By Myra Hagan, JVA Consulting
There is a debate taking place over at The Economist in its Corporations and Communities Debate Series about the role of charity in Corporate Social Responsibility (CSR). Sustainability, social responsibility, shared values and environmental impact are all buzzwords that have spread across sectors. Traditionally, the nonprofit sector has been looked to when social change and community services are needed, but as companies’ business practices become more transparent, consumers are demanding more than just goods and economic benefits. While this may be generally agreed upon by the public and noted as smart business strategy, how companies meet this demand differs and is the launching point for the debate.
The “for” side believe that charitable acts are no longer part of a CSR model. Peter Lacy, Managing Director for Accenture, is the representative voice. Lacy’s main point in his opening comment is that charity cannot and should not replace or cover for the positive or negative effects a company has on the communities it is involved with. Companies should be socially responsible throughout their entire business model to not only be responsible, but also to gain a competitive advantage. Lacy continues his argument with the belief that while philanthropic endeavors offer great value, they cannot get at the supply and demand that comes with societal problems in the way that business strategies can.
Margaret Coady, Executive Director for the Committee Encouraging Corporate Philanthropy, represents the “against” side of the motion. Coady emphasizes the collaboration of companies and nonprofits to make change. Her belief is that while charity cannot make all the changes needed, neither can corporations. Philanthropic efforts can have a more immediate impact and change than a gradual transition of company operations. Coady adds, however, that philanthropies offer companies new entry points into communities and breed innovative ideas.
I highly encourage you to check out the rest of The Economist debate. It continues through March 15 and along with the thought-provoking points being made by the speakers, there have been over 200 comments made by knowledgeable and passionate people from across the globe. My personal opinion does not find a home in either side, but lies more in the middle ground. The work done by nonprofits and charities across the globe is invaluable and offers much needed services to many communities. Corporations that are in the position to do so should certainly give charitably to causes they believe in and to causes that directly impact people anywhere along their supply chain, from worker to consumer. That being said, I believe this should only be done if the corporation is already operating its business practices in a responsible way. If there are improvements that can and should be made in the business’ model, they should not be put to the wayside at the expense of philanthropic endeavors. The expression “whatever you do, do it well” should be the mantra of CSR.
Regardless of the position you take on this discussion, you can clearly see that the lines between sectors continue to blur. Corporations can no longer get by on providing consumer goods and creating economic opportunities while nonprofits cannot provide innovative solutions to socioeconomic and environmental problems without funding. Through the haze it would seem that social enterprises are emerging as the bridge across this gap. Creating a product that’s central focus is built on making change to solve social problems makes social responsibility the business model, not an afterthought. A revenue stream to support the endeavor allows room for the product to change and grow more fluidly to meet the evolving needs of the problem it addresses. Corporations need to continually address their roles within their communities and partnering with nonprofits is certainly a positive way to impact them, but redesigning the business model to a social model looks to be the direction business is moving in.
If social enterprise and CSR are of interest to you, be sure to check out JVA’s upcoming Social Enterprise Academy, April 8-12.