By Flavie Desgagné, M.Sc., lecturer, University of Montreal
Today’s rise of populism is changing global socio-political dynamics. New forms of power, however, must also be balanced with new practices of responsibility. As such, a growing number of brands are promoting themselves as leaders of positive social change and positioning themselves as beacons in a storm. They participate in social debates and have had the courage to take controversial positions even if it has meant alienating some their customer base. Recent examples include Gillette’s campaign against “toxic masculinity” and Nike’s campaign featuring Colin Kaepernick, an American football star fired for actions taken against racial injustice.
That said, this hardly comes from a place of pure altruism. Following its media campaign, Nike’s revenues doubled compared to the same period the previous year. Reputation, the ability to attract talent, internal pride, consumer loyalty, a sense of belonging and a strong social engagement can generate many benefits for a company. And yet, consumer BS detectors have never been so sharp. A poorly formulated message that isn’t followed up by concrete action will be judged harshly. The now notorious Pepsi ad featuring model Kendall Jenner sparked massive backlash around the world and was mocked on social media by users accusing the brand of clumsily capitalizing on major protest movements.
Before you explore an entrepreneurial approach to community investment you first need to gain a better understanding of major social trends. Ask yourself how you can optimize your organization’s social impact. Any subsequent communication must be based on concrete action and a strong commitment to the project.
Consumer expectations have grown and brands appear to have understood this. The latest survey by Deloitte of more than 10,000 Millennials across 36 countries came to the following conclusion: “Young workers are eager for business leaders to be proactive about making a positive impact in society—and to be responsive to employees’ needs.” In addition, they feel that businesses and the charity sector have a more positive impact on society (44% and 59% respectively) than religious or political leaders (33% and 19% respectively). These results are consistent with those of the Edelman Trust Barometer, which revealed that 66% of study participants believe that CEOs of large companies should take the lead on societal change instead of waiting for governments to impose it. With rising awareness about social responsibility and environmental protection, corporate social responsibility isn’t just a simple trend. It’s the new normal.
According to Imagine Canada’s latest report, Canada will face a major social deficit within a decade. This is being driven by increasing income inequalities in individuals, communities, and regions; an ageing population; rising transitional needs of a more diverse population of immigrants and refugees; and the impacts of climate change. It is projected that the charity and non-profit sector will require an additional $25 billion—roughly double its current income—by 2026 to meet the spiking needs for services.
While extravagant charity balls reserved for elite pockets of the population are still common in the world of philanthropy, community investment is changing quickly. Relational philanthropy is giving way to strategic investment where proactivity, brand impact, or tangible results for the community are becoming the new decision-making guides. The trend towards concentrated donations versus sprinklings of smaller, non-impactful donations to multiple charitable organizations clearly indicates a desire for a more active engagement in helping to solve a given social problem. According to Imagine Canada’s 2018 portrait of corporate donations, maximizing the effectiveness of community investment activities is becoming increasingly important. This is measured in terms of both the commitment to the company (image, recruitment, mobilization, and employee retention) and the social impact (tangible results generated).
The fundamental question for professionals in the areas of philanthropy, sponsorship, and corporate social responsibility is this: What type of impact is being sought and how can we ensure that it is maximized?
An entrepreneurial approach to community investment
An entrepreneurial approach to community investment could be a promising avenue. By its very nature, private community investment is more agile, more suited to risk-taking, and less subject to rigid controls than are public subsidies. This approach identifies opportunities and investments in social innovation projects where public funds are not yet available.
#1 – Act like an investor
The process involved in analyzing requests for financial contributions must be revisited. Projects must be evaluated in the same way that an investor would assess a start-up’s business case, with a focus on the potential for social profitability, not on the cost of administration, salaries, or research and development. The community sector faces the same challenges as the private sector: workforce retention, the shift to digital, and attracting clientele. As the American humanitarian activist Dan Pallotta argues, the way philanthropy is viewed must change. Why are we judging organizations by their overhead costs rather than by their potential for social impact?
#2 – Understand the ecosystem
This approach requires the development of real partnerships with local organizations. Good social investors, therefore, must fully understand the needs on the ground, act in consultation with the various stakeholders, and create networking opportunities between investors. In short, they must develop the necessary expertise in their area of investment.
#3 – Humanize accountability
More frequent contact with organizations and more humane accountability create relationships of trust and atmospheres of openness that go beyond a standardized form or an annual report. This makes it easier to overcome pitfalls or even failures in order to better redirect investments and identify new opportunities that will effectively maximize impact.
Achieving a perfect balance between the needs of the community and any given business strategy is the cornerstone of strategic community investment. As Stanford University political science professor Rob Reich states, “Philanthropy should be a tool for social innovation and risk-taking rather than an exercise in power.”
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 Emmett, Brian. (2018). Emerging “Social Deficit” May Force Charities to Cut Essential Services. Imagine Canada. http://imaginecanada.ca/blog/emerging-%E2%80%9Csocial-deficit%E2%80%9D-may-force-charities-cut-essential-services
Ayer, Stephen. (2018). Corporate Giving in a Changing Canada. Imagine Canada. imaginecanada.ca/sites/default/files/ic_corporategiving_web_dec2018.pdf
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 Andrillon, Laure. (2019). Rob Reich: “La philanthropie n’est pas toujours l’amie de l’égalité c’est aussi un exercise de pouvoir.” Libération. https://www.liberation.fr/debats/2019/01/25/rob-reich-la-philanthropie-n-est-pas-toujours-l-amie-de-l-egalite-c-est-aussi-un-exercice-de-pouvoir_1705368