Part one: WHY should corporates adopt a purpose led approach to giving?

The Why, What and How of Purpose Led Corporate Giving
This is part one in a three part series distilling our research and what we’ve heard around
1. WHY should corporates adopt a purpose led approach to giving?
2. WHAT
does best practice, purpose led corporate giving look like?
3. HOW can corporates embed social purpose within their organisations?

So we can continue to build upon this, let us know how what's worked for you to secure leadership support for your program.  We'll be sure to incorporate these insights in future editions

by
Purposed

For those who prefer to read plain text, here's an excerpt below from Part One of our three part series on the WHY, WHAT and HOW of purpose led corporate giving.

PART ONE - WHY SHOULD CORPORATES ADOPT A PURPOSE LED APPROACH TO GIVING? 

To better understand how a purpose led approach can revolutionise the corporate giving landscape in Australia, this three part series distils research around three key questions:

1. WHY should corporates adopt a purpose led approach to giving?

2. WHAT does best practice, purpose led corporate giving look like?

3. HOW to embed purpose led corporate giving into your organisation?

Parts 2 and 3 will be released shortly, be first to get them by subscribing to our newsletter

WHY SHOULD CORPORATES ADOPT A PURPOSE LED APPROACH TO GIVING?

Purpose led corporate giving is strategic investment that focuses giving to causes aligned with the purpose of your organisation, consumer market and employees.

Despite two decades of increasing philanthropic support for Not for Profits (NFPs), major social and environmental challenges remain pervasive in Australia and around the world. 

This experience indicates that NFPs alone do not have the capacity to effect systemic change; that Government alone does not have the capability to address the root cause of many social issues; and that corporates alone do not have the ability to tackle the issues plaguing today’s society. 

To solve the most pressing problems of our time, Corporates, NFPs and Government with a shared sense of purpose must work together, be open to testing new solutions, and focus on generating both more and better giving

And when we refer to “giving”, its not just about giving funds, but also time, skills, experience, goods and services. 

The findings from the Giving Australia (1) research have been echoed in our conversations with Corporate Australia. Many of the Corporate Social Responsibility (CSR) Managers we speak to report that, despite exploring various technological and strategic solutions, they are still falling short of their employee giving and volunteering targets. Conversely, the employees we speak to consistently report that they feel disconnected from the causes made available to them, or are unable to find the right avenue to meaningfully contribute in their already busy lives.

This suggests that there is still a significant gap between the strategic, corporate led motivations for giving and the deeply personal, emotionally led motivations of employees. 

In short, corporates are failing to effectively encourage the core driver for meaningful and sustained giving: the fulfilment of one’s social purpose. When it comes to creating impact and strengthening engagement, we must find better ways to help employees discover their purpose, and pursue it in ways that are easy, meaningful and impactful. 

While the above issues are not new, our recent engagements suggest that the corporate giving landscape is on the cusp of a revolution. Leading corporates are being more strategic in their giving, and charities are exploring approaches to make giving more meaningful via virtual reality, and more transparent with the likes of blockchain. 

There is growing evidence to support the business case of adopting an authentic and engaging approach to giving that positions corporate and employee purpose at the heart.

WHY? THE BENEFITS ARE CLEAR

PURPOSE PROMOTES CUSTOMER LOYALTY AND PROFITABILITY

  • 66% of consumers are willing to pay more for a socially responsible product or service (2)
  • 90% of consumers report they would swap to a more ethical brand (3)

PURPOSE PROMOTES RETENTION & CREATES A THRIVING WORKPLACE CULTURE

  • 44% of millennials would leave their current employer within the next two years to gain more meaning and fulfilment (4)
  • $43K is the fully loaded cost of a single employee turnover (5)
  • $2,400 of value is generated by every employee who participates in volunteering through their workplace (5)

SHAREHOLDER VALUE Loyal & more profitable customers + engaged employees = greater shareholder value

  • 10X Market Out Performance. Purpose led companies outperformed the S&P 500 by 10 times between 1996 and 2011 (6)

BUILDING A TANGIBLE BUSINESS CASE

Components of the business case

The first, and potentially most significant barrier for corporates in adopting a purpose led approach to giving is demonstrating a clear business case. 

Fortunately, the business case for social purpose has been strengthened of late by readily available data on consumer behaviour and employee motivations. 

We have identified three clear and pervasive trends that support a purpose led approach to deliver more and better corporate giving. This section explains each of these trends and provides the tangible and intangible benefits that will help you build your business case. 

What makes for a compelling business case? 

Firstly, consumers expect businesses to behave in a socially responsible way – their spending and loyalty increasingly reflects this. 

Secondly, employees now want more from their careers – attracting and retaining top talent depends on more than compensation. Corporates must prioritise being an employer of choice. 

Thirdly, corporates are expected to play a key role in solving society’s most pressing problems – their employees want to be involved in contributing to the solutions.

1. Building customer loyalty in a world of declining trust

The modern consumer expects businesses to operate ethically, and believes that businesses have a responsibility to contribute to solving societal and environmental challenges. This belief guides consumer behaviour, with 90% reporting they would swap to a more ethical brand given a comparable offering (3), and 66% willing to pay more for a socially responsible product or service (2). 

In 2014 Thankyou hand wash was the most expensive product of its kind stocked in Australian supermarkets. Despite warnings that Thankyou was at risk of pricing itself out of the market, they remained steadfast that discerning consumers would be willing to pay more for an ethical product contributing to social good. Since getting Thankyou products into supermarkets, they have seen sales grow by 200%, outperforming cheaper products with no ethical pay-off (7). 

Further to this, retailers here in Australia and abroad have been building customer loyalty (while boosting sales) by providing consumers with opportunities to recycle goods at their stores. Bunnings warehouse for example offers e-waste drop off events to ethicaly dispose of the materials on your behalf, giving people another excuse to wander the aisles over the weekend. 

By contrast, Volkswagen’s sales plummeted by 20% in the wake of its diesel emissions scandal, and the company recorded its first annual loss in 20 years (9). The VW example is a stark reminder that people have the power and their collective action (or inaction) can hit a company where it hurts – their share price. 

These examples demonstrate the power of the consumer and how willingness to pay can be heightened when the consumer connects with the purpose behind a product.

Trust is a valuable commodity that cannot be bought, and once lost is hard to restore. 92% of consumers trust peer reviews over advertising, proving that businesses need to embed deep levels of trust in their employees, clients, and shareholders (9). The average consumer is worth 10 times the amount of their first purchase, but it takes 12 positive interactions to counteract every negative one (10). Employees are at the coalface of building trust for your business. In fact, millennial employees feel that where they can have the greatest amount of influence is on customers, suppliers, and their peers. They see that their influence can be exerted through small scale, immediate actions, that ultimately influence the bigger picture. 

This brings us to one of the fundamental reasons for investing in a corporate giving program: employee engagement.

Why should you care?

CUSTOMER LOYALTY IS A THING OF THE PAST - 90% of consumers report they would swap to a more ethical brand for a comparable offering (3)

CUSTOMERS PAY A PREMIUM FOR PURPOSE - 66% of consumers are willing to pay more for a socially responsible product or service (2)

2. Becoming an employer of choice

Only 13% of employees are engaged at work (11), and ‘presenteeism’ costs the Australian economy $34 billion annually through lost productivity (12). An effective way to counteract the costs of lost productivity is by helping employees discover and pursue their social purpose. A recent study concluded that companies with strong community involvement see increases in employee productivity by as much as 13%, and reductions in turnover by as much as 50% (13). A further study found that employees who volunteered, “worked harder, were more willing to help their colleagues, talked positively about their companies, and were less likely to waste time at work” (14). 

Fostering employee engagement is one of the key drivers of contemporary corporate giving programs, and for good reason

Our relationship with work has changed drastically over the past decade due to globalisation and automation. Increased digital connectivity has heightened the value of face-to-face volunteering opportunities that allow people to find a sense of belonging and community. If corporates want to attract and retain top talent, their value proposition needs to be more than just money, and must include opportunities to find a sense of meaning and personal connection within the workplace. 

Why is this important? Because Millennials will make up 75% of the workforce by 2025, and are a generation that prioritise social purpose in their personal and professional lives (15). So much so that 44% of millennials state that they would leave their current employer within the next two years to gain more meaning and fulfilment (4).

If this statement alone isn’t alarming enough, let’s look at the numbers. 

Research has found that the average fully loaded cost of employee turnover, including vacancy, recruitment and onboarding costs, is $43,000 (5). Yet, for every employee who participates in volunteering through their workplace $2,400 of value is generated through increased productivity, greater discretionary effort and fewer sick days (5). 

To position yourself as an employer of choice you need to have a strong social purpose at the heart of your business, and must empower each individual employee to understand the unique role they can play in making a difference.

Why should you care?

MILLENNIALS ARE LEAVING FOR MEANING - 44% of millennials would leave their current employer within the next two years to gain more meaning and fulfilment (4)

AVG. COST OF TURNOVER - Fully loaded cost of employee turnover is $43,000 (5)

VOLUNTEERING PROVIDES MEANING AND GENERATES PRODUCTIVITY - Every employee who volunteers through their workplace generates an additional $2,400 of of organisational value (5)

3. Solving the most pressing problems of our time

“The Dollar” is the universal language that resonates with the executive, however putting a dollar figure on solving some of the most pressing problems of our time can be extremely difficult. 

With many concerned about the longevity of Australia’s Great Barrier Reef, a 2017 Deloitte study aimed to put a value on it by assessing the economic, social and icon asset value of this natural wonder. They calculated that it supports 64,000 jobs and contributes $6.4 billion to the Australian economy, and along with its cultural significance could be valued at $56 billion (16). 

While an interesting statistic, long before this study had been conceived many had dedicated efforts to address the health of the reef. The underlying reason we all rally around causes of social and environmental significance is because we all want to make a difference in solving the problems we’re emotionally connected to. From a workforce engagement perspective it is important to give employees targeted choice to support the causes closest to their heart. 

However to achieve large scale impact, Corporates have the unique opportunity to focus on a flagship cause of strategic significance. The most impactful corporates are those who have identified problems that are big in scale, neglected, and relevant to their industry, offering or organisational capability. 

Take Air New Zealand for example. They have made a commitment to tackle global climate change with a long standing partnership with the New Zealand Antarctic Research Institute. Not only do the provide monetary support, they are raising awareness during one of the dullest parts of their customer’s experience – the safety demonstration (see Air New Zealand YouTube video). In just a few days their video received over two million views, along with many comments that demonstrate their consumer loyalty and recognition as an employer of choice. 

Just like Air New Zealand, Larry Fink, head of BlackRock told chief executives to “understand the societal impact of your business”, otherwise they would lose society’s support and their “liecense to operate” (17). 

With this in mind, leading corporates are aligning themselves with the United Nations Sustainable Development Goals, and are coming together to form partnerships with other organisations and NFPs to help address the world’s most pressing problems. In many cases these partnerships will strengthen individual business cases, but when asked why they are doing this, leaders respond “put simply, it’s the right thing to do” (18).

Why should you care?

EFFECTIVE PARTNERSHIPS WILL HELP SOLVE THE MOST PRESSING PROBLEMS OF OUR TIME

THE BUSINESS CASE IN PRACTICE

Loyal and more profitable customers + engaged employees = greater shareholder value

Now that you have research backed business case drivers, let’s use a hypothetical example to bring this business case to life. 

Here we compare two similar paper manufacturing businesses, Paper for Profit and Paper for Purpose

Paper for Profit has been around for 25 years and traditionally monopolised the paper manufacturing industry in the region. Five years ago a new competitor Paper for Purpose emerged, offering the same product but in an environmentally responsible manner, and has managed to attract a number of customers as a result. 

Both organisations now have the same number of customers and employees, however Paper for Profit focusses purely on maximising short term profits. Paper for Purpose on the other hand, has a social purpose embedded into its organisation’s DNA - to regenerate more forest than their paper manufacturing consumes. They want to leave the planet in a better place than when they started. 

Paper for Purpose make their intent extremely clear in all marketing efforts, and in turn, have attracted an extremely loyal customer base who understand that a responsible product often comes at a price. Regardless, their consumers are happy to pay more for their product as it serves their social conscience. 

Recognised for its efforts, Paper for Purpose quickly became the region’s employer of choice, with people lining up to work for them. They attract and retain the best talent on offer, those who are more productive, creative and ethical - who also put in higher levels of discretionary effort. The passion their workforce has for their company brand and the work they do is impressive, especially given their product, paper, isn’t the most innovative on the market. As a result, Paper for Purpose realises less employee turnover, lower employee onboarding costs and higher rates of knowledge retention than its competitor. 

Have a look at the table on page 15 of the Why should corporates adopt a purpose led approach to giving? pdf file in this blog to see how the two organisations compare from a revenue, organisational efficiency and social outcome perspective.

Financial Outcomes: Paper for Purpose generates $10M more shareholder value than its non socially minded competitor, realising a 235% ROI on their Social Investment

Social Outcomes: Paper for Purpose planted 337,000 trees (the equivalent of 674 international rugby fields of trees) last year, delivering on their purpose to regenerate more forest than their paper manufacturing consumes

GAINING LEADERSHIP SUPPORT

Establishing a meaningful connection with consumers and your workforce provides the competitive edge to improve profitability and transform your organisational culture.

We now know that being a responsible organisation that gives back makes good business sense, and that brand protection and market share depend on the extra mile a business is willing to go to for the benefit of its stakeholders. 

So how can an organisation like yours get leadership support for a purpose led corporate giving program? There’s no doubt that the numbers are important. 

The first two business case factors around customer loyalty and employee engagement speak to the rational part of our brain: the dollarised proof that demonstrates the benefits generated through purpose led change. And this has been proven. A study on S&P500 companies demonstrated that purpose led companies outperformed the market by a factor of 10x between 1996 and 2011 (6). 

The third factor of the business case speaks to the emotional part of our brain: put simply, it’s the right thing to do. People think rationally and make decisions emotionally. 

By understanding the underlying motivations of your leadership and stakeholders, you can support your rational fact base with a crafted story that engages their emotional side. We suggest you step in to the shoes of your leaders to understand what their motivators are. Every individual is different, but to get you started here are some of the common motivators for leadership within large organisations.

Craft your message around what your leaders care about

What interests your 

  • CEO - Staying one step ahead to lead the company into the future and maximise shareholder value
  • CFO - Increasing shareholder return by improving customer profitability and operational efficiencies while reducing reputational risk
  • Head of HR - Being recognised as an employer of choice to attract, motivate and retain high calibre talent
  • Head of CSR/Foundation - Defining and embedding a community investment program that generates unprecedented social, environmental and corporate value
  • Employees - Undertaking meaningful work that provides learning opportunities and exposure for career advancement

Now you have the tools to construct your own business case, get started on making purpose led corporate giving a priority on your leadership’s agenda. 

In the meantime we’ll be pulling together Part 2 of the paper: WHAT best practice, purpose led corporate giving looks like. Stay tuned and sign up for our newsletter to get it delivered to your inbox.

REFERENCES

1. Giving Australia 2016 Research 

2. Nielsen (2015) The Sustainability Imperative 

3. CONE (2015) Cone Communications/Ebiquity Global CSR Study 

4. Deloitte (2016) The 2016 Deloitte Millennial Survey 

5. CECP Corporate Leadership Council (2015) Giving in Numbers 

6. EY (2016) PURPOSE: Can a purpose, beyond profit, really drive results and long-term value? 

7. Fitzsimmons, C. (2014) How Thankyou Group cracked the hand wash market with the most expensive product in the supermarket 

8. BBC News (2016) VW profit tumbles 20% in wake of emissions scandal 

9. Nielsen (2017) Global Trust in Advertising 

10. Newell-Legner, R. (2008) Leader’s Guide: Secrets to Keeping Our Customers Happy REFERENCES 

11. Harter, J. and Mann, A. (2016) The World Employee Engagement Crisis 

12. The Centre for International Economics (2016) The economic value of pathology: achieving better health, and a better use of health resources 

13. Babson College and IO Sustainability (2015) Project ROI: Defining the Competitive and Financial Advantages of Corporate Responsibility and Sustainability 

14. Rodell, J. (2013) Finding meaning through volunteering: why do employees volunteer and what does it mean for their jobs? 

15. World Economic Forum - 3 ways millennials are changing the world of work 

16. Deloitte (2017) Deloitte Access Economics: At what price? The economic, social and icon value of the Great Barrier Reef 

17. Financial Times 2018 - The shareholder-first corporate model erodes public support 

18. Purposed Corporate Social Impact Challenge 2018 - corporate attendee survey

‍ACKNOWLEDGEMENTS

Purposed acknowledges the work of Sarah Wilson, Chris Cousins, Katherine Jude and Spark Strategy in the production of this publication.