Want the biggest benefit for your buck? Now you're thinking like a Philanthropist

Small Business Philanthropy - and it’s not about money

What comes to mind when you hear the word ‘philanthropy’?

Perhaps big businesses with big budgets and big personalities like Buffett, Gates, and Oprah or just a word that's really hard to spell? But where does small business fit into the conversation about philanthropy, business social responsibility (BSR), and giving back to the community in meaningful ways?

In this article

It’s about method and motivation

Many people mistakenly believe that philanthropy and charity are just different sides of the same coin. Whilst the motivation of each may be similar, the method used to reach the outcome is usually very different.

I’m not starting an argument but …

Simply put the familiar metaphor used to describe the difference between these two concepts of charity and philanthropy is: Give a man a fish and you feed him for a day (charity), but teach him how to fish (philanthropy) and you feed him for a lifetime.’

Yes, yes I know but …

Now I’m the first to admit that this simplistic metaphor triggers arguments about whether charity creates a dependent relationship between the giver and the receiver, or whether philanthropy seeks to empower and enable sustainability. I prefer to explain philanthropy as ‘giving a person a hand up, rather than a hand-out.’ When describing philanthropic efforts in developing countries, I explain it as helping people get their foot on the first rung, of the development ladder.

Teaching people to fish and giving them a hand up

Philanthropy is actually more about a deliberately planned strategy to help solve some of our world’s most pressing problems using the hand-up rather than hand-out approach. This mindset is fuelling a new breed of businesses that are deliberately using their business as a strategic force for good in the world. Among those leading this new world of business for good are those Certified B Corporations – the for-profit for purpose movement putting purpose at the heart of business strategy and adopting what Inc. Magazine calls ‘the highest standard in socially responsible business’.

Why do small business owners make the best philanthropists (and it’s not about money)?

For entrepreneurial business owners, philanthropy is a natural extension to applying a business approach to problems. They have the resources, the problem needs to be fixed and they know how to fix problems because that’s what they do all day every day in business.

Good business is about people solving people’s problems

Entrepreneurs by nature are innovative people and naturally drawn to solving problems, creating meaningful change and looking for new ways to generate value. They produce the most effective and efficient ways of achieving an outcome and perhaps that’s in part because many of them are usually driven and transfixed on an end result - constantly scanning their environment for opportunities to improve.

This results fixation can also be applied to social change and is already challenging the old-school ways and thinking about just how effective is the old concept of charity. This new approach is not actually new but our new digitally connected world now allows those of like mind to find each other faster, connect ideas sooner, and share resources better.

Social good in business has traditionally been left to the realms of corporate social responsibility (CSR). But broken lumbering corporate models do not fit the nimble small business. Small business by its nature, wants a return on its investment, and wastes and inefficiencies are natively not what we are prepared to accept as an inevitable cost to doing business.

One of the important aspects of running your own business is it can be an extension of who you are and what you believe and value. And what you believe has to affect the person you are and the type of business you run.

The business of achieving a particular result in a crowded market

Good business is about understanding deeply the needs and desires of your customer and seeking feedback throughout the customer journey. Only then can the business successfully solve the problems of its customers and therein earn its place and its profit from its clients.

Small Business Philanthropy (SBP)

Taking a business approach to solving many of our social problems is what the new type of business philanthropy is all about. The success of this approach comes from understanding and the fusion of two, up until now seemingly competing forces.

The downside of the upside

The weakness of each can be solved by the strength of the other.

  • Philanthropy by itself lacks the customer feedback mechanism of the market to make sure that the needed outcome actually occurs.
  • When left alone and unsupervised, Business markets can move ahead fast and often leave behind the most vulnerable.

The best of partnerships

When you fuse these two approaches together, you enable a business approach to solving problems with philanthropy that makes for a sustainable and predictable outcome.

The last word, for now

It's time for people and their businesses to take a more public role so we can reframe the news from a conversation about social problems, into a platform for demonstrating that problems have solutions. By taking a business approach to philanthropy, problems can be solved and sustainable predictable outcomes achieved.

In the words of the B Corporation movement, 'it's about businesses focusing not so much about being the best in the world, but being the best for the world.'

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