Around the world, people are calling for the redistribution of wealth. This rise in economic populism seeks to strip the corrupt powers that be of their riches and instead empower ‘the people,’ whether they be disenfranchised individuals or small businesses. Big business has, unfortunately, been a driver of these sentiments, having earned itself a bad reputation for reasons ranging from income inequality to the inappropriate use of corporate power. This has placed large multinational corporations on the defensive, struggling to protect their brands and win back popular support.
Philanthropy is one way corporations can change public perception. A company like Microsoft, for instance, is better known for the social responsibility of co-founder Bill Gates than its recent acquisition of GitHub.
The caveat, of course, is that if companies don’t act virtuously, philanthropy just amounts to a bunch of noise; Volkswagen’s fudged emission test results is just another reminder of that. But if the philanthropy of a business reflects its true values, it can have considerable impact.
One place to start is with the wage gap. The World Inequality Lab’s 2018 report shows that across the globe the top one per cent of earners has captured twice as much of the wealth as the bottom 50 per cent. This is not an issue driven solely by big business. Income inequality is more complex: corporate performance, globalization, technology, and the demise of unions have also played a role. But the fact remains that organizations have been lax toward addressing their role in the problem.
Then, there’s the issue of size. Multinationals are under continued pressure to grow, perpetuating the trend of large-scale mergers and acquisitions of mammoth proportions. The public perception of this is that consolidation has stymied wages, raised prices on consumers, and reduced job growth, all the while padding the pockets of the ultra-rich. In every sector, fewer firms control greater shares in their markets than they did a generation ago. The public sees this consolidation as one of power, which is being wielded to influence business-friendly policies that can be damaging to everyday citizens.
While big business actually plays an integral role in the strength of our global economy (and is also largely worker-friendly), these shortcomings should not go unaddressed. Large companies would also do well to convince the public it cares as much about the general welfare as it does the bottom line. And they can make that case courtesy of philanthropy.
Subaru, for example, now uses a software program to track the volunteerism of its employees, helping the company better articulate its positive impact on the world. In the first nine months of 2017, 512 of its employees had volunteered for 105 events for 46 different organizations. Subaru also gives $250 for every car bought or leased to charities, and has donated over $94 million in the past nine years.
Most large, multinational corporations already have giving programs in place. The trick is to ensure that they’re measurable, easily understood, can be clearly communicated, and that customers can verify the stats if they choose. A 2017 Cone Communications study found that 65 per cent of consumers now check to see if a company is being authentic when it takes a stand on a social or environmental issue. For millennials, that number increases to 76 per cent.
Companies should also ensure that their donations are truly socially motivated, rather than political. When charitable donations can be linked to the pet projects of influential politicians, making social responsibility look a bit too similar to corporate lobbying, this does little to alter public perception. Likewise, corporate giving tends to work best when closely aligned with the concerns and values of employees.
Though big business has seen its reputation tarnished, there’s still reason for hope. Studies suggest that 70 per cent of millennials are willing to spend more with brands that support causes. That demographic alone represents $2.45 trillion in spending power. This means that philanthropy can improve the bottom line at the same time as it’s boosting its corporate image, improving employee morale and carving out marketplace differentiation.
Corporate giving establishes a unique identity. When that identity is based on meaningful change, it becomes a powerful elixir that makes communities better places to live, fuels the business and revolutionizes its corporate culture. When a big business is truly using its resources to better the world, the world takes notice – and shows its thanks.
Igor Makarov is the President at ARETI Group.