Contributing to the social good is increasingly important for many corporations as management and staff express desires to be good community citizens. Some of these companies are setting up giving that is based on their total profit, such as Ben & Jerry’s long-term giving of 7.5 percent of pretax profit to its foundation. Other firms are incorporating giving directly into the design elements of their product.
What’s the driving force behind this shift to social responsibility? The younger generation that buys products and services is moving towards companies that contribute to the community at large, and brands have taken notice. Diverting profits to good causes is no longer something to be avoided at all costs or performed sporadically, but is now an attractive brand attribute. Companies that fully embrace social giving within the product purchase experience often find they can demand a premium price due to their improved perceived stature.
The trick for companies that want to introduce social good into their practices is how to attract influential younger consumers while designing a workable plan for helping others. The companies that do it best have a focus on social good that is ingrained in the company culture. These are typically firms founded by people who want to earn money but also want to enact real change.
Social giving can be accomplished through many means: giving money, lending expertise, or simply donating the time of company personnel to a worthy cause. Entrepreneurs in the early stages of business planning should understand (a) that social giving can be worked into their overall planning and (b) that giving and volunteering can become a defining value of the business.
What about companies that are already on their way to donating money, time, or expertise? It might be a tougher sell to put in place a program where 10 percent of profits go to a clean water initiative when that represents a new strategy to investors. However, management can present a good case for the long-term ROI of a social good focus that builds customer appreciation and longer term loyalty.
Some firms are adopting a “one for one” style model of social good through which they send out a free product to a needy population for every one of their products purchased by consumers. Tom’s shoes was obviously a leader here, and to date Tom’s has distributed more than 10 million pairs of shoes. Warby Parker is another well-known firm that provides eyewear to people in need and also encourages local business and job growth. SumAll sets aside 10 percent of the company’s equity to fund SumAll.org, a nonprofit entity that is driving social good through data.
Finding the right type of social endeavor to support is an important step for companies. There are a lot of possible avenues, such as promoting fair trade practices, driving green energy initiatives, reducing poverty, or providing tools to grow local economic activity. Social giving can be direct in terms of diverting profit or sending products directly to an organization; or it can be more indirect giving such as community service volunteering.
Many firms that offer a service can creatively find a way to lend some of their time and expertise to help either a community as a whole or a charitable organization that needs to run more effectively. Whatever the specifics, it is important for companies to identify their competencies that best match key social causes.
Pursuing social good initiatives requires some investment from the company and needs to be well managed and structured. It’s imperative for businesses to neither just pay lip service to its social good endeavors nor to implement a program that is mainly hype and does not compare to other firms. Consumers are very savvy, especially those that focus their spending on social good campaigns, and they can easily spot a firm that isn’t 100 percent invested in its stated mission. At SumAll.org we have in place an executive team that is now working with some of the biggest nonprofits in the world, helping them see new insights from all of their data.
Businesses have a duty to their shareholders. However, there are still many things a company can do to contribute to social good. A social good focus is not just about being a good corporate citizen; it also can be a shining brand attribute that drives consumer loyalty and instills a sense of pride and accomplishment for management and staff.