We have teamed up with Abbott to produce an article series on the future of corporate philanthropy. Please read the rest of the series here.
By Mike Hannigan
To speculate on the future of corporate philanthropy, it helps to first consider the recent past. In the early 1990s, while corporate profits reached an all-time high, there was a concurrent degrading of the institutions of public education, health, and social support. The fact that corporate prosperity and community safety and well-being did not develop in parallel–and have in fact continued to diverge–is seen by most as grossly unfair. Unfortunately, corporate philanthropy, understood as a share of corporate profit cut out for community benefit, has not filled the gap.
This is in no way intended to deny the importance of corporate philanthropy. It is and will continue to be of vital importance to community interests. But the relatively small share of corporate profits that are funneled to philanthropic efforts will remain the same because, by law, investors and stockholders must come first. Even though most executives want to do the right thing for their communities, and are justifiably proud of the philanthropic efforts of their businesses, they find their actions framed by the interests of their stakeholders.
However, several important foundational developments have emerged and consolidated during the past 20 years that have begun to change the interface between corporate prosperity and community well-being.
- Many businesses with community stakeholders protected as a part of the charter have withstood the test of time and thrived in a highly competitive marketplace. Newman’s Own and Newman’s Own Organics, Salesforce, Patagonia, New Leaf paper, Seventh Generation, Give Something Back Office Supplies (our company), and hundreds of others now serve as models for aspiring values-based entrepreneurs and business professionals.
- Numerous powerful trade and business associations that bring together and mobilize businesses, associations and individuals around the common themes of social enterprise and corporate social responsibility have emerged, developed and become not only widely recognized but also embedded in the business culture. Organizations such as Social Venture Network (SVN), Business for Social Responsibility (BSR), Social Enterprise Alliance (SEA), Business Alliance for Living Local Economies (BALLE), and more recently, B Corp, provide ongoing, effective institutional support of a far flung network of individuals and businesses that seek to use the power of business for community benefit.
- The number of trained individuals seeking to start or work in businesses that self-define as values-based has increased exponentially, and the talent gap for values-based businesses in need of management skill is rapidly closing. Each of the dozens of business programs I know of or have visited integrates corporate responsibility or social entrepreneurship into the curriculum. In addition, entire programs are dedicated to the training of these students at business schools such as Bainbridge, Presidio, and Dominican universities. The growth and influence of Net Impact, a student organization, in connecting business careers to social benefit will have a powerful future influence.
- The availability of investment capital to support the growth of businesses that incorporate solutions to community problems as components of the company mission has also increased exponentially. The Omidyar Network, Skoll Foundation, Google Foundation and numerous other organizations bring billions of dollars of investment capital into play for social benefit businesses. SOCAP, Investor Circle and other effective investor-based organizations provide regular forums connecting capital to businesses to social needs.
- Finally, corporate law itself–which has been historically slow to evolve–is changing to accommodate and protect the development of businesses that place the interests of a broader set of stakeholders at the core of their work. Through the efforts of B Lab and other organizations, many states have now passed legislation that creates corporate forms favorable to businesses seeking social good outcomes as well as financial returns. They’re called Benefit Corporations. It is now possible in many states for mission-driven businesses to protect the social mission within the charter. California is the sixth state to enact corporate benefit legislation, and many others are poised to enact similar legislation in 2012.
Successful model businesses, effective trade organizations, an abundance of trained business talent, investment capital, and appropriate corporate structures to preserve social mission, taken together and viewed over time, have opened new pathways to use the power of business to accumulate wealth and resources to create community prosperity. That is what corporate philanthropy was intended to do in the first place, but I predict that it will continue to change and develop in exciting ways that were difficult to imagine just a few years ago.
Mike Hannigan is co-founder and president of Give Something Back Office Supplies, a for-profit business that sells business products at low prices and donates more than half its profits to nonprofits. Hannigan speaks at business conferences and schools around the world about building a more sustainable society through the power of business. He has helped build GSB into the western states’ largest independent office supplier. Reach him at email@example.com.