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As companies become purpose-led, where does that leave charities?

As companies become more outwardly focused on doing good, how can nonprofits react?

As companies become purpose-led, where does that leave charities?
[Source Image: Rogotanie/iStock]

Sustainable, meaningful, purpose-led. However framed, when applied to organizations, these terms indicate to wider society that a company is committed to making a difference. Evidence proves that purpose-led organizations are no longer a buzzword; they are fast becoming the norm because they can prove that they add real value to employees, shareholders, and customers. And it’s nothing new. In a five-year old-study, results showed that “in 2013, meaningful brands connected to human well-being outperformed the stock market by 120%,” while additional research showed that “purpose-driven companies outperformed the S&P 500 by 10 times between 1996 and 2011.” The growing workforce of millennials–and generation Z following fast on their heels–wants to work for companies that share their values around responsibility to mankind and the planet. Companies, therefore, have to fight for the best talent by transforming to a purpose-led business or risk losing the skills they need.

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Larry Fink, CEO of Black Rock, one of the biggest asset managers in the world, recently wrote a letter to global CEOs stating that, “Without a sense of purpose, no company, either public or private, can achieve its full potential; it will ultimately lose the license to operate from key stakeholders.” He goes on to state that companies must ask themselves: “What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce?” and so on. As others in the financial world follow, all sizes of business across the world will have no choice but to understand the value of being purpose-led, deciding and then designing their own meaningful path.

Where does this leave charities? Does it make them redundant? No. In the words of John Low, chief executive of Charities Aid Foundation, “Almost everyone . . . benefits from the work of a charity, and the demand for their services and support shows no sign of abating.”

[Source Image: Rogotanie/iStock]
Charities exist for many reasons and will continue to, regardless–from the multi-issue global charities to those that are set up in memory of lost loved ones with a small, focused agenda, perhaps to fundraise for a hospital unit. “Purposeful” businesses will succeed most where profit and purpose align. We need them to create profit that allows society to prosper and for more good work to be done. The demand for the many services and support gaps that the charity sector fills now will continue in years to come.

A critical partner for advocacy and delivery

We can only create the world we want for the future through collaboration with others. Where civil society, governments, companies, and charities all come together, we make the most progress. We only have to look to the current plastics movement to see that. Something kick-started by the BBC’s Blue Planet series’ capture of the hearts and minds of the public is resulting in huge change; from the BBC immediately banning plastic cups and utensils before moving on to plastic containers in 2019 to the queen of England giving up plastic all together. Changes in society’s appetite for plastics, driven by charities such as WRAP, WWW, and Greenpeace, are resulting in innovation in the field of plastic pollution and, importantly, global giants changing their policies and approach to plastic.

Charities are often the delivery partner for much of the good work that companies (and/or governments) want to do because they have the right skills, access, and understanding of what works. For example, Virgin Group’s purpose is “changing business for good.” Virgin media aims to prove that digital makes good things happen–for people, businesses, and communities across the U.K. and Ireland. As a digital infrastructure provider, they are enabling Scope’s new digital employment support service, with an ambition to reach 1 million disabled people with employment information and support by the end of 2020. This will help them get into work, stay in work, and realize their career ambitions. The long-term benefits of this activity are many; improving economic productivity, stigma busting, and fostering richer perspectives in the workplace.

[Source Image: Rogotanie/iStock]

A teacher of new skills

As companies look to find their purpose, there are new skills they need to learn:

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Empathy: Companies, and many people within them, understand empathy, but it hasn’t necessarily been at the forefront of driving business success. Consumer-focused companies are always striving to understand what the customers want or need, how they think, and what behaviors they demonstrate. This drives successful products. But empathy is also about sharing the feelings of another. What world (beyond your product) does the consumer want to see? How do they expect you as a company to act in order to create that world because you’re well placed to? Companies need to understand the issues facing society and the grassroots individuals blocked from achieving their potential by adversity every day, in order to truly understand what is needed to make change happen. They need to listen and empathize and empower those who know. The charity sector can teach companies to do noncommercial, nonjudgmental listening.

Movement/global campaigns: The nonprofit sector has traditionally been the heart of social change, giving voice to the voiceless and rights to those without. Companies have a history of successful campaigning and lobbying, often around economic agendas, but much less on driving the social agenda. Charities have long understood the need to collaborate and share a vision of a better world, how to work together, and bring the necessary skills sets to the table. Advocacy and policy change for a better society are often their purpose. They are the experts.

Helping the workforce to find meaning in work: It’s typically values-based decisions that lead people to work in the charity sector. It’s hard work, but meaningful and where people get to live their own sense of purpose. Charities and those who work in the sector understand that. They suffer the low pay and unglamorous offices, take on the emotional burden of their work,  and continuously go the extra mile because it fulfills what drives them and moves one step closer to creating the world they want to see. Corporates want to unlock that purpose, discretionary effort, and understanding of the right thing to do, and the charity model can help them understand how to do that. For instance, telling stories about the “need,” closing the gap between employees and the people whose lives they aim to improve, and understanding that the best workforces are also made up of the people in society that we want to enable.

[Source Image: Rogotanie/iStock]

A change of mind-set

However, for charities to operate successfully in the new purpose-led landscape, it will involve a change in mind-set with a focus on sharing long-term goals alongside corporate partners. This is the biggest opportunity; to see the corporate world not just as a funder or gift-in-kind provider, but as a genuine partner. Currently, many businesses look for “charity partner of the year” opportunities, which involve a beauty parade and staff vote with the most popular winning. These can be lucrative and help fundraising directors breathe a massive sigh of relief about their targets. They raise awareness too, providing a critical route to marketing dollars that charities can’t afford. Charities also look for pro bono support to help them deliver infrastructure–it’s how the partnership between TV network BT and Comic Relief relationship started with the 1980’s the telethon. FTSE 100 businesses give around 2 billion pounds (around $2.5 billion) worth of money, time, gifts in kind, and management services a year to charity.

Many of the partnerships are driven by short-term need. Charities struggle to imagine the long term; too often it’s an utter luxury given the firefighting every month. Pressures on funding, as more and more income is restricted and state funding is drying up, are driving the exact opposite of what impact we want in society. It’s driving short-termism. The exact same disease that Larry Fink and others are trying to get the business world to move away from.

So the opportunity for charities is to look for long-term goals for society and work out what is best positioned to help achieve them. Share the vision with the business world–or even better create it with them. A world that works for us all needs all of us to sculpt it. Charities should ensure they have a seat at the table for those conversations, and where they don’t, they should demand the seat or start a new table. Be brave and visionary and constructive enough to bite the hand that feeds you. The responsible business world should be asking you how to be more responsible.

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There is no first and second place for profit and purpose–the future demands that we strive for both, regardless of the sector. Perhaps we won’t even see the future in sectors: We’ll all be socially responsible enterprises. We need “more worthy” profit-making entities and we need more long-term, commercially thinking charities. We all have a role to play in building a sustainable society, and the more we collaborate with each other, the greater the sense of purpose we can build throughout the entire world of work, unlocking individuals and organizations alike to build the society we want.


Kate Adams is the operations director of Nesta’s Challenge Prize Centre. She has spent half her career consulting in the private sector and half in the not-for-profit sector, including funders like Comic Relief and Nesta. 
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