Corporate social responsibility is not just ethically right during the downturn, it’s good for business

By Jake Hayman

As corporate Britain battles to survive the toughest economic climate for decades, it’s no surprise that as so many companies cut jobs and services, there are also worrying signs of cuts to corporate giving and charitable support.

According to new research commissioned by the Social Investment Consultancy, 97% of British business leaders expect to cut corporate giving this year. Total giving is expected to be a third lower – equal to a cut of an estimated £500million to good causes. This is a serious, if not entirely unexpected, blow to the thousands of charities that rely on business support and which may already be seeing their incomes decline as individual donations dwindle.

These cutbacks will either expose corporations as fair-weather donors or require them to develop new techniques for leveraging their support for communities while lowering programme costs. The question for anyone concerned about corporate giving is simple. If budgets are being cut, what else can businesses do and how can we restructure corporate charitable giving to make it less susceptible to future economic downturns?

A restructuring of charitable giving in the private sector would be timely, as current corporate social responsibility (CSR) schemes are often little more than an afterthought. Although the public typically applauds ‘giving something back’, this is too often an exercise in box-ticking, a cash donation or the volunteering of unskilled man hours. But big business isn’t the only offender. Charities can often fail to appreciate that engaging with the business sector can dramatically increase their efficiency. NGOs are becoming more professional, but they simply don’t have the resources of the private sector. When allied, charities can leverage the benefits business can bring of economies of scales, supply chains, government lobbying, products and services, networks and infrastructure.

Another reason that CSR has had such a dubious reputation is its inevitable connection with a shallow desire to look good rather than do good. The truth is the demand for greater responsibility is no longer necessarily driven by the media or public opinion. It has become an internal phenomenon as well. Chief executives often cite their staff as the most influential factor governing their approach towards charitable giving. It is now commonly accepted that corporations that exhibit a lasting commitment to strong values programmes outlast those that do not. Over time, those regarded as morally ‘good’ consistently out-perform their less ethical counterparts.

Furthermore, a new generation of staff is emerging whose professional choices, motivation and loyalty are strongly influenced by their ability to contribute to society. Firms that provide their staff with the opportunity to apply themselves successfully both in the workplace and in the community will recruit the best graduates, have higher levels of motivation and productivity, and will have the best record of staff retention.

We are now seeing a discernible shift from the payment of a social ‘tax’ to a more advanced business model of community engagement as a mechanism for competitive differentiation. A value proposition is evolving. Lawyers earning £300 per hour are no longer wasting their time painting park benches as part of misplaced CSR activity. Instead, major law firms are leveraging their core skills and offering charities pro bono legal support. Not only does this save the charitable sector a major financial outlay, but also it costs less than a typical charitable gift.

Law firm Reed Smith is undertaking invaluable work in this area in their incubation of ‘Lawyers for International Development’. Token charitable donations by multinationals are being supplanted by initiatives which allow for their existing resources – staff and supply chains – to be harnessed by charities in the distribution of medicine, food and malaria nets. And charities such as the World Food Programme are proving this to great effect through partnerships with corporations like TNT.

Of course, there is typically conservative resistance to using CSR to improve business models. But as advocates of ‘traditional philanthropy’ progressively reduce both the depth and breadth of their charitable giving, people will begin to see the value of a sustainable model that benefits both parties. Our survey showed 81% of senior corporate affairs employees agreed that better leveraging of volunteering and in-kind giving is a good idea and 83% believe that being socially responsible can create a competitive advantage.

All figures, unless otherwise stated, are from YouGovStone Ltd. Total sample size was 961 members of the YouGovStone UK ThinkTank (459 respondents from the private sector). Fieldwork was undertaken between 19-25th February 2009. The survey was carried out online.