In his book, The Company Citizen, Tom Levitt argues that businesses should work with charities for the good of society – but also in their own interests. This article was written for the website What Charity, ‘the Tripadvisor for charities’, launched in March 2018.

There’s no shame in advocating that business should have a reason for giving to charity that’s more than the moral, slightly guilt-tinted one of ‘giving back’. A business case for a company to work with charities makes it sustainable and repeatable, helping build positive community engagement into the company’s operations.

Superficially, companies find the charitable giving of cash tax-efficient but this is where business giving should start and not end.

There’s much evidence that companies known for their support of charities enjoy greater interest and loyalty from their customers. M&S maintains its successful partnership with Oxfam, notwithstanding recent events, and Boots’ liaison with Macmillan Cancer Care is now six years old. In both cases the relationship is not confined to cash but includes employee volunteering, training, skills exchange and strategic gifts in kind. Gifts in kind can reduce waste, surpluses and processing or disposal costs.

For companies seeking contracts with local authorities all of these activities can count towards the ‘social value’ that the law allows public bodies to seek from their procurement practices. Some businesses support ‘Buy Social’, a campaign in which they deliberately use their procurement powers to favour social enterprise suppliers, businesses which rank social or environmental goals as a greater priority than the maximisation of profit.

Perhaps the biggest prize businesses can win from working with charities is employee engagement.

Allowing employees to donate to good causes, perhaps through payroll giving, gives them a level of involvement and control; allowing them to use company time for fundraising, ditto. This is just a start! Where the company allies its own power to support charity with that of its employees an even  greater sense of purpose amongst staff is generated; it’s this purpose which generates employee loyalty and engagement. ‘Time volunteering’ creates a team spirit and can deliver greater impact than can fragmented individuals.

Where employees have the opportunity to use their professional skills in a good cause, a process which allies company purpose and mission with long term commitment, with the aim of bringing about a sustainable change for the better in the world, engagement is heightened yet again. Some companies allow every employee up to three days a year of paid leave to support such work.

An engaged employee is more committed for the long term, more productive and a better ambassador for their company than is a less engaged one. Bearing in mind that employee engagement in British business generally is at rock bottom whilst UK productivity has not improved in a decade, positive, active, sustained support of charities by businesses can only be a good thing – and not just for charities’ beneficiaries.

Tom published this article on Linked In, in response to a recent CAF report:

The Charities Aid Foundation (CAF) has been performing a valuable service for 90 years by safeguarding philanthropic funds around the world to help charities build resilience, develop infrastructure and create opportunities for positive social change; in short, to act as a force for good. It’s also a valuable observer and commentator on the state of the charity world and civil society generally. Its latest report, ‘Corporate Giving by the FTSE100’, is very welcome. In a friendly and positive way, however, I’d like to suggest a few issues to bear in mind when reading the report.

My concern is that the headline news, that corporate donations to charity are down by 26 per cent in cash terms since 2013, comes with far too many caveats. Since 2013, reporting of corporate donations to charity hasn’t been obligatory so, the report concedes, some FTSE100 members have ceased doing it. The report seems to imply that those not reporting (whilst others continue) have something to hide, but this need not be the case. The report again concedes that the donation of corporate cash to charities, when expressed as a proportion of pre-tax profits, has actually been going up: indeed, the trend line for this figure suggests it has doubled (from 1 to 2 per cent) since 2009.

It could therefore be argued that – relative to what they can afford – businesses are being more generous, not less, than they used to be. And this is over a period when the proportion of pre-tax profits being paid out to shareholders has gone through the roof – one explanation as to why wage growth has stagnated for a decade. Although charities have not fared as well as shareholders from corporate bonhomie over this period, relatively speaking they’ve done a lot better than employees.

CAF correctly argues a business case for companies to engage with charities:

‘Companies are increasingly recognising that they need to better demonstrate their value, both social and economic, to maintain public trust.’

Indeed, more than half of British consumers are attracted to companies known to support a charity. But there’s a danger of the pot calling the kettle black! According to the perennial barometer of trust, Edelman (whose report is cited by CAF), confidence that business can be trusted to ‘do the right thing’ is indeed falling, to 52 per cent at the last count. CAF doesn’t mention that Edelman’s figure for charities – at 53 – is hardly any better. Recent stories featuring Carillion and Oxfam will have done little to boost either of these figures.

Most worrying about the CAF report is that it assumes that engagement with charities is the only measure of a company’s ‘good’. It repeats the idea of support for and duty towards charities several times without mentioning the ultimate beneficiaries of such philanthropic activity. Perhaps, just perhaps, some businesses have found a better way of engaging sustainably with communities and the environment than through charities?

The report is based on a common means of assessing corporate engagement, the well established and respected London Benchmarking Group (LBG) Index, a measure of cash and in-kind donations and the value of work hours donated through employee volunteering plus associated management costs. LBG metrics are applied to FTSE100 reports even where the company has not itself adopted the LBG method. And that’s a problem: conscientious companies are increasingly concerned not about the inputs that they make to society but about their outputs, outcomes and impacts – the changes that their activity brings about. Although the LBG Index can be used to measure outcomes it’s essentially a measure of inputs – a situation reflected in too many corporate reports. Applying an outcome-based analysis – ‘What’s actually changing as a result of our actions?’ – is not only responsible in itself but may prompt the company to then ask ‘Is investment via a charity the best way to achieve this?’

The American Dell Foundation works with 700 charities worldwide. Each year it asks its partners ‘How can we best support you?’ Five years ago an overall majority said ‘cash’; today the biggest single reply was not cash, nor even volunteer hours and skills, but measures to develop leadership and impact. Even more pertinent, when asked where the source of ideas for impact and social change would be in the future 62 per cent said social entrepreneurs, 40 per cent said people living on the front line and only 32 per cent identified local voluntary organisations. Dell isn’t in the FTSE100 but if this change in emphasis, reflected elsewhere also, is happening in Britain then ‘Companies listening to beneficiaries’ may have contributed to CAF’s results.

If a company is looking to work with a government agency or a local authority it may be required to report on the ‘social value’ it generates. The Social Value Act is agnostic on whether such value should be delivered through a charity partner. But businesses that increase their investment in apprenticeships, reduce their carbon footprint, build a comprehensive relationship with schools can all claim to be delivering social value – without using charities as an intermediary. Such beneficial and positive engagement does not feature in CAF’s accounting.

Take Lifebuoy soap: in many parts of the world Unilever has reduced the size of the soap bar (along with the price) to deliberately make it more accessible to people on lower incomes. Alongside this, the company has been campaigning in high risk countries to raise awareness of water-borne diseases such as cholera. In those areas a lot of soap is given away but a lot’s sold, too – and lives are saved as a direct result. Although local charities do support the Unilever campaign they are not an integral part of it, so nowhere in the CAF methodology could this ‘good’ be recorded.

There’s no shame in companies admitting that boosting employee engagement (a route to enhancing productivity) can be a valuable outcome of engaging charities. But getting workers on board with the company mission and purpose isn’t just about words: it’s about workers realising that they and their work can ‘make a difference’, ‘change things’, even ‘deliver social value’. A bike ride or cake bake might create a team spirit and raise money for charity but it only ‘makes a difference’ at one stage removed, when the charity spends it. Employees who volunteer in company time (using company skills) can create more change in a child’s life, and feel a greater sense of involvement in that change, by working with them on reading skills than by any number of miles covered whilst wearing lycra.

So, panic not. The headline fall in corporate sponsorship of charities might actually be a good thing: it might reflect company ownership of their impact, evolution of their social purpose alongside their financial one, reflect a development of the values of the ‘company citizen’. We should not read this CAF report as saying that companies are moving away from facing up to their social and environmental responsibilities.

Tom Levitt, author of ‘The Company Citizen’, outlines why responsibility and sustainability are important for businesses of all shapes and sizes. This piece was written for Heart of the City, the City of London Corporation’s excellent programme for SMEs in the City.

‘How do we do Corporate Social Responsibility when we’re not a big corporate?’ was a common response to some research I did a while ago which asked how smaller businesses engage with the community. ‘And what would this CSR look like, anyway?’

The vast majority of Britain’s businesses have fewer than 20 employees. Such companies may have no human resources specialist, no strategy for community engagement and certainly no ‘CSR department’. But they’re aware of the community around them and many simply take it for granted that some form of community engagement is both expected from them and the ‘right thing to do’. In that sense, they gain from some of the benefits of engagement – though not all.

Very few businesses would say ‘no’ to a group of employees who wanted to raise money for a charity in company time, a school requesting a raffle prize or a good cause in need of some product which the company had classified as waste or surplus, but these are all reactions to external prompts. It helps to get on the front foot, not just to anticipate future requests.

It helps to have a strategy. If environmental responsibility (which, by the way, can pay for itself sooner than you’d think) demands a plan then community engagement does too. No sensible company would want to reduce its carbon footprint by responding to every new idea that comes along, switching electricity providers every time the tariffs change.

The benefits of such a strategy to those on the receiving end are clear: they’re usually charities who get money, goods, even volunteer time and skills which they wouldn’t otherwise have, though there are tangible gains for the company, too.

Such as: where an employee believes that their employer cares about the same causes as they do then a bond of engagement is created or strengthened which will benefit the company. Where that cause is related to the mission of the company the bond’s even stronger; engaged employees remain with their company longer, are better ambassadors and more productive than those who are disengaged.

For example, I met an employment agency that asks all of its staff to spend up to three working days each year volunteering to work with unemployed people, including graduates, in a deprived community. They teach them to write a CV, help them practice job interviews and, through building relationships, witness first hand how their effort is creating opportunities for people worse off than themselves. In the four years since the company took this initiative staff turnover has fallen, job satisfaction scores have risen and people have come to the agency looking to work there because of the caring reputation it has created. Similarly, trained staff at local branches of Boots Opticians spend time volunteering to help pre-school children learn to read, whilst informally checking their eyesight and referring them for free treatment where necessary. This scheme has won awards and creates huge levels of job satisfaction. I know of a steel stockholder with four employees where the team spends time every month carrying out odd manual jobs, such as repairing fences, for local good causes; and a garage mechanic who openly adds £1 to every invoice, creating a pot which he donates to a local charity each month.

Then, of course, there’s the charity fundraiser – the cake bake day, the cycle ride, the sponsored walk. Whilst these can certainly raise money they don’t create that sense of engagement and purpose in quite the same way.

There’s evidence that skilled volunteering takes place even within the very smallest companies, which are often ‘time poor’. An accountant might audit a small charity’s books for free in a couple of hours, a better use of her busy time than half a day litter picking or digging an old person’s garden. Skilled volunteering itself – updating a charity’s web site, perhaps, servicing a youth club’s minibus – can help an inexperienced employee gain valuable skills. Even listening to children read in schools can teach an employee ‘soft’ skills like empathy, patience, clarity, essential for a career in customer service.

However, responding to such requests can cause chaos if the company gets a reputation as a ‘soft touch’! This is where a strategy helps: how much money will the company donate to good causes this year? How many days will it allow for team building exercises (as team volunteering can be, when handled properly) and how much company time will be spent on volunteering and honing skills in aid of good causes?

So that’s environmental and employee engagement sorted. But more can be done! By paying the Living Wage as a minimum (a calculated level of decency slightly above the legal minimum) employee engagement is boosted again, even amongst those above that pay grade. Adopting the Prompt Payment Code, pledging to pay all valid bills within 30 days, helps supply chains – as many SMEs know to their cost, complaining legitimately that too few big customers acknowledge this. And building a broad, ongoing relationship with a local school, contributing to their curriculum, sponsoring their sports team kits, offering them apprenticeship places, can be a cost effective way of adding a new dimension of responsibility to an SME’s work.

This is the tip of the iceberg. Reducing plastic usage, recycling better, using cleaning products that don’t damage the environment, sourcing materials using fair trade and ethical criteria, such as sustainable timber, and using the Social Value Act to your advantage represent the next layer. And you wouldn’t want to be sourcing from a supplier that kept staff under conditions of ‘modern slavery’…

Social and environmental responsibility are really just common sense, looked at through the lenses of strategic and long term thinking. ‘The Company Citizen’ celebrates companies that take their citizenship role seriously – companies of all sizes, shapes and natures.

Next time, your company’s good work could be featured!

What does the Carillion affair tell us about the future of the private sector in service delivery? It’s nothing like as simple as saying ‘no more’! What’s the Company Citizen’s approach?

It’s inevitable that, in the future, private companies will provide more services to the public than they do today.

This might sound extraordinary, in the light of the Carillion affair, but what’s the alternative? Spending cuts and austerity, especially at local government level, mean that the state no longer has the capacity to deliver conventional services on the scale we need; whilst our traditional, Attlee-esque view of the public sector struggles with diversity and complexity. With the whole of the public sector in a mess, if we don’t regard the private sector as, at the very least, an asset or partner in its recovery, we won’t succeed in putting it right within a generation.

This is not to say that the ways in which outsourcing has been conducted hitherto were right. Whatever the undoubted strengths of our civil service, commissioning skills have not been allowed to develop in the way they needed to. In short, government has been dictated to by a handful of large companies who don’t necessarily share the values needed to deliver services which are essentially about caring.

The following criteria should ring alarm bells in the offices of Chief Commissioners of Services in government departments:

• Companies which have grown huge through acquisition. Although size may sometimes bring reassurance, acquisition itself provides no evidence of success in delivering services.
• Companies with highly volatile share prices, because they are probably being dictated to by small groups of profit-hungry shareholders. (Note that companies which have abandoned quarterly reporting, to think longer term, tend to have more stable share prices).
• Companies which are so big that their internal structures of accountability don’t work (which explains how some recent scandals, such as payments for handling non-existent prisoners, arose).
• Companies with excessive levels of inequality within their employees. These continue to pay bosses after they’ve left, protect executive bonuses at the expense of pension funds and have low levels of employee engagement.

Unfortunately, as regards the current crisis, Carillion meets all of these negative criteria. In fact, most of our biggest outsource companies have lost one or more CEOs in recent years, seen their share prices tumble and issued profit warnings. This is because – back to austerity, but add in the toxic fear of Brexit unknowability – the supply of new big public sector contracts has simply dried up. We’ve allowed some private partners to walk away from contracts they don’t like, such as on the railways, when involving them was supposed to be a way of managing risk! This should not be allowed without repercussions.

And yet… some outsourcing companies have developed excellent working methods which, where they work, receive no publicity and therefore little credit, including partnering with charities to allow them to deliver services at an unprecedented scale. HCT (formerly Hackney Community Transport), one of the country’s largest social enterprises, delivers transport services on a massive scale. Recently Cordant, previously regarded as just another outsource company, remodelled itself with a flatter pay structure, more employee involvement and more recycling of profits. Is this a flagship for service provision of the future?

The fact is that personalised health and care, investment in the prevention of poor health, better local housing and transport, all demand more (and more accountable) local autonomy in the way that they’re delivered. This needs huge investment, especially in the period of transition in which we find ourselves, in the eighth year of a government which doesn’t really believe in governing. We’d all love for the taxpayer to ride to the rescue but, in the short term, that ain’t going to happen. The private sector has access to the money – profits associated with share price changes may exist only on paper, but many have seen real profits blossom and dividends rocket as wages have been held back. We need such money invested in providing services, either on behalf of or complementary to those of the public sector, driven by a reasonable rate of return.

Above all, we need to see companies take on a long term approach to services that is not only financially healthy but delivers responsibility, sustainability and ethics, too.

This article first appeared on Linked In