doing good goes beyond just improving your image and boosting your company’s credibility. These factors, while important, are not the only benefits. Acting with integrity can also enhance your competitiveness in the market.

Well, your organisation is part of a marketplace, an environment, and a larger context. Isn’t it? That is, its success directly depends on the consumer markets, labor markets, infrastructure, resources available, environment, etc. Engaging in philanthropy activities allows you to improve key elements of your business. This, in turn, contributes to long-term success and sustainability in your operations.

Let’s look at the labour market for example. In an increasingly knowledge-based market and competition, your access to well-educated and skilled employees is decisive to your success. What if you wanted to operate in areas with huge market potential but a lack of talent? Cisco, for instance, didn’t take the chance to wait until faced with such an issue. To avoid limiting its growth due to a talent shortage, the company invested in its Cisco Networking Academy. This initiative was aimed at training computer networking administrators to meet the demand for skilled talent. By offering job opportunities across various locations, it attracts talent and ensures a steady workforce. This strategy helps prevent future challenges related to a shortage of skilled workers.

Another benefit of philanthropic endeavours to business growth is that doing good could be a great means for R&D. Take the British telecom giant Vodafone for example. Years ago Vodafone liaised with the UK government and created a program for mobile banking services for a charity cause in Kenya. The result? In the aftermath of the initiative, what Vodafone learned was that Kenya was a viable option for a new market entry with huge potential. Even if not purposely, doing good can inspire innovation as you spot untapped market niches and new growth opportunities.

Next – your workforce and the stress here fall on the force. It is for a reason that Virgin’s founder, Richard Branson’s now infamous quote is repeated time and again by business leaders: “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients”. Your employees are what drives your business forward. And it is no secret that employees’ aspirations today go beyond making a career. They want to make a difference. That’s probably why many companies these days do their best to provide their employees with an opportunity to do so.

IBM, through its Smarter Cities Challenge program, sends teams to cities worldwide. Their goal is to address and solve local community issues. On the one hand, they get to contribute to communities by tapping IBM’s core business expertise and knowledge. On the other, this is a great opportunity to give meaning to IBM’s employees, many of whom report that participating in the program was one of the most rewarding experiences in their careers.

You see, not only is there a connection between philanthropy acts and business results but they are becoming increasingly interdependent. Businesses rely on local suppliers and staff to operate effectively. They are also influenced by the environment and the communities in which they function. These interconnected factors play a crucial role in shaping business success. It is both cynical and incorrect for businesses to ignore the marketplaces they operate in. They cannot detach from the responsibilities they bear within these environments. No matter your business size or industry, we all have a greater responsibility. That responsibility is to act in a way that honors everything around us, supports us, and enables our business to thrive.

Instead of ignoring current business challenges, why not engage in social initiatives that give back to our communities? By doing so, we can make a positive impact while addressing the realities we face. This approach not only helps the context we’re part of but also enables businesses to grow sustainably and healthily.