Charities need to challenge the status quo, they need to provide value on both sides of the equation – for those they are supporting and for those who are funding them.
Too often directors on charity boards lack the necessary level of competence, or hold their positions well beyond their use-by date. The boards of charities need to be challenged in their expectations that people will donate because they have in the past or that they should get services for nothing because they are a charity, ignoring the well-known truism that ‘you get what you pay for’. Charities need to challenge the status quo, they need to provide value on both sides of the equation – for those they are supporting and for those who are funding them. There needs to be an enhanced level of shared value for sustainable growth.
Dreamers of the day
If you asked me what I would like to do ‘when I grow up’, the answer would be to sit at the head of a large foundation that makes grants to charities and NFPs. What's the attraction in that? I see huge opportunities within those foundations to drive change in the charity sector. There would be serious incentive to implement change if the bankers of the charities attached productivity change to their dollars – not through imposing sanctions, but through paying bonuses for the implementation of change programs that will drive shared value. Access to grants from many foundations is by a process of filtering out charities based upon a diminishing criteria. The criteria will often start with the need for deductible gift recipient (DGR) status, then they might include the requirement that those charities who receive the funds only support Australian children living in rural areas that come from single-parent homes, are under the age of 12 and have a low attendance rate at school. They are clear on who they want to support and on the projects they want to support. Many also require the provision of reports on how their money is spent. But very few look at the effectiveness of the charity or NFP or at how change to that organisation could see the better utilisation of many donors.
A case in point is the annual ‘Failure Report’ produced by the NGO Engineers Without Borders. The name of the organisation makes it clear what it does and where it works. This insightful report looks at what it has done (nothing new there) and also what didn't work. It then looks at the lessons to be learned and makes recommendations for next time. It's a wonderful, honest and courageous document and so refreshing to read.
An interesting report from Engineers Without Borders that speaks to this point concerned funding for the implementation of a water project in an underdeveloped area. The funding was to a Canadian group and was for the installation of a water system – specifically, a new system. While they were installing the water system, they were stepping over and removing the US-installed system that had broken down. The water would be drawn from the same source and delivered to the same community via very similar technology. The report found that for a fraction of the cost of the installation of the new system they could have made repairs to the US system that already serviced the community. They could not do that, however, because the funding conditions did not allow for maintenance or repairs but only for the installation of a new system. It didn't make sense to those on the ground and still doesn't make sense. It's a clear example of a donor determined to take sole credit and showing inflexibility in the use of their funds. It also shows where the power lies. Not equally between donor and NGO, not even close. My point is that if those at the foundation level choose to form a partnership rather than believing that because they have the money they should make all the decisions, the foundation's or donor's money could be more efficiently utilised.
The final group I see deriving real value from this book is the social entrepreneurs. These individuals may have worked in a dozen different jobs, following three or four different ‘careers’ by the age of 25, but haven't yet taken control of the company so have decided the best way to make their mark is to do it for themselves. The socialpreneurs are best described by T. E. Lawrence: ‘All men dream: but not equally. Those who dream by night in the dusty recesses of their minds wake in the day to find that it was vanity: but the dreamers of the day are dangerous men, for they may act their dreams with open eyes, to make it possible’.
The socialpreneurs defiantly dream by day and more often than not they make it happen. They make it happen quickly, and if it doesn't come to fruition they move on and keep trying until it works. The best example in this book of a socialpreneur dreaming and making it happen, while epitomising the concept of doing good by doing good, is Blake Mycoskie, the founder of TOMS. He had kicked around a number of business ventures, some of which returned a nice profit, but they weren't feeding his soul so he walked away from them. Actually he headed to Argentina to learn to play polo – and the rest, as they say, is history.
‘ … The dreamers of the day are dangerous men, for they may act their dreams with open eyes, to make it possible.’
The socialpreneurs I've worked with don't need approval to make things happen. They don't conform to the limitations of funding through foundations or conditions attached to grants. They are driving a for-profit with a clear social benefit, and therein lies the magic; this is why it becomes sustainable and why they can set the course without the mindset limitations of those who believe they know what works best. When it is your money, rather than a gift or grant, a different level of freedom exists. I don't believe this is the only way forward, but it's one worth investing in and worth keeping an eye on. Plenty of them will fail, plenty will have dumb ideas, but among the coal there will be diamonds, and often those diamonds are worth a tonne.
I was part of a panel of judges at a humanitarian conference in the Philippines where we listened to presentations made by university students from places across Asia, including Nepal, Pakistan, India, Indonesia and many other countries. It was a bit like the reality TV show The X Factor, but for those with a social conscience. Just like the TV show there were plenty of auditions and pitches that never made it to the stage, and of those that did there were a few that were brilliant, and others that had the passion but were unlikely to crack the market, for now anyway. What was most inspiring about every one of the presentations was the desire, the lateral thinking and the headspace they were in. They had the courage and audacity to think they could tackle some huge social issues, and in some cases you knew they would.
So if you're in business looking to make a profit, working in the for-purpose space wanting to make a difference or you're a socialpreneur who wants to do both, fast, then together we can explore what works, what doesn't and what your best approach might be to doing good by doing good.
Chapter 1
IS THERE A BETTER WAY?
Do you need to change your current approach to corporate social responsibility (CSR)? Before we can answer the question we need to define CSR and some of the typical approaches to it we see.
All organisations have their own interpretation of their programs and have the discretion to attach a definition that works best for them. But what is at the core of corporate social responsibility? Well, if you suggested it is about ‘how companies undertake their activities to optimise a positive impact on society’ you would not be too far off the mark.
Or you might choose a rather more robust definition such as the one formulated by the World Business Council for Sustainable Development in its publication Making Good Business Sense by Lord Holme and Richard Watts: ‘Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’.
Business for Social Responsibility (BSR) has adopted the following definition: ‘Operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business’. Finally, the European Commission prefers: ‘A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby companies integrate social and environmental