For many years, promoting Corporate Social Responsibility (CSR) initiatives was the favoured way for organisations to show they had a heart and were committed to giving back. Something of a catch-all phrase, this self-regulating business model helped companies be (and look) socially accountable to themselves, their stakeholders, and the public.
While CSR is still useful and admirable, in recent years the concept of ‘impact giving’ – which was an integral part of CSR – has evolved beyond traditional philanthropy to become a more powerful way of actively contributing to positive societal change through financial donations, employee volunteerism, and cause-related marketing.
By no means just another buzz phrase, impact giving is shaping the future by going well beyond simply writing cheques. The benefits of impact investing are long-term and measurable for an organisation. Investments made to make a difference in social and environmental causes that will also generate financial returns for the investor is the way forward.
So, how can corporations do impact giving right? I believe you do it the same way you build a solid house – with a structural plan and the right materials. Effective impact-giving begins with a strategic approach encompassing specific and measurable goals. Leaders should begin by defining clear objectives, establishing success metrics, and ensuring the non-profit partner can measure them.
As a CEO if you want to kick-start impact investing in your organisation here are some points to consider before diving into it:
- If it’s about deploying funds then you can find specific companies that are socially responsible and are creating a positive environmental and social impact in your local community or country but need funds to scale their operations.
- Launching your projects is a more active approach to impact investing. You can either launch a foundation or fund and put together a team that takes an active role in bringing forth projects that align with your values.
- In both cases thoroughly evaluate the social and environmental impact of your investments and the measurable outcome.
- Don’t over-extend yourself. Starting small is better than not starting at all. Even with one community project you can create a huge difference by generating more employment and creating social and environmental change as well.
- Once you have ventured into this space you have to constantly evaluate the social and environmental impact of your investments and not take a back seat. This is crucial because you don’t want to discover later that your investment has not given the result you expected from a social and environmental perspective.
- Finally, businesses should emphasise a long-term focus through multi-year funding commitments.
Collaboration with charities possessing the expertise and resources necessary for success is also crucial, as is engaging other donors to amplify impact and foster a collective effort toward meaningful change. At the same time, implementing progress tracking for transparency is key, allowing course corrections and promoting shared learning.
While being a force for good in the world is a great reason to get on board, consumer trends should also be a major motivation for CEOs to embrace impact giving. Two key demographics, millennials, and Gen Z, place a very high value on socially responsible companies and believe corporations should invest in improving society – and that includes taking care of the planet.
A far-reaching McKinsey study in 2020 asked consumers if they cared about buying environmentally and ethically sustainable products. They overwhelmingly answered yes, with more than 60 percent of respondents saying they would pay more for a product with sustainable packaging.
A more recent survey conducted by OnePoll found that millennials feel brands need to be held to a higher standard, with a massive 80 percent likely to base their purchases on a brand’s mission or purpose. While 74 percent would boycott brands for crossing an ethical line and going against their personal values.
As an interesting side note, a survey in late 2022 by Fidelity Charitable showed that millennials are also much more likely to become impact investors themselves than older generations, as values-based investment takes priority over charitable giving.
There is a global mindset shift happening – possibly given extra impetus by the pandemic – that believes we each bear responsibility for empowering positive social change, and that every small consumer/business decision matters.
To quote the late, great Martin Luther King, “Life’s most persistent and urgent question is, ‘What are you doing for others?’”