Forget the buzzwords, it’s simply good business

When I was young, life was easy: there were those who studied to become rich and those who studied to save the world. Since then, things have changed. The worlds of business and non-profit have increasingly converged, illustrated by new movements and new labels such as social entrepreneurship, social business and impact investing.

As a result, companies are emphasizing the social and environmental value components of their business models. Driven by the consumer movement and the Internet, corporate social responsibility and sustainability issues are slowly moving from being outliers to becoming part of the strategic core of a business. These changes (have to) go deep.

As fellow YGL Hannah Jones, Nike’s Vice-President of Corporate Responsibility, put it in an interview with the Stanford Social Innovation Review: “Any company that thinks it can do CSR for PR or for spin is kidding itself, because it’s a very transparent world out there. Unless you are walking the talk, you’re better off not talking at all.”

But the benefits for business are clear: companies that are creating financial, social and environmental value are more attractive to top talent. A company like Patagonia already received 900 applications per job offer before the last economic downturn. And last year, there were more MBA students from an Ivy League university attending a social entrepreneurship job fair than the concurrent event organized by a leading management consultancy.

However, seizing the opportunities presented by the convergence of the business and non-profit sectors will require a new mindset. The education of entrepreneurs has to change to break down the old concepts of non-profit and for-profit. Both businesses and the non-profit sector have to see themselves as part of the same system and focus on their interdependence, not on their differences. And just like more and more people are willing to earn less in return for a more meaningful job, companies might have to be prepared to make less in order to create not just financial, but also social and environmental value.

There is one type of company that for hundreds of years has built responsible ownership into its DNA and that has turned the art of taking a long-term view into a competitive advantage: the family business. These companies, in which the family maintains a strong presence, aim to keep a company in the hands of the family for generations. They have a greater interest in the long-range implications of an action than in any quick wins. Driven by family values, there is often a sense of responsibility towards employees and the community that results in a natural alignment of “people, planet and profit”. And that seems to pay off. Across the world, family businesses have outperformed their manager-run competitors for years.

Ultimately, my dream is that we get rid of all the non-profit/for-profit labels and buzzwords, and just focus on what is essential: good business.

Author: Felicitas von Peter is Founder and Managing Partner of Active Philanthropy, a charitable forum enabling families and individuals to generate the maximum impact with their giving and social investing, and is a 2010 Young Global Leader of the World Economic Forum.

Photo Credit: Active Philanthropy