There are six myths commonly believed to be true about business and its role in society and local communities today that I would like to debunk.
Myth 1. Business philanthropy is for the large companies only.
Many people believe that business philanthropy is really only for the large “rich” companies such as Nike, Starbucks, Levi Strauss, or Exxon Mobil among many others. While it is true that these global companies operate on a significantly larger scale with more resources at their disposal than small companies and thus can have a significant impact either positive or negative on the communities or countries in which they operate. So changes in their approach to giving back can result in significant impact for nonprofits/NGOs when done strategically and intentionally. However, it is also true that your company is never too small to make a difference if you also engage in strategic philanthropy.
In the United States, for example, small business is actually the backbone of the economy. According to the US Bureau of the Census, small firms represent more than 99.7 percent of all employers. Small businesses, are defined by the Office of Advocacy, as companies with fewer than 500 employees. Small businesses employ more than half of all private-sector employees and generate 60 to 80% of new jobs annually. In 2002, there were approximately 22.9 million small businesses in the United States according to Office of Advocacy estimates. Of this number, there were 5.7 million firms with employees and 16.5 million without employees.
In light of such numbers, it is clear that small business is a powerful force in the United States today. So ensuring that small businesses like yours understand how to give back strategically and “profit with values” is essential. Just think about the possibilities for positive change in our communities if even 50% of small businesses engaged in strategic giving!!
“You don’t have to be a big company before you can do much in the community. Even as a small company, there are many ways you can support community organizations…the smaller businesses around here have made a lot of difference.” –Chip Bair, Owner, BeauJo’s Pizza, Idaho Springs, Colorado
Myth 2. Business philanthropy is “wait to do later” considerations once a company is established, has a solid foundation, and has started to show a profit.
Strategic business philanthropy should be a consideration from day one when an entrepreneur or business founder/owner begins to think about starting a business. It is not an add-on for later. Integrating socially responsible business practices including community involvement, from the beginning, is actually easier and more cost-effective than trying to insert them later.
When starting a business there are many things that you need to consider about your business such as its structure and mission, identification of products and potential customers, effective marketing and sales, and securing investments. In each of these areas. there are choices that you need to make when designing the business and developing the business plan. Integrating socially responsible practices (including community involvement) from the beginning has been shown to help strengthen the business and increase its profitability. There are numerous proven business benefits to engaging in strategic business philanthropy. For specifics on the business benefits, sign up for my free eCourse.
“To do this, you don’t have to be a Microsoft and have a huge foundation with millions and millions of dollars. You really should plan things right from the beginning and step into it. I think EVERY company should look into how they will give back right from the beginning.” –Maria Simone, CEO of Signature Accents
Myth 3. Integrating business philanthropy into company culture is cost prohibitive for a smaller or startup businesses.
While adoption of certain policies and practices have some up front costs associated with them, in the long run, these expenditures have a significant return on investment, helping save the company money and increase profitability. For example, companies that provide volunteer opportunities on company time have found that employee motivation, productivity, and retention are improved. In the long run the company saves money increases its profitability.
There are so many ways to support and partner with nonprofit organizations beyond the old school check philanthropy model. Many smaller companies do not have a philanthropy budget yet – but there are so many other ways to get invovled that might have even more impact that cutting a small check!
Myth 4. Philanthropy and community involvement activities are fluffy, feel-good, side activities which siphon off valuable resources with little return.
When undertaken strategically and integrated as part of the overall business building strategy, business philanthropy activities can be an essential component of growing the business. Philanthropic involvement with nonprofits offers an important opportunity for “doing well by doing good.”
In fact, many businesses no longer use the terminology philanthropy or community involvement. Instead, in recognition of the possible returns such activities can provide, they are called community investments. Such community investments can have a significant impact on the companies reputation and sales, employees satisfaction and productivity, in addition to making a valuable contribution and being part of the solution to addressing local social issues in the communities in which they operate.
Myth 5. Business philanthropy should be motivated solely by altruism.
Most smaller companies in fact ARE motivated to support nonprofits by a sincere desire to help communities. However, those that are totally altruistic in their approach make their contributions anonymously to support those issues and organizations that matter to them. Such companies are in the minority. Most companies expect that, in addition to making a contribution in the community, there is also some business upside for them from their philanthropy – such as enhanced reputation and visibility.
Having a strong business community helps improve local economies. Having strong local economies helps ensure higher quality of life and access to services for all members of the community, including employees of the company. To effectively improve local conditions, there must be a partnership between government, community organizations, and business to make it happen. Business is an essential and powerful component, without which change is hampered. In the spirit of true partnership, why shouldn’t both the business and a community organization with whom they are engaged both benefit? Ensuring that the relationship is not one-sided helps insure that the relationship is not a one-shot deal and can be sustained and deepened over time. Both sides need to feel there are benefits from their perspective or the relationship will be short-lived which can be a missed opportunity.
“We absolutely do strategically link our community involvement with business goals. We are for-profit and very proud of that fact. The link between community investment and the corporate strategic level for us is about brand recognition – good will goes a long way with that. You can’t quantify it on your balance sheet but it definitely helps to differentiate you from the other players in the marketplace.” –Ron Baumbarger, BitWise Solutions
Myth 6. When companies engage in community investment activities, it is self-serving if they tell about it.
While shameless self-promotion is of course undesirable, getting the word out about how your company is supporting the community and various organizations, is a way to let employees, customers, and the community know that your company cares and is doing its part to improve the community and be a good citizen. Many of the larger companies have self-selected to develop stand alone annual corporate social responsibility reports, portions of annual reports, and post information on the web site to be more transparent about their efforts.
Studies have shown that consumers want to buy from companies that support causes. If a company does not let its employees current and perspective customers know what they are doing, it is a missed opportunity to strengthen loyalty and maintain and even increase sales. Remember, 87% of Americans are likely to switch from one product to another (price and quality being equal) if the other product is associated with a good cause, an increase from 66% since 1993.