In 1970, economist Milton Friedman wrote a now-famous article for the New York Times Magazine entitled “The Social Responsibility of Business Is to Increase Profits.” Friedman argued that businesses’ sole purpose is generating profit for shareholders; companies that pursue the “social good” act irresponsibly and jeopardize profits. Friedman’s spin on capitalism was widely embraced in boardrooms across America.
According to this view, viable businesses only consider their own economic interests. Any embrace of broader society–such as paying a living wage, caring for the environment, or giving back to local communities–is a distraction from making money, the only legitimate business value. This fixation on markets over social values drove business thinking for the next forty years.
Today, businesses are proving Friedman wrong. Whether it’s called altruism, social responsibility, or strategic philanthropy, businesses have learned that combining enlightened self-interest with support for social causes makes business sense.
Authenticity: Revisiting Classic Virtues
The current economic crisis, caused by putting individual interest above all else, marks a turning point for the “greed is good” ethos of the last few decades.
In times of crisis, consumers seek businesses that embrace classic virtues based on trust, good citizenship and civic responsibility–a trend that only promises to intensify in the coming years, as demonstrated by recent studies that consumers carefully consider a company’s reputation when making purchasing decisions.
The 2006 Cone Millennial Cause Study, for example, found that 69 percent of Americans consider a company’s social/environmental commitment when deciding where to shop, and 89 percent are likely or very likely to switch from one brand to another—price and quality being equal— if the competing brand is associated with a good cause. Over the past decade, socially responsible investing has risen more than 258 percent, according to the Social Investment Forum.
“The view of business as necessarily selfish…is, as it always has been, nonsense,” says noted British economist John Kay. “There is widespread agreement on which are indeed good businesses. They are characterized by satisfied customers, motivated employees, well-rewarded investors, and high reputations within their communities. They are admired by everyone: their customers, governments, the financial community, the people who work for them, and other businesses.”
Embracing a social mission delivers a message that your business is totally committed to your target market’s best interests, not just their purchasing dollars.
Strategic Philanthropy: Choose a Cause that Aligns with Your Business
When your company supports a social cause that complements the mission and purpose of your organization, you help your community while boosting employee morale and retention, and strengthening relationships with your customers, clients, prospects and vendors. The secret is actively integrating strategic philanthropy into your core business to enhance the company brand while making an authentic social impact.
For example, LensCrafters stands for healthy vision, and created a natural cause brand in its Give the Gift of Sight. PNC Financial Services supports early childhood education with PNC Grow Up Great, a cause brand that incorporates multiple partners such as Head Start, Sesame Workshop and Family Communications.”
White Dog Café, a popular restaurant in Philadelphia’s University of Pennsylvania section, is well known for its commitment to social responsibility. White Dog’s mission serves four areas: customers, employees, community and nature.
The business supports several local causes, including environmental responsibility (it was the first business in Pennsylvania to purchase 100 percent of its electricity from Wind Power Sources), paying a living wage to employees, and sourcing from local farms where meat and poultry are raised humanely.
Cause-related marketing yields mutual benefits. Look for partners with a similar agenda whose goals can be better achieved by partnering with your company. Take inventory of the assets that make you an appealing partner in a cause-related venture.
Lead with integrity. Cause-related marketing is only viable when you completely believe in the causes you embrace. This requires that you follow your ethical compass in every decision. We are human beings first, consumers, investors and businesspeople second. Smart companies build human values into their strategic missions, interweaving their bottom lines with others in the community.
Embrace a cause. An easy way to embrace a cause is to team up with a charity. What about your business appeals to a nonprofit partner? If you have a publishing company, consider supporting the public library. If your clients are primarily middle-aged women, think about supporting a relevant cause, like breast cancer research.
Pick Wisely and Realistically. Before partnering with a charity, get to know the people you’ll work with, and get a feel for what they can deliver.
Establish Measurable Goals Up Front. Establish agreed-upon, realistic goals at the outset and measure how well you achieve them. Put them down on paper and refer to them as you implement and evaluate the program.
Get The Word Out. Never lose the marketing focus of your community partnership efforts. Even though the work is philanthropy, your cause should generate interest in your business and motivate people to buy from it. Select a cause that is important to your target market, and make sure your target market sees that connection. Tremendous goodwill can be generated, and media attention can be its side benefit.