Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

July 25, 2011

Business can do better by doing good


By Todd Cohen

Companies are missing a great opportunity to make a difference while making money because they are failing to apply their business know-how to social problems that affect their business.

But if they truly were to build social enterprise into their business strategy, apply their business sense to their philanthropy, and focus their giving on social needs that limit or even hurt their business, a new report says, corporations could boost their bottom line and improve their communities.

The way to do that is through a strategy known as “sustainable value creation,” or finding “new, scalable sources of competitive advantage that generate measurable profit and community benefit,” says the report, released by Accenture and the Committee Encouraging Corporate Philanthropy.

Pursuing that strategy will require big changes in the way the corporate world thinks and does business.

While many companies develop business processes that are effective in developing and producing profitable products and services that meet market demand, they typically do not apply those same business processes to identify and address social problems.

Successful companies “already have proven mechanisms in place to generate profitable ideas both in the short- and long-term, yet the business opportunities within fundamental societal issues are often overlooked,” the report says.

And that wastes a big opportunity because, as the report says, companies that do a good job looking for the root causes of their core business challenges “often uncover underlying societal problems that, if addressed, may lead to new sources of competitive advantage.”

So if companies were to take the business strategies they develop through their attention to making money and apply those strategies to their philanthropy, and then focus their philanthropy on addressing social problems underlying their business challenges, they might be more effective both in their business and in their philanthropy.

The concept of sustainable value creation also represents an opportunity for nonprofits to better understand the role corporations can play, not only in supporting individual charities, but also in addressing social problems facing their communities.

Individual nonprofits, as well as intermediary and umbrella groups like community foundations, United Ways and united arts funds, all should be thinking about the connections between business and social problems, and looking for ways to help corporations make those connections and do something about them.

Nonprofits can be the brokers that engage corporations in collaborative strategies to address community problems and help them move beyond a narrow focus on the bottom line to a more integrated approach to doing business and doing good in a way that is good for business and for community.

3 Comments:

  • At 12:42 PM, Blogger J Clay Johnson said…

    Thanks for this article, I hope this concept really gets out there and begins to effect the ways small and large companies think about doing business.

     
  • At 8:42 PM, Anonymous Mandy said…

    Nice post which Pursuing that strategy will require big changes in the way the corporate world thinks and does business. In which many companies develop business processes that are effective in developing and producing profitable products and services that meet market demand, they typically do not apply those same business processes to identify and address social problems. Thanks a lot for posting this article.

     
  • At 11:22 AM, Anonymous Jason said…

    Nice post which wastes a big opportunity because, as the report says, companies that do a good job looking for the root causes of their core business challenges often uncover underlying societal problems that, if addressed, may lead to new sources of competitive advantage. In which companies were to take the business strategies they develop through their attention to making money and apply those strategies to their philanthropy, and then focus their philanthropy on addressing social problems underlying their business challenges, they might be more effective both in their business and in their philanthropy. Thanks a lot for posting.

     

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