The idea of philanthropy is not new.Look around any town or city and there will be parks, public halls and libraries that are named after the wealthy individual or companies who financed the construction and donated it for the common good.
In the 21st century, however, the idea of the wider responsibility of business is changing.
That’s the view of Bruce Walker, co-founder of FutureX, an organisation that supports and promotes purpose-driven entrepreneurs. He has seen change happening at all levels of the corporate world.
“Most companies, as they get bigger and become more of what we think of as a ‘corporate’, go through a fairly standard procedure of creating a Corporate Social Responsibility plan, in which they engage with the community. It has created meaningful impact for sure, with foundations created to support local initiatives and projects in developing countries. “There’s also the traditional model of philanthropy, where an individual who has made a lot of money exits their business and becomes a philanthropist.”
Bruce says that, by and large, this is still the standard model, but a new way of moving beyond Corporate Social Responsibility and philanthropy is gathering momentum quickly.
“CSR is typically seen as being separate to the core operation of the business – it’s something that people do with their profits. At a recent meeting with a company in Canary Wharf, it was clear that they felt that it was OK to make an awful lot of money because they did some charity work. For a lot of people in the room, the millennials in
particular, there were a few raised eyebrows questioning whether that’s the best way to do it.”
FutureX is working with Sir Tom Hunter and The Hunter Foundation. As Bruce says, Sir Tom was responsible for taking the idea forward in “venture philanthropy”, where money represents one aspect of philanthropy, but support represents another. Instead of donations, venture philanthropy creates organisations, whether they be charities or values-led businesses that can grow and sustain themselves.
“The really exciting thing that I’m seeing is some companies taking the idea of CSR and embedding it into the way that they do business.
“A good example in Scotland is BrewDog, who committed to giving away 20% of their profits each year –10% to employees and 10% to charity. So that’s an embedded initiative rather than just giving money to charity on an ad hoc basis. There are multiple ways of approaching it, of course, but it needs to be part of the mission and vision of
how you treat people and run the company. Brew-Dog have an almost anti-business model, and are known for their Equity for Punks movement and being community and customer-led.”
There are benefits to the business as well. Employees become more engaged with the business, customers can become more loyal, and it improves the resilience of the company.
“It’s building momentum in at an exceptionally fast pace,” adds Bruce. “Of course, it tends to be that the bigger the company, the slower they move, but have a look at how Unilever are working.
Companies don’t get much bigger, and yet they are completely committed to change – to the point where they talk about rebooting capitalism. The thinking is your business must serve society and the current form of capitalism leaves too many people behind. This is a multinational entity, with almost endless resources and they are starting to create meaningful change in supply chains and how they do business.” The UN Sustainable Development Goals is a list of 17 areas that the UN believe the world has to address – from poverty and hunger to health and wellbeing, education, gender equality, clean water sanitation, and many others.
“It’s essentially a guide for companies around the world,” says Bruce. “These are our biggest problems, but if you can go towards solving them then there’s also a massive opportunity for your business. In the long-term, you have to ask yourself if a business can be truly successful in a world that has poverty and hunger and major climate
change issues.”
Historically, large companies have hidden bad behaviour behind glossy CSR policies but transparency is becoming greater.
Sometimes, this comes from good investigative journalism and other times companies themselves decide that being open and honest is the right thing to do. These days, being “found out” kills credibility.
The subject will be discussed at the upcoming Impact Summit by FutureX, taking place in Glasgow on May 15.
“One of our partners is Cazenove Capital, a huge wealth manager and part of the Schroders group.
“It has been a traditional investor for a long time, but now it’s looking at mission-led investment, which is essentially looking at companies to invest in that are mission driven rather than solely being profit driven. That’s a colossal shift for companies that centrally hold all the money.”
Recently, an associate of Bruce’s, who heads up a company that gives 100% of its profits to clean drinking water charities, was turned down by a bank that said they couldn’t give him any money because he gives all his profits away.
“But then he said, is that not what every company does? It’s just that in most cases they give them away to shareholders. So if 100% of the profits were going towards a yacht purchase, that would have been ok?
“It makes absolutely no sense to me to have a company that has thousands of people, but that
only rewards its shareholders.”
IMPACT SUMMIT TAKES PLACE AT SWG3 IN GLASGOW ON WEDNESDAY, MAY 15.
FOR MORE INFORMATION AND TO BOOK TICKETS, VISIT: WWW.IMPACT-SUMMIT.ORG
This article appeared in The Herald on the 6th April
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