When we think of philanthropy, images that immediately come to mind are galas and golf tournaments, photos of oversized cheques and smiles, wealthy socialites, high-powered business people and CEOs of non-profit organizations.
The list of social problems and causes – from homelessness to saving the trees – are not going away any time soon. We know that relying on tax dollars and an already strained public sector bureaucracy won’t solve these problems. This is why it is not surprising that there are more than 170,000 charities in Canada. All of them need our money. And most of us want to be part of the solution.
According to Imagine Canada, we donate $10.6 billion to charities and non-profits and 12.5 million of us volunteer 2.1 billion hours of our time, which translates to 1.1 million full-time jobs.
As the need to tackle and resolve social issues continues to grow, it is not surprising that 76% of business leaders surveyed by Imagine Canada said that it is difficult to respond favourably to the increasing requests for donations, while 38% said that too many charities are trying to solicit money for the same cause.
Visit the community relations page on the websites of most private sector corporations and you get the same message – We receive numerous worthy requests for donations, however we are only able to support a limited number that align with our charitable vision – and the list of causes that the corporation supports follows.
It’s time to rethink philanthropy.
Shift the thinking from giving grants and donations to creating private-public sector partnerships.
In my previous article, I suggested that non-profits should raise funds by helping for-profit organizations be successful. In this article, I will suggest how corporations, entrepreneurs and professionals in the private sector can contribute to resolving the root causes of social problems by partnering with non-profit organizations, governments and social enterprises.
Implementing innovative solutions through private-public sector partnerships
Private-public sector partnerships are really an expanded form of philanthropy. Each partner leverages their respective area of expertise. The result is usually the creation of an innovative solution that neither partner could successfully deliver on their own. When compared with public sector institutions, private sector corporations generally have stronger capabilities in communications, access to capital, resources to support research and product development, expertise in logistics and far reaching distribution channels. The public sector can leverage these capabilities and benefit from the private sector’s focus on measured performance and outcomes, particularly in areas such as healthcare where public sector management has produced less than optimal results.
In my experience in the healthcare sector, I have seen private-public sector partnerships work successfully. Innovative, efficient technologies are being used to resolve problems of overcrowding in emergency departments, collaboration among multiple healthcare providers and supporting chronic disease patients self-manage their health. All of this has been done without burdensome financial investments or job losses. For example, all New Brunswick hospitals are now linked to the province’s integrated pharmaceutical supply chain which is co-ordinated through McKesson Canada’s Moncton distribution centre. This is an innovative way of increasing efficiencies in the healthcare system, ensuring patient safety and creating jobs and cost savings.
According to McKinsey & Company, although many private sector corporations tend to approach these partnerships as a purely philanthropic endeavor, their participation can create a virtuous cycle of mutual benefit for all concerned. Benefits include increased demand for a company’s products and services, a mechanism for joint investment and risk-sharing to create new markets or products. In addition, the partnership can deepen a company’s understanding of key markets and develop valuable networks for future business development.
Purpose-driven impact investment
Social entrepreneurs aim to provide a ‘return to society’ by reducing the impact of poverty, improving access to health, education and technology and protecting the environment, without maximizing profits. It is estimated that there are 25,000 social enterprises in Canada. With two thirds of millennials saying that their investments should reflect their social, political and environmental views, we can expect the number of social entrepreneurs to increase.
For-profit organizations and entrepreneurs should consider impact investing as part of their corporate social responsibility programs. Impact investing combines traditional investing and philanthropy to create social change and financial return.
One way of doing this is by investing in the Social Venture Exchange (SVX). SVX connects entrepreneurs and organizations seeking to tackle social problems with investors who want to create social impact while generating a financial return. Another option is to create a social enterprise as a subsidiary of the for-profit organization, established for the purpose of driving social change, with different investment and profit objectives.
When formal partnerships and investing are not feasible, private sector corporations should consider incentivizing their employees to provide pro-bono services to non-profit organizations, particularly on boards and working committees. Incentives commonly used are the matching of funds raised and financial donations in exchange for employees’ volunteer time. This is not only beneficial to the non-profit organization, but also for the private sector corporation and its employees.
Employees who volunteer their professional expertise without pay through services such as consulting mandates and project management, benefit from the experience and knowledge gained as well as networking opportunities. These professionals also gain access to information and insights about economic trends that could potentially provide business opportunities for product innovations, new markets and clients.
Business sustainability is linked to community well-being
Rather than focusing only on short-term profits, businesses should be equally concerned about their long-term sustainability and resilience.
Broadening the scope of philanthropy to include partnerships, impact investing and employee incentives to address social problems is, in my opinion, the key to business sustainability.
Sustainable businesses that can surmount the challenges of sudden changes in the market will survive in the long run if they are connected to healthy economic, social and environmental systems. These businesses will create economic value by contributing to strong communities in which the adverse effects of poverty, ill-health and environmental harm are minimized. In the long-run, when the public, private and non-profit sectors work together in partnership, we create a culture of communal solidarity in which all citizens have a fair chance to have a good quality of life.
Further reading –
Camille Isaacs-Morell is a marketing professional with an insatiable curiosity to learn more, to do better and to make a difference in the world.
See the BIG picture. Focus on what’s important.