On 19 September Tom Levitt spoke to the IAVE conference on the subject of ‘Small and Medium Sized Enterprises: a new Resource for Volunteering.’ Here is his speech.
In 2011-12 when I was researching my book, ‘Partners for Good’, about the way in which cross-sector partnerships had changed in Britain over the previous 15 years, I became aware of the lack of research about the way in which SMEs – small and medium sized enterprises, those with fewer than 250 employees, according to the European Union definition – engaged with the communities around them.
Indeed, I found only one such serious report in the previous ten years in Britain – a couple of others having been carried out in Europe.
This was, of course, a period in which corporate social responsibility – emphasising the large corporations in Britain and across the world – had progressed to a relatively advanced stage of evolution: from the antagonistic sparring between civil society and corporates of the 1960s and ‘70s, through chequebook philanthropy, to the era of Charity of the Year and, more recently, common marketing and even mission-driven delivery partnerships in which businesses and charities identified common goals, delivered complementary activities and achieved real social change together.
The exciting new frontier of partnerships is the corporate citizen recognising a social evil locally and recruiting voluntary organisations to address a cause together.
This may be the exception and not the rule, of course; but, when charities’ operations are supplemented by business scale and capacity, much can be achieved. but where, I asked, were SMEs on this map?
* * *
I used to be a politician; I was a Member of the British Parliament for 13 years. One reflection I have on that period is that there is a limit to what government can achieve alone; and that few charities really have the scale and capacity to make a real difference on a national scale.
So, if public sector and voluntary sector together cannot make the difference that dignity, justice and fair distribution of opportunity demand, who can?
Let me give you a clue:
- Back in Britain, the turnover of Manchester United, the world’s fourth richest football club, is £350 million (that’s nearly US$600 million).
- The turnover of Oxfam UK, our largest international development charity and the seventh biggest charity in Britain, is also £350 million.
- And £350 million is also the turnover of one large Tesco superstore: not the Tesco business, but just one large store.
That is one measure of the size, capacity and power that the private sector can call upon.
Let me give you another story. Of the world’s 100 largest economies, only 40 are countries; 60 of them are corporates. Do you seriously think that the global challenges of our time, the life and death issues of climate change, global poverty and resource depletion are going to be resolved by governments alone, or even with governments with charities at their side?
No. They will only be resolved when business recognises that it is in its own long term interest to tackle them – and that there is therefore a business case for them so to do.
That’s got that off my chest! I’m supposed to be talking about small businesses – but the message is the same.
* * *
Back in Britain, we have 160,000 registered charities of which three quarters have a turnover of less than £100,000 (US$170,000).
These charities are the lifeblood of the communities they serve; when we talk about businesses engaging with local communities we mean, by and large, engaging with these charities and voluntary organisations.
In Britain we also have over four million – yes, four million – small and medium-sized enterprises.
Together they make up:
- 99% of all private sector businesses
- 60% of all private sector employees
- 50% of all private sector wealth
By these measures, they are as important to the voluntary sector as a resource as are all the bigger boys in the corporate sector put together – yet the corporate sector dominates the CSR headlines.
Of those 4 million SMEs, half are one-person operations or employ no one, so let’s put them to one side.
That still leaves two million employers, one for every 30 citizens in the country.
The bulk of them employ between five and 20 employees and they are often situated within the very communities they share with those 130,000 small charities.
And what do those small charities most need?
They will tell you: money.
But what do they do with that money?
Do they have the capacity to use it wisely, to make the most of it?
Do they have the skills they need to improve the services they provide to their beneficiaries, to get ever better value for that money, to make it go further, to grow – for want of a better word – their business?
Possibly not… So where could they get that capacity from?
Someone asked people from small businesses in Britain: do you prefer to give money to national charities or to local ones?
They divided about half and half.
But when asked where their donations actually went, four out of five said they went to national charities, not local ones.
Why? Because they had heard of national charities, they knew where to find them, it was easy to make a donation with the click of a mouse button.
That wasn’t the case with local charities.
As I said, I was intrigued to see that so little research had been done on the relationship that existed, if any, between SMEs and those smaller, local charities.
So I set about to plug that gap and I was fortunate to receive some funding from the Joseph Rowntree Foundation to look at the two Yorkshire towns of Bradford and York.
What did I find?
Firstly, there was much more happening that I had guessed: the donation of raffle prizes and cash were by far the two most common elements of community corporate engagement, though much of that cash was raised by employees rather than from company coffers.
Engagement with schools was quite high – doubtless because the employees of a particular SME often had their children’s school in common.
Decisions on who charity beneficiaries should be were made almost without exception by the owner alone.
Intriguingly, the pattern of engagement with the community in affluent, go-ahead York was not significantly different from that of Bradford, one of Britain’s most deprived and depressed cities.
(With just one exception: the tendency for businesses to purchase fair trade tea and coffee was far more marked in York than in Bradford.)
And some volunteering, of both skills and time, was present even in the smallest employers in both cities:
I define time volunteering [pink line] as that which requires few or no specific skills – litter picking, sponsored events, even painting walls – whereas skills volunteering [blue line] specifically utilises skills that employees have and that charities need: perhaps financial planning, graphic design, construction.
I found too that in the smallest companies there was more skills volunteering than time volunteering – which is not surprising, as time is often at a premium in busy SMEs living from hand to mouth – though levels of both were still pretty low.
Remember that an hour of accountancy support may well be worth more to a small group than four hours of painting a wall, especially if that wall was last painted only six months ago, the last time a company asked the community organisation to provide a team volunteering exercise!
As companies get bigger, this graph shows, volunteering increases – both time volunteering and skills volunteering.
Again, this isn’t surprising – bigger small companies (as it were!) have more, and thus potentially more to spare, of both time and skills than smaller small ones do.
But above 20 employees something interesting seems to be happening: time volunteering continues to rise, whilst the incidence of skills volunteering actually falls.
I think this is because as time volunteering grows the company begins to see an advantage to themselves, rather than to the beneficiary charity, of team building activity.
A while ago a city-based company asked if I could arrange for all of their 100 employees to volunteer on a suite of related local projects to make a positive impact on the local community – on one day.
I reported back that I could find 20 opportunities a day for five days, which would together have the same impact on the community.
‘If we can’t all do it together, we won’t do it at all,’ I was told.
Who was that volunteering intended to benefit: the community or the company?
I drew other conclusions from my Yorkshire research: yes, SMEs do engage with their communities. But they do so in ways which are:
- reactive, not proactive
- ad hoc, not strategic
- not related to business case
- not called ‘CSR’.
If you use the phrase CSR with the typical SME employer they will run a mile. And yet:
- more than half think it’s RIGHT for business to engage with the community
- half say they COULD do more
- only a fifth say ‘none of our business’.
These figures all confirmed findings of research by Business In The Community of ten years previously.
So, believing that they should be engaging more is one thing – why don’t they then do so?
What are the barriers to SMEs engaging with communities through community organisations?
This is what they said…:
- Shortage of time and other resources?
The question mark is there because although this is the most frequent answer given by SMEs to explain their lack of meaningful engagement with the community, those who have gone ‘through the barrier’ say that shortage of time is not a barrier. The barrier is how you think – not how much time you spend thinking. And that thinking is coloured by:
- Inadequate knowledge
- Lack of good practice exemplars (nowhere to find out what works)
- Not a priority for leaders
…Of the Institute of Directors, the Federation for Small Businesses and the British Chambers of Commerce, none actively promotes community engagement. And:
- Experience of ‘the begging bowl’.
This last one is important: charities can find that a reputation for take, take, take drowns out the good they might be doing in the community and can create barriers to engagement rather than break them down.
And yet, as the Beursvloer movement in the Netherlands has proven, with its exchange markets in which small businesses don’t give time, skills and resources to charities but exchange such commodities with them, there does need to be a business case to justify prolonged engagement between businesses and the community.
Otherwise such engagement is mere altruism, not necessarily sustainable; it’s one-way traffic, aid rather than development, done to make the company look good.
Which is a shame, because there is a business case to be made and there is no shame in shouting about it.
So what is that business case?
Community engagement is known to bring benefits to the company in a number of ways:
- Enhancing [company] reputation in the community and the market place
- Stimulating innovation
- Partnerships generating more than the sum of their parts
- Making compliance easier
But the most important one, and the one which encapsulates volunteering, is:
- Employee engagement.
Enhanced employee engagement is a prize well worth having because, by genuinely showing to employees that there is more to work than making widgets, that they are valued, that they are partners in a process of community engagement, by fostering a sense of achievement, the employer can reap rewards, including:
- Improved productivity (a well established outcome)
- Greater loyalty (related to reduced industrial strife)
- Team spirit
- Reduced time off through sickness
- Longer tenure (leading to reduced recruitment and training costs)
- Higher calibre of recruits
Which explains why job-seeking graduates increasingly ask ‘What sort of company do I want to work for?’ when applying for work. And:
- Develop new skills
It is difficult to develop new skills through clearing ditches or walking ten sponsored miles with a group of friends – but if an employee can use their existing skills in a new way, can get experience of new situations, can learn to co-operate with new people, enhancing both their ‘hard’ task-related skills and ‘softer’ people skills, then they will, again, become more productive, imaginative and useful employees.
And, of course, business resources are not limited to money, time and skills! They include:
- Facilities, equipment, time, skills, space, surpluses, training, waste, tools, money.
All of these can be shared at little cost to the business: in the case of waste or surplus goods, a reduction in Landfill Tax caused by finding someone who can use what the business cannot, can very often pay for itself – and any costs can be seen as an investment in more engaged employees.
Back in Britain, groups of small businesses are starting to come together to share in contributing to their communities, to stimulate others to do so, through skills and time volunteering but also through the sharing of commodities.
Such groups exist in Swindon, Oxford, Shropshire, Kingston, London – and in the Tameside area of Manchester, where lottery funding has helped SMEs and charities share resources, fundraising activities and good ideas.
Here’s a story from Tameside.
A young woman in her mid-30s left hairdressing to take over the running of her ailing father’s steel stockholding business with its seven, middle aged, male employees.
If ever a charity asked her for a contribution she would tell them, politely but firmly: ‘No. I’m busy, struggling with my business. Besides, we’re a steel stockholder – what could we possibly do for the community?’
Then, one day, a children’s nursery approached them: ‘In the storms at the weekend we lost about 5 metres of fencing. Can you spare anything that could fill the gap?’
The woman took a deep breath and said: ‘There’s some stuff that might work in the back of the shed. Take it all, I could do with the space.’
It turned out that there was ten metres of fencing.
Then one of the employees said ‘We’re free on Saturday. A couple of us can come over and put it up for you.’
This story has two punchlines: the first is that on the Monday morning the employee came into the office and said to the owner ‘That was great, we really enjoyed Saturday – what can we do next?’
And the second is that I met that woman when she was addressing a meeting of 50 local SMEs – the first time she had ever spoken in public – where she said ‘That weekend changed my business. It made my company a better place for people to work. It gave them a purpose to coming to work, over and above moving bits of steel around, and I recommend that sort of activity to everyone.’
* * *
A year ago, I brought together a group of ten people with knowledge and experience in this area.
I said: I want to create an online facility which will help local charities to engage with local small businesses and also enable those businesses to put on record what they can spare, in terms of time, skills and things; and then to match them up using the latest match-making online technology. I want the web site to contain advice, opportunities for training and for fundraising, and toolkits to help reproduce the good practice that I have identified and collected from elsewhere.
I don’t want to reinvent the wheel.
I want the local voluntary sector umbrella group to control of this web site and I want their members to be evangelists, going out to convince small businesses that it’s in their best interests to engage with their communities, the communities which they share in every locality.
When I asked: will it work? they said: ‘Give it a try.’
A year later, we have a plan.
We have the information, the technology, the contacts, the partners and the possibility of pilot funding.
We call it ‘Elements’. We hope that Elements will be self-sustaining within three to four years, but we do not underestimate how difficult it is to communicate with the small business community.
They are atomised, they are many and they are – well, small.
We can create the horse, we can identify the water: the challenge is to get the horse to drink.
You can read more about the role of the smaller corporate citizen in chapter 6 of my new book, ‘Welcome to GoodCo: Using the Tools of Business to Create Public Good.’
It has been a passion for me, a quest, a journey.
And it is far, far from over.
What I know is that small businesses are the largest part of any private sector economy, in every country.
And they are an underachieving part of every community.
Wherever small businesses share communities with community organisations there is the possibility of co-operation and the guarantee – yes, guarantee – of benefit to both parties.
At a time when the corporate sector is changing, but their contributions are static;
…at a time when government funding for the services that the voluntary sector delivers are falling in many countries, whilst demand is certainly rising…
perhaps millions of small businesses are the answer to the quest for sustainability in those services that our volunteers provide, fund and otherwise support, especially in the most hard pressed of the communities where people live.