What comes to mind when you hear the word philanthropy?
Perhaps big businesses with big budgets and big personalities like Buffett, Gates, Oprah or just a word that's really hard to spell? But where does small business fit into the conversation about philanthropy, business social responsibility (BSR) and giving back to the community in meaningful ways?
It’s about method and motivation
Many people mistakenly believe that philanthropy and charity are just different sides of the same coin. Whilst the motivation of each may be similar, the method used to reach the outcome is usually very different.
I’m not staring an argument but …
Simply put the familiar metaphor used to describe the difference between these two concepts of charity and philanthropy is: Give a man a fish and you feed him for a day (charity), but teach him how to fish (philanthropy) and you feed him for a lifetime.’
Yes yes I know but …
Now I’m the first to admit that this simplistic metaphor triggers arguments about whether charity creates a dependent relationship between the giver and the receiver, whereas philanthropy seeks to empower and enable sustainability. I prefer to explain philanthropy as ‘giving a person a hand up, rather than a hand out.’ When describing philanthropic efforts in developing countries, I explain it as helping people get their foot on the first rung of the development ladder’.
Teaching people to fish and giving them a hand up
Philanthropy is actually more about a deliberate planned strategy to help solve some of our world’s most pressing problems using the hand up rather than hand out approach. This mindset is fuelling a new breed of businesses who are deliberately using their business as a strategic force for good in the world. Among those leading this new world of business for good are those that have become Certified B Corps - the for-profit movement to put purpose at the heart of business strategy and adopting what Inc Magazine calls ‘the highest standard in socially responsible business’.
It’s enough to make a hippy swear!
Why business owners make the best philanthropists (and it’s not about money)?
For entrepreneurial business owners, philanthropy is a natural extension to applying a business approach to problems. They have the resources, the problem needs to be fixed, they know how to fix problems because that’s what they do all day every day in business.
Good business is about people solving people’s problems
Entrepreneurs by nature are innovative people and naturally drawn to solving problems, creating meaningful change, and looking for new ways to generate value. They produce the most effective and efficient ways of achieving an outcome and perhaps that’s in part because many of them are usually driven and transfixed on an end result - constantly scanning their environment for opportunities to improve.
This results fixation, can also be applied to social change and is already challenging the old-school ways and thinking about just how effective is the old concept of charity. This new approach is not actually new, but our new digitally connected world now allows those of like mind to find each other faster, connect ideas sooner and share resources better.
One of the important aspects about running your own business is it can be an extension of who you are and what you believe and value. And what you believe has to affect the person you are and the type of business you run.
The business of achieving a particular result in the market
Good business is about understanding deeply the needs and desires of your customer and seeking feedback throughout the customer journey. Only then can the business successfully solve the problems of its customers and therein earn its place and its profit from its clients.
The downside of the upside
Philanthropy by itself lacks the customer feedback mechanism of the market to make sure that the needed outcome actually occurs. When left alone and unsupervised, the business market can move ahead fast and often leave behind the most vulnerable.
The best of partnerships
When you fuse these two approaches together, you enable a business approach to solving problems with philanthropy that makes for a sustainable and predictable outcome.
Small Business Philanthropy (SBP)
Taking a business approach to solving many of our social problems is what the new type of business philanthropy is all about. The success of this approach come from understanding and the fusion of two, up until now seemingly competing forces.
It's time for people and their businesses to take a more public role so we can reframe the news from a conversation about social problems, into a platform for demonstrating that problems have solutions, and by taking a business approach combined to philanthropy, problems can be solved and sustainable predictable outcomes achieved.
In the words of the B Corp. movement, 'it's about businesses focusing not so much about being the best in the world, but being the best for the world.'