What Honourable Ladies Did

Tom wrote this review of ‘The Honourable Ladies Volume 1’  (Ed: Jacqui Smith and Iain Dale) for ‘Order Order’, the magazine of the Association of Former MPs, October 2018…

For review purposes I picked up this book of biographies of the 170 women elected to Parliament between 1918 and 1996 with the intention of focusing on perhaps a dozen examples from different backgrounds and histories. Despite its 650 pages I found I couldn’t put it down.

It’s a story of struggle for women both as a gender and as individuals. Some early pioneers had experienced poverty and hardship and only got to Parliament with the help of the trade union movement whilst others clearly carried a sense of aristocratic entitlement: several of these won by-elections caused when their MP husbands were ‘elevated’ to the Lords. 

Missing in those early years were the middle class women from the professional classes that dominate politics today, reflecting Britain at the time. Not missing was passion: no woman was elected by accident, every one had a cause to fight although the tenure of some was but brief. I was intrigued to learn that a woman MP had raised the issue of female genital mutilation as far back as the 1930s.

The book is littered with ‘firsts’: we can all distinguish between the first woman elected MP and the first to take her seat, that bane of pub quizzes, and know that Betty the Tiller Girl became the first woman Speaker; but who were the first woman minister, cabinet minister or Privy Councillor? Another trick question: they were all Margaret Bondfield, a divisive figure in the Labour and trade union ranks, a friend and contemporary of one of my own political heroes, Frances Perkins, the first woman in the American cabinet (1933). Only 44 women have ever emulated Margaret to sit around that Cabinet table.

Virginia Bottomley’s review of Margaret Thatcher, inevitably a longer piece, is no hagiography. I read it on the same day as attending a talk about her by Caroline Slocock, the Labour-voting former civil servant and the only other woman in the room when Margaret Thatcher resigned at Cabinet. Different takes, but clearly describing the same person, the outsider who made it to the top. Outsider? Yes: a Methodist, a scientist, a woman… perhaps also a misogynist, who appointed just one female Cabinet minister, briefly, in all her years in power.

Even before WWII, when the proportion of women MPs barely exceeded two per cent, there was evidently already a cross-party sisterhood. After the war the Commons’ female population doubled but stuck at around four per cent for 40 years, not helped by women sometimes winning their seats off other women. It reached nine per cent in 1992, the last general election in this collection, before attaining the giddy heights of one third of all MPs in 2017, still 18 per cent short of the number to which a truly democratic system should aspire.

This is a wonderful book: eminently readable, a perfect late night diversion delivered in bite-sized chunks. Jacqui Smith and Iain Dale (the only male on the production team) have done a great job in celebrating very special human beings in a hugely sympathetic way, aided by over 100 female biographers who clearly enjoyed distilling those they greatly admired whilst no doubt becoming frustrated at what they had to leave out.

Reading ‘The Honourable Ladies’ was a pleasure although I’m far from finished, having deliberately left my friends and contemporaries from both sides of the House until last. I look forward to another 300 biographies from the 1997-2017 generation and then more beyond, women whose histories have yet to be made.

 

An ESOP Fable

At the 2018 Labour Conference, Shadow Chancellor John McDonnell announced a new policy on employee share ownership…

 

John McDonnell is absolutely right to say that employee share ownership is a fair, democratic and desirable path for business to take. He might even add ‘and it’s in the long term interests of business to promote it’. But his way of going about achieving this goal, outlined in Liverpool recently, has been ham-fisted and counter productive, prompting the likes of the CBI to rail against a policy they actually support – in principle.

If, ten years go, you had invested in a portfolio of shares from the 69 listed companies where more than 3 per cent of shares are owned by employees then your return on investment today would be massively higher than if you had invested the same money in the FTSE Index generally. Business – as the CBI acknowledges – understands the value of employee share ownership; it gives bosses greater insight into their operations, better powers of risk management and all the employee engagement benefits that arise from being involved in a shared endeavour. The Employee Ownership (EO) sector already has a turnover of over £30 billion and enjoys greater workforce stability than the mainstream, not to mention special EO-transfer tax breaks. In very few EO businesses (excluding co-ops) do workers own the majority of shares.

But what Labour proposed in Liverpool was not a standard ESOP (employee share ownership plan). It was an ill-disguised tax grab. The figure of ten per cent of all shares in all larger public listed companies to be gifted to employees is arbitrary, the idea that personal gains to employees should be limited to £500 per year is unfair (when other shareholders might earn more), and giving the balance of dividends earned to the state was simply cynical. It felt like another route towards the nationalisation of the 100 biggest monopolies, and we know where that policy ended up.

But John did highlight a dilemma: on one hand we have the John Lewis model, where every employee has a stake in ownership through a trust that owns all the company’s shares on their behalf, and when you leave the company you don’t take your stake with you. On the other, there’s the Post Office, where individual employees own some of the company’s shares for life – or, more likely, until they sell them on the open market, which dilutes the link between employee and company interests over time. The former model, whether owning some shares or all, is the more sustainable.

The principle of employee ownership – especially through co-operatives – has long been a tool in the socialist toolbox. But it’s also in tune with the ‘people’s capitalism’ that Cameron, May and even Thatcher espoused; an excellent report on the subject, the Nuttall Review, was written for the Coalition government. And a Bill that entitles businesses to get loans at favourable rates where the owner transfers ownership to employees has just been passed – in Donald Trump’s America.

I think McDonnell is confusing a number of issues: profit-sharing is not the same thing as EO, though both can benefit the business through higher productivity. If you want more money from business then reverse the cuts to Corporation Tax, easy to do whilst retaining UK’s ‘competitive’ global position in the tax stakes, and reform corporate governance, not least by bringing the 2006 Companies Act up to date in relation to promoting the interest of stakeholders and not just shareholders. And devise an acceptable model of promoting employee representation on company boards.

Let’s build a sovereign wealth fund, and through it, on behalf of all the people, invest in ethical companies to generate a profit which can be used to pay for pensions, health and social care. Pie in the sky? It’s exactly what happens in Norway, recently re-confirmed as the world’s most socially progressive nation.

Employee ownership and employee share ownership should both be encouraged, but not forced through. Let’s make the case for businesses to be more inclusive in their ownership by showing that it’s in their interests, in the long run. 

Not every tide flows in this direction: whilst we all welcome Amazon’s recent decision to pay above the Living Wage to all employees, who noticed that they’re paying for this by scrapping an employee profit-sharing scheme?

Tom Levitt is a former Labour MP and the author of The Company Citizen

Company Citizen Seeks Partner For Mutual Advantage

‘Insights for a Better Way’ is a collection of almost 50 essays, edited by Caroline Slocock for Civil Exchange/Carnegie Trust and published in July 2018. Here is Tom’s contribution…

Insights for a Better Way is edited by Caroline Slocock

Once upon a time big companies did CSR (Corporate Social Responsibility). It subtly reminded employees that they were team members whilst ticking a few philanthropy boxes and was delivered by – well, that didn’t really matter. Maybe volunteers, perhaps a dedicated department with no other role in the company, rarely the HR people. And adopting a ‘Charity of the Year’ allowed the company’s goodness to be more widely appreciated; charities liked it because it was easier to get money from a new source each year than wring it out of an old one. For them, raising money was, mostly, what it was all about.

Things have changed. 

First, some companies realised that their choice of charity partner was significant: the right choice signposted the purpose and mission of the business far more than did random fluffy animals, well-known diseases or distant children, causes that polls of employees were prone to promote. Second, they realised that a year was not long enough to build a proper relationship or learn from missed opportunities. And third, cash was not necessarily king: time and skills could be at least as much appreciated as money when appropriately deployed.

This meant that new ideas could take root:

  • Flexibility, rather than the rigid ‘corporate volunteering day’, was more attractive both to charities and to participating employees.
  • As sceptics pointed out, employee volunteers were not really volunteers: they were being paid whilst working alongside those ‘doing it for nothing’. It was the company, not the individuals, that was contributing its time and skills.
  • Integrating CSR into the mainstream operation of the company, rather than treating it as an optional extra, could benefit the company.

This new generation of company citizens talked of ‘purpose’, ‘mission’ and ‘partnership’, leading to a less altruistic, possibly more honest approach: there was nothing wrong with the company profiting indirectly from its engagement with good causes. Indeed, this justifies any investment made in the process.

So, we’ve moved from employees taking initiatives to sponsor each other, bake cakes and ride bikes for money, through communal days out for painting or gardening, through providing the skills that charities and community groups need – right through to a company expressing its own mission and purpose through a strategic approach to its relationship with the community. 

‘Health at Work’ is a multifaceted British Heart Foundation (BHF) campaign. Companies that engage with it gain from reduced sickness absence, higher morale, better team building and reduced early retirement on illness grounds. The return on investment for a workplace health strategy can be as much as 34:1 based on reducing absenteeism, accidents and staff turnover and the resulting improvement in productivity. Participating companies also report better employee engagement and internal communications. At Asda’s distribution centre in Leicestershire BHF promotes its Workplace Wellbeing Charter. Here, on-site gym membership costs employees £3 per month and the company supports free fruit days, helps employees buy bicycles, offers smoking cessation clinics and health checks and even stages a ‘coast-to-coast’ static cycle event to raise money for BHF. The Asda scheme initially reduced absenteeism by 1.5 per cent – worth £200,000 to the company, a massive return on a £20,000 investment, in a single year.

Four hundred employers and 10,000 individuals have backed the Time to Change pledge. Led by charities Mind and Rethink Mental Illness it’s a commitment to change attitudes and risks around mental health. The charities help create bespoke workplace plans including events to support mental health Champions. Longstanding supporters include Transport for London, Imperial College, E.ON, Anglian Water and Lloyds Bank. A manager in a big white-collar company noted that the main cause of death in adult males under 40 is suicide. He said: ‘Ours is a stressful business and our median employee is a 29-year old male; we need to manage them carefully.’

In America the Dell Foundation, a major source of philanthropic funding, has identified a significant shift in their charity partners’ needs, away from cash and towards skills and expertise. They describe the shift as from capital to competence, intervention to innovation, coordination to collaboration and short-term fix to long-term involvement. Given a choice between a $100,000 gift and an equivalent value in counselling, skilled volunteering or access to decision-makers only four in ten of Dell’s 700 partner NGOs, worldwide, would today choose cash. Just four years earlier that figure was seven in ten.

Collaboration between charities and businesses has always existed and is ever evolving. No longer is it acceptable for corporates to write cheques to hide their misdemeanours, boost short term sales or please the apocryphal chairman’s wife; one way traffic is, in many cases, over. What’s happening today in the best cross-sector partnerships between the private and voluntary sectors is mutual respect and common advantage, longer term relationships based on shared interests and complementary skills. 

Unlike the ‘here today, gone tomorrow’ era of the Charity of the Year, this is a truly sustainable development.

Tackling the Poverty Premium

In April 2018 Tom co-presented a paper at Edinburgh University with Professor Alex Murdock of London South Bank University. The Conference was the IRSPM and the theme was business solutions to problems where the public and voluntary sectors had proved absent or ineffective.

Alex provided the academic context whilst Tom wrote most of the paper and told a workshop of academics and practitioners from around the world about Fair for You, which he had helped found in 2015.

Here’s the paper.

 

Local Value for Local People

In this article, Tom Levitt, author of The Company Citizen explores the use of social value and the frustration of measuring it. It appears on the City View web site. Tom will be discussing these issues at Commissioning and Procurement for Growth National Conference on the 27th March in London.

 

As a CEO in the social finance sector said recently: ‘More people are measuring social value than creating it.’ I understand that frustration – though there are certainly more of both doers and measurers than there used to be and that’s welcome.

Social value and impact have become part of the vocabulary not just of service delivery but of all activity in the three sectors, public, voluntary and private.

One very good reason for this is that having one eye on social value enables budget holders to deliver more from what, in the public sector, at least, are ever-dwindling budgets.

However, six years after the Social Value Act came into being, and more than a dozen since ‘Impact Investing’ became a thing, we still lack a common, agreed statement of principles, let alone a practical method of measuring and comparing the different ways in which organisations create change in society.

Whether their activity is social or environmental, implemented efficiently or otherwise, delivering outcomes against targets or simply assumed to be ‘good’, the need to measure is getting more imperative.

Commissioners, procurers and procurees, investors, donors, boards and governments, all contributors to the common good, want meaningful, cost effective and measurable outcomes.

Essentially, the Social Value Act allows (but doesn’t require) local authorities to take into account the ‘social value’ a company delivers when considering whether to accept its tender for delivering a service.

This value can justify awarding a contract to a company if it exceeds the difference in value between that bid and the lowest bid by up to a specified proportion of the contract price, normally ten per cent.

There are thresholds and limits to the Act’s scope but those who make the most of it often set their own criteria.

The Act applies to all government agencies, with large councils the most likely to use it, some specifying which types of social value they want to see delivered by which contract.

Private companies such as Fujitsu voluntarily apply the Act’s criteria to their own procurement practices.

Defined by Social Value UK as ‘…the quantification of the relative importance that people place on the changes they experience in their lives’…social value is normally expressed in monetary terms, though the processes by which this is calculated are varied and somewhat arbitrary.

This makes it difficult to offset the value against the ‘bottom line’; hence the frustration. This is less of a problem for impact investors – normally high value, outcome-driven, corporate philanthropists – who tend to invest in large scale development schemes designed to deliver long term outcomes against specific goals with a readily measurable monetary value.

This wish to quantify non-fiscal outcomes is no longer confined to the charity and public sectors. As companies sign up to deliver the UN’s Sustainable Development Goals, or simply become more aware of the commercial imperative to be ‘responsible’ in everything they do, businesses need to take seriously measurement of the social and environmental changes that they cause.

From the global to the local: a number of councils around the country have taken social value to heart and its footprint can be seen in all of their activities.

Few have done this more intensely than Preston, a city both big enough for a policy of local spending for local people to have a real, observable and positive impact and small enough for that focus to generate a sense of local community and purpose.

There are inherent problems in achieving a common approach to recording social value, not least the intellectual challenge of comparing the value of different elements of change, which includes the emotional and intellectual reward gained by the people delivering it (social value is a strong motivator of employee engagement).

There’s a common failure to distinguish between outputs, outcomes and impacts, a shortcoming which too often results in the proxy measurement of inputs posing as outcomes: ‘my company delivered 10,000 hours of volunteering this year’.

Indeed, one recently launched ‘impact measurement tool’ is no such thing, pretending to measure change by combining a handful of quantifiable inputs.

This story illustrates what’s supposed to happen when employee volunteers turn up at a community centre with their paintbrushes: the input includes the hours of labour and the paint, easily quantified.

The output is a pristine wall of a calming colour. An outcome is that users show greater respect for and pride in their facility and the impact is that this contributes, along with many other factors, to reducing community tensions. As the chain grows in complexity the direct link between the hours spent painting (itself dependent upon volunteers’ efficiency) and any reduction in street crime becomes more tenuous.

Different funders and investors may seek different outcomes.

Consider an organisation which helps teenagers at risk of entering gang culture: it provides them with support at school and counselling for their families.

Some of its operations are funded by a council contract, the rest through charitable fundraising. The council wants to see repeat juvenile offending reduced thereby saving money for public services.

A foundation wants to know how many children engage with the organisation and how community perception of young people has changed. A potential donor wants an assurance that the organisation isn’t spending excessively on administration, fundraising and running costs. And a local business has offered to provide work experience for some – though not those at high risk of offending as they pose an unacceptable reputational risk to the company (even though a positive outcome for them would create more social value than for those posing a lower risk).

There are four ways to arrive at a common approach to measuring impact or social value:

  • make it simple, aiding comparability
  • make it complex, maximising transparency, accounting for all outputs
  • compromise, pleasing no one
  • measure impacts in different but appropriate ways for different purposes

All of these approaches present challenges.

As for companies and government agencies, so for countries. GDP is an inadequate but oft-used measure of a nation’s worth, measuring as it does the value of commercial transactions (including, controversially, drug trafficking and prostitution) but excluding investment in education or culture and certainly not including the negative value of environmental damage.

Campaigners within the business world calling for ‘internalisation of externalities’ are growing in their call for negative impacts to be measured as assiduously as the positive, such that the currency of impact measurement (and, indeed, social value) should become a net figure rather than a headline one.

Perhaps the Social Progress Index or a system based on the Sustainable Development Goals should be the norm between nations? Can these myriad measures, this vortex of values, be rationalised or is a common system of assessing social value and the like an impossible dream?

In 2016 the British Standards Institution called together a variety of people interested in social value and asked us what we thought. There were broadly two camps: one believing that monetisation of social value was a goal in itself and the other that the solution was more nuanced, tending towards the fourth of the bullet point alternatives above.

Today, in 2018, BSI has established a committee of the willing to explore the practicality of a common framework and measuring system for social value, or net social change, or impact, call it what you will. We will look at the issue over 18 months and hopefully reach a consensus; part of our work will surely be to assess the different frameworks that already exist.

For example, I know of two procurement guides which allot unskilled volunteering time (an input!) a monetised common value, of £13 or £14 per hour respectively, deemed to be the typical cost to an employer of having the equivalent work done by an employee. But they disagree significantly on the value of pro bono professional advice, with one citing £25 per hour and the other £84.

Unravelling these knots is a challenge to which we must rise.

We need to alert businesses to the benefits of delivering social value in their everyday operations as much as we need charities to better report on what exactly changed as a result of their deployment of donors’ funds.

Meanwhile the public sector, always assumed to be the epitome of social value delivery, will not be reversing its shrinkage of recent years nor meeting society’s future challenges alone. Knowing what we change, for good or ill, and taking responsibility for it is both a start and a challenge for all sectors and organisations.

Tom Levitt, author of The Company Citizen


Find out more on this topic:

Commissioning & Procurement for Growth
Quantifying Social Impact in Business and Public Services
Tuesday 27th March 2018
Mary Ward House Conference & Exhibition Centre, London , WC1H 9SN
Visit the conference website

Why Should Business Give to Charity?

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.

Is Corporate Giving really on the Wane?

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.

Companies must be responsible; can they be Company Citizens?

I’m pleased to feature a GUEST BLOG from John Tizard, a fellow consultant with vast experience of the public, private and voluntary sectors.

Tom Levitt is a zealous disciple for the cause of responsible business and for businesses creating public good. In his new book, ‘The Company Citizen – good for business, planet, nation and community’, (Routledge 2017) it is apparent that his zeal has not diminished.

John Tizard

Indeed, his passion for the subject (as well as his knowledge of it) leaps out from every page.

In my view, Levitt rightly argues that businesses (be they large, small, local or multinational) have an absolute responsibility to the societies within which they operate, and to the wider public interest. However, there is a long litany of companies that have failed communities, society, their staff and even themselves. Ones that have had poor governance; ones led by people more concerned with amassing personal wealth rather than the public good; ones that are more concerned with short term profit maximisation at the expense of long terms sustainability and social responsibility.

Can businesses self-regulate? Can they adopt a responsible approach? Can they be ‘Company Citizens’? Does contemporary capitalism and consequential business practice drive irresponsible short termism and selfishness? Tom Levitt is of the view that more and more are committed to being responsible and recognising their wider social, environmental and employer responsibilities; and the opportunities that such approaches can create.

As Levitt evidences, some recognise these opportunities and are already taking appropriate action. Many large corporates have invested in this agenda but let’s not forget the many thousands of small companies that simply play a vital and positive role in their local communities. They don’t need glossy brochures or corporate departments to do this. It is simply part of their DNA.

In ‘The Company Citizen’, Levitt describes the attributes of a good ‘company citizen’ and cites numerous examples of companies that have shown leadership in one or more of the behaviours listed above but also argues strongly that it is in the interests of businesses to go further – much further.

Levitt makes the case for moving on from the traditional concept of ‘corporate social responsibility’ (CSR), where companies write a cheque to charity and/or encourage their staff to donate money and/or time to charities and community activities. He also bursts the cynical myth that CSR can be used as an excuse or cover for poor and unethical business practices.

Whilst philanthropy has a role to play, Levitt says that it can often be too donor focused. He quotes Martin Luther King as saying, “Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice, which make the philanthropy necessary”.

Levitt argues that businesses should commit to finding practical solutions to societal, environmental and economic problems. I particularly liked the example of Manchester

United FC (maybe because I am a supporter!) taking responsibility for its supply chain. On discovering that some of its footballs were being produced in factories where workers had little choice other than to bring their children to work with them, this leading football club as a business supported the establishment of creches at these factories. The book has many other examples of responsible supply management and companies going out of their way to solve external (but still linked to their business) problems, including ensuring their own procurement and contracting practices support SMEs, charities and the social sector.

Levitt is very strong in arguing that voluntary action by companies of all sizes and types is more likely to secure sustainable behavioural change than regulation. Yet we know that there are too many rogue companies.

There is evidence in many policy and practice areas that changing laws alters behaviours and more dramatically than nudging or peer pressure albeit that it can also lead to minimalist compliance rather than enthusiastic action.

Of course, whilst there are many companies that will recognise the benefits of being good ‘company citizens’, inevitably there will always be some rogue businesses and business leaders who don’t even meet moderate standards of behaviour, and some who actually act criminally. For these companies, Government must regulate to set minimum standards and be prepared to enforce them rigorously. It should align its public procurement with this agenda and drive good practice through publicly owned companies.

Levitt highlights examples of where companies have challenged ‘bad government’. For example, many US companies are not simply rolling over and accepting President Trump’s immigration and climate change policies. They are taking practical actions, which they believe align with the public interest as well as with their business interests. Now we see companies distancing themselves from the NRA in the aftermath of the recent US school killings.

Social activists can play in putting pressure on companies to change and to refine their behaviours. Groups as diverse as Occupy, Greenpeace through to consumer groups and local community groups have demonstrated that such pressure can be effective. This is core to the democratic process; and progressive companies should support and welcome such action.

Of course, social activism of this kind can also be strengthened when it aligns with trade union activism. I wonder if Levitt does not stress the importance of trade unions because of the massive decline in union membership in the private sector. And I personally wonder if an additional element of being a good ‘company citizen’ should be to encourage and facilitate union membership, and to involve unions and staff in all core company decision making.

What is certain is that to secure the significant advance that that Levitt proposes, it will be essential for investors, shareholders and owners to embrace the concept of ‘company citizenship’. Levitt describes: where this has happened; why it has happened; and the resultant benefits. And he makes a strong case for demonstrating that shareholder activism together with social action, government encouragement and consumer pressure could lead to significant movement for ‘company citizenship’.

Anyone who reads this book will fail to be challenged and impressed by Levitt’s call for businesses to shift the paradigm and act as ‘company citizens’ because this is in their best interest. This is a powerful manifesto. And whilst it is pleasingly passionate, it usefully draws on numerous case studies and offers practical advice for companies, and for government.

Levitt has set out a manifesto for responsible business and because it is a manifesto we can understand why he has not highlighted bad behaviours and poor practice as a different style of book might have done.

Having read the book three critical questions spring to mind:

  • will companies rise to the challenge and the opportunity, and if they don’t, what (if any) will be the consequences?
  • what should Government do – to regulate, to encourage best practice and to address those companies that fail to live up to Levitt’s aspirations or do worse?
  • is Tom Levitt being over optimistic or even a touch naive?

The reader will shape their own answers as will the key stakeholders, but on reading the book no one will be in any doubt about what the author thinks and his commitment to his progressive cause.

‘The Company Citizen’ should be read and absorbed by business leaders, investors, politicians and policy makers, trade unionists and social activists.

John Tizard, February 2018

Should charities pay any tax?

How seriously should we take calls to scrap all taxes on charities? Should we do the same for businesses that do good? (Originally posted on Linked In)

When I see a senior person from charity finance arguing that charities should be exempt from all taxes I’m tempted to reach one of two conclusions: either the Chair of the Charity Tax Group, John Hemming, has forgotten what taxes (and charities) are for or he’s simply setting an Aunt Sally running to see how many salute it, if I may mix my metaphors.

Whilst mansplaining the first option I hope I can do justice to the intellectual challenge of the second.

People and companies pay tax in order to do good. Such ‘good’ comes from funding common action to address common social and other problems: a service to help us when we’re sick, to educate our children or to address poverty and social exclusion through the benefit system, for example. Whilst we can all agree that ‘the defence of the nation’ should be included we may disagree on how that’s best achieved. Meanwhile, no one can sensibly argue that we’re spending too much on social services or elderly care.

Taxation redistributes wealth and few would disagree that the richest should contribute more than those less able to (though to what extent is always good for a pub debate).

Charities enjoy several tax advantages in exchange for delivering ‘public benefit’. There’s controversy over what this means, especially where independent schools are involved. The comedian (and economist) Simon Evans recently drew attention to the absurdity of Gift Aid: the more you give to charity the more the state subsidises your giving – using money that might otherwise be used for ‘doing good’.

This slightly irrational position sees a shift of resources from organised, focused intervention at scale by the public sector and in the public interest towards chaotic, diversified investment in… lots of stuff, delivered by a host of myriad charities. Little wonder some senior people on the left are reported to be sceptical of charities as service providers – in any situation.

But not me. I think it’s right for charities to bring innovation, local expertise, caring values and alternative ways of delivering services into the public domain and right that Government partners with them in that delivery. Whilst charities should never be the vassals of government, should always have access to funding from independent sources too, professional partnerships between charities and the state frequently make great contributions to society.

I’m also in favour of businesses doing good, as I outline in my book ‘The Company Citizen’. Companies have a duty to behave responsibly in respect of community, stakeholders and the environment, and there’s a long term business case for them to be proactive in doing so. In fact, we need them to address climate change, food poverty, resource management on the international scale that only companies can.

Some argue that companies who do good should be rewarded with tax reductions; this idea should get very short shrift. After years of cuts in public spending we can see that we should not be spending taxpayers’ money in ways which aren’t focused on need. Companies that cut their carbon footprint will save money in the long term and gain a business advantage from doing so, they don’t need a tax cut to achieve that.

So we’re left with a rather uncomfortable feeling that maybe taxpayers shouldn’t be subsidising charities as much as they do, let alone singling them out for tax cuts. But charities aren’t companies and they can’t gain from ‘doing good’, which is a cost for them, not a net benefit.

Actually, other than Gift Aid and the VAT issue there’s no wholesale subsidy of charity operations, despite what recent commentators on various Oxfam issues have implied; most taxpayers’ money that goes to charities goes straight into services for those they help, often the poorest and most excluded members of society at home or abroad.

The best thing is to quietly park the ‘scrap the tax on charities’ agenda, Mr Hemming. I suggest you do so!

The ex-Minister and his Trumpian ‘Facts’

As a former MP, Tom responds to the former Charities’ minister’s attack on Oxfam – and on charities generally.

Did Rob Wilson learn nothing as the Charities’ Minister?

I never thought I’d do it. I registered as an online Daily Telegraph reader so that I could absorb the thoughts of Rob Wilson, the former charities minister who lost his Reading seat at the last election. Had the commentators quoted him correctly? Unfortunately, they had. To dismiss Oxfam as he does, as a ‘left wing pressure group’ who therefore cannot have their views taken seriously, not only lacks evidence but is wholly irrational. That he learned so little in his time in office is a poor reflection on my former profession as a Parliamentarian.

Let me first pay tribute to some very sensible Conservative supporters and members, who play key roles in many major charities. They will feel offended by the implications in Wilson’s words that passionate support for a campaign or cause is somehow unworthy. The charity world needs Conservative activists just as much as it needs passionate and conscientious people of other hues. As a serial charity chair myself, and a lifetime Labour Party member, let me assure him that I’m very aware of the need for charities to behave in ways that are not seen to be Party-political. That doesn’t mean we can’t make a case.

Not only are lefties in my position aware of our legal duties but we actually agree that charities should not behave in overtly party political ways. When I chaired the All Party Parliamentary Group on Charities I never expected them to roll over, I expected them to challenge government. In part, that’s what charities are for! We want people of all political views to share charities’ commitment to social and economic justice and join our campaigns and activities. Or perhaps Wilson believes that ‘social and economic justice’ can only be a leftwing idea? Nonsense.

Nor, Mr Wilson, do charities campaign for ‘state handouts’ as if they had a divine right to exist. State handouts, as you may have noticed, are emergency measures which are not sustainable in the long term; there’s nothing charities would like more than to not have to ask for money – not for themselves, but for their beneficiaries. The idea implicit in Wilson’s view, that having more money circulating in their economy cannot be any part of a solution to people’s poverty, is simply bizarre.

This leads to my most serious concern about the former minister’s position: his Trumpian engagement with facts. I used to chair an international development charity (not Oxfam) and I know that no charity is more committed to ‘the market’ in its operations than is Oxfam. A decade ago I watched the journey of the international organisation of which Oxfam UK is a part. They realised – and then committed to the idea – that developing effective and efficient markets is the most sustainable way of helping people with next to nothing become economically viable in places like Africa. They moved away from a focus on ‘aid’, short term alleviation of the symptoms of poverty, towards ‘development’, the honing of processes to help the poorest people help themselves. That is not communism, Rob, it is not a ‘failed left-wing economic model’ as you claim: it is the fair and inclusive operation of a market economy.

Thank goodness the rumours that predicted Rob Wilson’s next career move to be the Charity Commission were wrong. Charities, led by a politically and otherwise diverse group of people, need partnerships and friendships with Government (and political parties) but they must always be critical friends.

That’s a lesson this former minister clearly never learned.