What role for business in the Big Society?

This guest blog comes from Michael Green, author of ‘Philanthrocapitalism: How giving can save the world’. Michael is an economist by training, and has worked in aid and development for nearly twenty years, including a stint as head of the communications department at the Department for International Development. It was through his role in government that he saw the rising influence of the philanthrocapitalists in the fight against poverty.

Michael recently spoke at the first in a series of seminars on corporate philanthropy run by NPC, EAPG and the St Paul’s Institute. For information about the next seminars visit EAPG’s website.

Back in the 12th century, the Spanish rabbi Maimonides described a ‘ladder of charity’, ascending from the least to the most honourable. At the bottom of this ladder is to give grudgingly, which seems like a pretty fair description of the most high-profile piece of corporate do-gooding so far this year – the £200 million lent to David Cameron’s Big Society Bank by our major financial institutions, as part of the ‘Project Merlin’ deal to stop the government giving the banks the kind of kicking the public really wants to see.

Go up one rung and you get to ‘giving less than you ought but doing so cheerfully’. Whether you think companies give enough or too little, it is certainly the case that corporate donors seem very chipper about their giving. However, a quick glance at, say, the Arts and Business Philanthropy Awards 2010, shows that corporates are cheerful givers largely because it has been great PR for their business, rather than being great philanthropy.

By Maimonides’ standards, corporate philanthropy that is about coughing up under pain of regulation or cheap PR dressed in charitable clothing is not much to celebrate.

Rather, what Maimonides the management guru recommends has nothing to do with more giving or volunteering. The form of charity that he reveres the most is to give someone a job, or help them start a business. This is an important reminder, as we try to put flesh on the rubber skeleton of the Big Society, that, when we think about business’s impact on society, corporate philanthropy is not even the icing on the cake, it is the cherry.

This not a licence for business to forget corporate social responsibility and simply go off and maximise profits. What we learned from the crash of 2008 (and the recent scandals in the care industry) is that such blind pursuit of short term profits is bad for society and for shareholders. We need business that thinks for the long term and realises that responsible business practices are integral to business success.

The idea that companies’ contribution to society is much greater than what is measured on a profit and loss account is not a new one. But it got a boost earlier this year when the world’s top management guru, Michael Porter of Harvard Business School, pronounced that harnessing this ‘shared value’ is a key element of competitiveness. Rather than seeing their social and environmental policies as a loss to the bottom line, Porter endorsed the view that companies can ‘do well by doing good’.

At the moment, it’s pretty hard for CEOs or shareholders, or customers, to measure this shared value and figure out the socially usefulness (or uselessness) of a company. If the government could change the rules on corporate reporting so that companies explain better what they really contribute to our society, we might understand better their role in the Big Society.