Social responsibility is the consumer watchword of our time. More people want to buy from brands that are socially responsible, and as a result, business leaders are adopting business social responsibility as part of their brands' DNA.
Even while the economy suffered in 2020, we saw businesses big and small increasing their charitable giving and modeling social responsibility by offering their products and services for free to those who needed it.
The focus on corporate social responsibility isn't going anywhere, so here are few ways to think about how you can get involved—and what it means for your business.
What is a socially responsible business?
A socially responsible business is one that uses its resources to address social challenges.
4 categories of social responsibility
According to Harvard Business School, there are four broad categories on which businesses tend to focus:
Environmental. Businesses in this category focus on making a positive environmental impact. They adopt renewables, "cradle to grave" manufacturing principles, carbon offsets, and sustainable sourcing.
Philanthropic. Philanthropic businesses focus on making a positive social impact. They often fund non-profits like universities, museums, arts programs, charities, and other cultural institutions. They might also provide grants and scholarships themselves.
Ethical. Companies that focus on ethics may go as far as codifying their ethics within their corporate legal structure to show their commitment to align with these values.
Economic. Companies that focus on economic responsibility understand where their dollars are going and what impact they're having across the value chain. They believe it's important to pay their employees fair wages, and they exercise good stewardship of their profit.
Business models of social good and charity
Every business has to figure out how they'll interact with the world according to their brand, their mission, and their customers' needs. The four categories above show the kinds of concerns that businesses tend to address; here are some of the models for actually addressing those issues.
Businesses directly supporting charities
Some businesses donate a percentage of their profits or their time to charitable institutions. There are a bunch of different ways to do that:
Contribute a part or a percentage of each sale
Give a product away every time a product is sold
Ask customers to contribute to a cause at checkout
Fundraise among employees
Volunteer to work together on a service project
Sponsor a charitable event
As an example, Eu Natural is a supplement company based in Nevada. They partner with a charity called Vitamin Angels that provides one year of vitamins for a needy mother or child with every vitamin purchase.
Businesses promoting social good
Businesses can promote social good by applying sustainable practices (e.g., recycling or reducing waste), sourcing materials locally, supporting local employment opportunities, or engaging in cooperative partnerships with other businesses.
Rush Order Tees, a custom textile printing facility in Philadelphia, PA, gives away a $5,000 scholarship each year to a high school senior.
But this kind of model doesn't have to be directly financial. For example, businesses might offer internships to underrepresented groups or offer free skill-building classes in their area of expertise.
Business as an agent of social change
Socially responsible companies can also act directly as an agent of social change. From green energy companies to businesses meant to disrupt unjust systems, many businesses have formed themselves around solving societal problems with innovative products or services.
As an example, Fig Loans is working to disrupt the payday loan industry by offering small loans that can be paid back over a period of several months. They drastically reduce the payments and interest on these loans, helping people build credit instead of keeping them in debt. They are also a certified B corporation (more on that below).
CEO of Fig Loans, Jeff Zhou, says, "I'm a true believer in creating a business that intentionally strives to upset poor ways of doing things. That's innovation. That's good business. And when you find a social problem that needs fixing and figure out a better solution to that problem, especially if it helps out a lot of people that were hurt from the old way, then that's something to really get behind."
Another example is Journey Pure, an addiction center located in Tennessee and Kentucky that connects highly qualified medical practitioners and addiction counselors to people struggling with drug and alcohol addiction. Their goal is to not only help get people off the substances that they are addicted to, but also to help them root out the mental and social problems that contribute to their addiction.
Does social responsibility help with growth and profitability?
Businesses have the capital, the resources, and the leadership to do good for the world. But does it help a business grow and profit? It depends. If a business is being charitable just for the optics, it's probably not going to help their bottom line.
The co-owner and CMO of Nolah Mattress, Stephen Light, says: "There's a reason we donate to wildlife conservation every time we sell a mattress. It's because we believe in the preservation of the natural world for the next generation. Companies that just try to do social good to win points in the marketplace rarely succeed."
Know your mission, know your product, and understand how it aligns with what you intend to support. But more importantly, know your customer. In the end, it's the customer that builds the brand. Supporting the charities and causes they support can be a wise move, as long as it aligns with your business ethics and goals. Pandering will only violate public trust.
So what exactly are the benefits?
This article in Forbes argues that it's everything from increased innovation and brand awareness to cost savings and long-term growth.
This study in September 2019 found evidence that when a company shows itself as socially responsible, it attracts a harder-working pool of employees with more quality work outcomes.
The book The Healing Organization offers various stories of businesses succeeding when they make profitability and human flourishing a priority. Think: DTE energy pulling itself out of near dissolution in the 2008 recession by committing to not laying off any of its employees.
Tools and resources to partner with charities
If you're not sure where to start, here are some organizations that can help you partner with charities that need funding or otherwise start your journey of giving.
Charityvest: A tool that allows businesses to match, report, and administrate their giving through one account
Bright Funds: An all-in-one giving platform that engages and empowers employees to give
WeSpire: A platform that helps businesses grow their giving through gamification and behavioral science
Goodworld: A full suite of tools to empower action and generosity
Benevity: Giving software that scales with growing businesses
Certified B Corp: B Corps are businesses that legally obligate themselves to make business decisions for the greater good
GivePulse: A search engine for local volunteer opportunities for businesses to share with their employees and offer incentives like paid time off
Millie: Gives businesses a simple solution for creating their own social impact platform