Business philanthropy can often backfire, attracting the ire of sceptics. But building ‘giving’ into your DNA from day one and focusing on small-scale, local projects can help you fend off negative PR
Philanthropy means love of mankind, but cynics often suggest there’s too little true benevolence going on when the world’s super-rich dig deep.
The subject is never far from the agenda when political and business elites gather at, say, Davos, but a sceptic may argue that’s as much evidence of the networking benefits and power-broking that comes with philanthropy as it is of the importance placed on ‘giving something back’.
Then there are the tax benefits that come from donating to pet causes such as art galleries. And even the most generous entrepreneurs and business leaders will face accusations of playing god if their giving reaches sufficient scale.
Last year, when Mark Zuckerberg, the Facebook founder and Chief Executive, and his wife Priscilla Chan pledged to give away 99% of their shares in the business in their lifetime, it wasn’t long before they were fending off accusations that tax avoidance was part of their motivation.
Even Bill Gates, the Microsoft founder and the world’s most admired philanthropist, isn’t immune to criticism.
The Gates Foundation has given away a more than $30 billion since it was launched. It has done plenty of good but in spending more annually on health aid than many major governments, to some, it also represents an enormous amount of power sitting in the hands of unaccountable billionaires and the causes they choose to champion, ignore or abandon.
The disadvantages of corporate philanthropy
Why are people so cynical about acts of generosity from capitalists? Jason Goodman, Founder and Chairman of Albion, an advertising agency, says the scale of the generosity of a Gates or a Zuckerberg “makes the average person ask, ‘really?’”
“It is not the norm to give away everything you’ve made in life,” he says.
“But there is a strong tradition in the US of entrepreneurs shifting their attention from business-building to addressing social challenges. Bill Gates is doing it at scale.”
While Goodman says he has “enormous admiration” for the ambition involved in something like the Gates Foundation, he is also an advocate for smaller scale, more local projects – philanthropy that grows up alongside companies, rather than being a pursuit for the wealthy founder once they’ve made their money.
This may also be a way of tackling unease over philanthropy – since companies’ charitable efforts will be more consistently linked with the needs of their communities and the interests of employees.
One of Goodman’s ventures is StartUp Kitchen, which connects disadvantaged young people in east London with successful entrepreneurs to help build the next generation of businesses.
The millennial effect
Goodman got the idea for StartUp Kitchen after noticing that the London technology scene was beginning to resemble San Francisco, “where the disparity between the haves and have-nots is visibly unhealthy”.
He says the idea was quickly embraced by the broader team at Albion, as well as by entrepreneurs including Richard Reed, the co-founder of Innocent Drinks, and Niklas Zennström, co-founder of Skype.
“The millennial generation are great drivers for would-be philanthropists,” Goodman says. “It’s a generation wanting to be part of companies with a greater purpose and they want to see leadership teams embrace philanthropy and show they actually care and want to put something back into the society around them.”
The business benefits of philanthropy
Charlotte Finn is Vice President of Programs-EMEA at Salesforce.org, the charitable arm of the American cloudcomputing giant. Finn says the company is trying to engender the kind of employee-led philanthropy that Goodman describes.
“When Marc Benioff founded Salesforce, he wanted to create a completely different business model, [and] a different kind of philanthropy model,” she says.
Salesforce.org was set up on the same day as Salesforce itself. “He knew that if he didn’t integrate it into the organisation from the word go, it would be difficult to get the culture as you grew.”
The company pledges to give away 1% of its time, resources and products to good causes, what it calls the ‘1-1-1 model’. Employees get six volunteer days a year; the scheme has an 85% take-up rate. Those that complete them can nominate a charity for the company to donate $1,000 to. It has given away more than $115 million in grants, 1.3 million hours of community service and provided product donations for more than 28,000 charities and colleges.
Through Pledge 1%, it is also helping other businesses sign up to the 1-1-1 model, including Virgin America, Sage and Yelp.
“People were looking at what we were doing, and the impact on our work culture – we’ve been coming in the top 10 places to work of all of the cities we have major offices in for the past few years. It’s no accident. There’s a direct correlation between our ability to create passion in philanthropy and how happy our people are,” Finn says.
She adds: “There’s a huge amount of cynicism about philanthropy. What having a framework does is move it from being a tick in a box in an annual report to being a tangible part of your organisation and in the business plan.”
Damian Kimmelman is the boss of DueDil, a financial information company. He is also the creator of Founders Pledge, a scheme that encourages entrepreneurs to give up 1% of the equity they hold in their start-ups to charity.
He says businesses should not be surprised if they encounter scepticism about their philanthropy. “It’s natural for people to be suspicious – after all, many technology companies have drawn media attention because of the low amounts of tax they pay. Given that, I understand why people might assume that entrepreneurial philanthropy isn’t entirely altruistic.”
To avoid accusations of vanity projects or simply replicating the good works of others, businesses should follow the advice of Will MacAskill, Kimmelman advises.
MacAskill is a philosopher and author who coined the phrase ‘effective altruism’ in his book Doing Good Better. Effective altruism calls on people to check the evidence of the outcome of their good deeds before blindly pressing on. It turns out, for example, that de-worming has more impact on improving educational outcomes in Africa than more fashionable methods such as donating used textbooks.
“It is very important to look at which charitable efforts seem like they’ll have huge payoff at scale, even if they aren’t currently considered one of the most effective places to give,” says Kimmelman.
He also advises bearing PR in mind “because the consequences of doing something well-intentioned, but that becomes misunderstood, can be more harmful to a charity or a philanthropic activity than doing nothing at all.
“It’s important to talk about what you’re doing and why you’re doing it to avoid misunderstandings, but also to get people involved. Part of philanthropy is doing something that scales, as many problems require a lot of people to solve. So you need to win hearts and minds.”