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Why small businesses should be embracing CSR strategies

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The small business and charity sector have more in common than many would realise facing many of the same challenges.  Indeed, without both the country may very well grind to a halt. 

The charity and small business sector both fill the gaps that are left by corporate and government who for one reason or another choose to leave this to the entrepreneurs, the family business, the innovators and the mums and dads.

Just like the small business sector the charity sector is made of up of fast moving, rapidly growing organisations, as it is of those who get by on what seems to be a shoe string budget making ends meet on a week to week basis.

Increasingly though small business is finding there is a place for them in the charity sector and it is helping them drive growth within their own business.  What may have been previously seen as the space of large business, the charity sector offers many opportunities for small business and when it is done right it is a fruitful relationship not just for the charity partner, but almost more importantly, for the small business partner.

Often when small business considers their contribution to charity they feel their impact is limited by the size of their budget which can’t get near those of big business and then question the difference they are able to make.  But the good news is you don’t need to be big in size of your company or contribution to build an effective relationship with your charity partner.  In fact small business can make a greater impact and reap greater benefits due to their agility and flexibility in how they interact with external partners.

The benefits that small business can enjoy from an effective Corporate Social Responsibility program, let’s call it that for simplicity, can include the following:

  • Increased employee engagement;
  • Increased staff retention;
  • More attractive employer;
  • Increased customer loyalty;
  • Brand differentiation;
  • Attract new customers;
  • Reduced operating costs; and
  • Increased profits through innovation and shared value.

So how does carving off a portion of net profit at the end of financial year and donating that to charity lead to any of the above, yet alone multiple benefits?  Well it doesn’t.

Donating money alone is unlikely to bring you the returns that you may enjoy by building a more effective relationship.  Your charity partners want money, there is no question about that, but what is better for them in the longer term is for you as the supporter to have a profitable and meaningful outcome from the relationship.  Quite simply if your relationship with your charity partner is NOT a profit centre back to you, then you are leaving money on the table.

Ask yourself the following questions which will help you identify the state of your relationship with your charity partner:

  1. Can I and those within my business clearly articulate the charity partner we support?
  2. How many within my business can detail how the donations are used and what change is brought about as a result?
  3. Can I detail who directly benefits from the support?
  4. What measures do we have in place to record and assess the quantum and the effectiveness of our contributions
  5. Can I articulate the benefit that we derive?

The risk is if you can’t answer each of the questions above with compelling information your contribution to charity becomes more like another tax that we pay.  And let’s be clear, we all pay too much of that as it is for often little return.

What does an effective relationship look like then if it is not based upon profit sharing alone?

The most effective CSR programs or relationships with charity partners and their supporters is based upon shared experiences.  When you engineer a shared experience that has positive returns to you, then you are more likely to engage in it again, and therein lies the magic.  If the relationship is a positive one for you, then you are likely to do more of it and as a direct consequence your charity partner will benefit as well.

But who in small business has the time to create these shared experiences? The answer to that is probably very few, but if we accept the principle that investing in the charity sector can and should be good for our business then isn’t it time we created some space and resources to make it happen?

By establishing a robust set of guiding principles or rules of engagement for our charity partners, by setting in place a reliable matrix to measure our investment and return we are more likely to build sustainable programs where everyone benefits and that is Doing Good by Doing Good.

About the Author:

willhornerphoto.comPeter Baines became passionate for sustainable leadership after taking part in the natural disaster response team who witnessed the devastating effects of the 2004 Boxing Day Tsunami. In late 2005, Peter established Hands Across the Water, a charity that raises funds for and awareness of Thai children who were left orphaned by the disaster. Today, Peter helps businesses build effective sustainable leadership while travelling the globe as a keynote speaker. Published by WILEY, Doing Good by Doing Good is available NOW in paperback RRP $34.95 from