There is a phrase used more and more in business magazines. It is called “social entrepreneurs”. In the non-profit arena, it is used one way, and in the business world, there is another meaning. The non-profit use of the term “social entrepreneur” is where a charitable organization learns how to apply entrepreneurism to their core competencies and create an income stream that will help support their charitable agenda. For example, a thrift store not only provides jobs and job training, it also helps defray part of the cost of a job-training program. A homeless shelter in Chicago has started a landscaping business that gives the men training and a job. It also brings in enough money to pay for the training and supervision of the program. More and more social agencies are creating companies large enough to support their whole ministry without any significant need for donations.
The more traditional use of the term “social entrepreneurism” is from the business world. It is regarding an entrepreneur or a company that uses its skills, resources and network to do social good. The entrepreneur interested in social causes wants to use his or her entrepreneurial skills and knowledge to help a charity. It is more than giving money. Because of his or her business savvy, he or she wants to be more “hands on” by consulting with the organization, networking, donating non-cash gifts, endorsing the charity and sometimes involvement in the governance of the organization. The combination of large donations and business acumen is bringing refreshing results to charities across the nation.
I have done this. It seems each year I do pro-bono work on Boards or in creating fund raising plans for organizations. I have helped organizations do visioning, thereby recharging their ability to raise funds. In community development, an entrepreneur’s opportunity to do pro-bono work is even larger. There is opportunity to help create businesses, build enterprise zones, employ people, help educate others in business and entrepreneursism, and help build housing developments. For a Christian entrepreneur who wants to help spread the gospel by meeting the critical needs of others, does it get any better than this? To me, there is nothing more exciting than using my entrepreneurial gifts to help a local church reach out to those in need in their own community. This is the love of Christ in action.
This is where we want to see the church involved. We want churches to encourage and partner with those in their congregation that are business people, entrepreneurs, managers or company owners. This is a chance to collaborate with volunteers from the congregation and do something significant in distressed neighborhoods. The church can help nurture this new breed of Christian “venture philanthropists”, encouraging them to leverage with their donations in new and exciting ways. This is what I call Social-Driven Capitalism.
There are new ways of making charitable contributions that seem to be more of a win-win for those that own or manage corporations. I call this new philanthropy “social-driven capitalism”.
Charity Event Cause Marketing
“Cause marketing” is different than traditional business philanthropy that gives donations and receives some press and recognition. In cause marketing, like traditional philanthropy, a business also gives a donation. However, with cause marketing, the company uses a fine tuned marketing campaign taking advantage of the market exposure and the extra emotional linkage with the consumer to move product sales. Sponsorship of events was the first form of cause marketing. Sponsoring a charitable event was a real way that business could give to an non- profit organization and receive some marketing exposure in return. This took its cue from secular sponsorship where companies used marketing dollars to gain market exposure. The biggest example of this is NASCAR. The cars and driver uniforms are multicolored billboards of corporate sponsorship. Sporting events are very effective at using sponsorship as well. NIKE and Gatorade were companies that brought this sports sponsorship marketing to the forefront.
Today cause marketing has become a major form of fund raising for larger charities. Donations from companies can come in the form of a percent of the sales of the product, or the money given for a sponsorship at a fundraising event. Either way, the charity is getting a great donation and tremendous awareness of their organization. The business in return is marketing their product while building customer loyalty through the good will resulting from being seen as a philanthropist toward the cause.
The organization that put “cause” promotional marketing and sponsorship in the charity world on the map was The Children’s Miracle Network. I was at World Relief doing a national cause-marketing project with coin banks in supermarkets, discount chains and convenient stores. I was able to see Children’s Miracle Network in action first hand as they approached the same stores I had coin banks in. In the years that followed, I witnessed the “cause marketing” industry grow into a moving force in philanthropy.
Traditionally a cause-marketing “sponsor” would get good “press” and recognition. The grandfather of this approach is Jerry Lewis’s telethon. Children’s Miracle Network took it to the next level. They increased the “win” for the sponsoring company. They put together in-store campaigns with well coordinated advertising, point-of-purchase displays and couponing though newspaper circulars. This marketing combination would dramatically move more product. As a result of increased sales it was easier and easier to find sponsors and stores that wanted to get involved. The Children’s Miracle Network model set a whole new standard in the industry. Today, rather than simply looking for charitable partners that can help them win over the affections of those who believe in the “cause”, sponsors want an increase in sales as a result of the campaign.
Does your company do something to make a difference? Respond to this post and we will collect them and put them into a PDF booklet for everyone to learn from.
Company-Based Cause Marketing
Instead of looking for a charity-event or a cause-marketing campaign, some companies want to incorporate a cause into their company ethos. Perhaps the best known examples of a company using charitable causes as part of their marketing campaign are Ben and Jerry Ice Cream and The Body Shop. They were certainly among the first. Both companies let their customers know that part of the product sale would go to the causes that they were promoting. The difference between this and the Children’s Miracle Network is that the Children’s Miracle Network is perceived as being involved in an annual-event type of campaign, whereas Ben and Jerry and the Body Shop present their charitable causes all year long as part of their mission. So during Thanksgiving when customers bought their turkeys at the Children’s Miracle Network display in the front of a grocery store, part of the proceeds went to the CMN. However, anytime customers bought a hand lotion from the Body Shop, they were actually helping save the rainforest. There was no doubt in their mind.
For-Profit Companies for Charity (Venture Philanthropy)
The next wave of charitable corporate giving has been popularized by Paul Newman and his “Newman’s Own” brand name products. Instead of a portion of sales going to the cause, the products were advertised as all of the profits going to charity! This is an example of a for-profit company that was created for a charitable reason. In the August 7, 2001 issue of USA Today there was an article called Ben & Jerry, Co-founder to Try ‘Venture Philanthropy’. The article featured three companies that were created to raise money for charitable causes. One was Newman’s Own. The article wrote:
Actor Paul Newman was a pioneer of venture philanthropy. Newman’s Own, co-founded by Newman to peddle salad dressing, has grown into a food products behemoth.
It also gives away its profits. The 19 year-old company, based in Westport, Conn., annually sells $100 million worth of popcorn, lemonade, ice cream and oil-and-vinegar dressing.
It has donated $115 million for hunger relief, for medical research and to fund camps for seriously ill children.5
The USA Today article also featured Ben Cohen, of Ben and Jerry, getting involved in this same form of venture philanthropy. Ben Cohen’s goal is to buy companies in low-income neighborhoods. He then wants to raise wages and improve other employee benefits.
In his first deal, Cohen used his Barred Rock Fund to buy Sun and Earth, a cleaning products maker, in partnership with a non-profit corporation. The article reported:
The fund owns 80% of Sun and Earth with its partner. The remaining 20% was set aside for employees. Sun and Earth wages were raised as much as 23%. Employees will get company benefits for the first time. All profits will be used to buy other companies, which will be run the same way. Cohen also says that he is giving management advice.6
Another company that the USA Today described was Pura Vida. John Sage, a former Microsoft executive, created Pura Vida, a coffee retail company in Seattle. Sage co-founded the company with a ministry helping poor children in Costa Rica where the coffee is exported.
Like Cohen and other wealthy entrepreneurs, Sage, 40, wants to use capitalism for charitable good by leveraging his business skills. ‘I wasn’t content to sit on the sidelines and be a passive philanthropist,’ Sage says.
Pura Vida is Internet-based and has 17 employees and expects almost $1 million in revenue this year. All it’s profits will go to charity. So far it has given $200,000 to needy families in Costa Rica, a major coffee exporter, for food, clothing and medicine.7
This is an exciting new trend and one that we believe the church and its members should be involved. I have seen many sucessful Christian business people wonder what they could do with some of their profits. Some have worried whether riches would spoil their children, so they set up foundations that will help charities and allow their children to learn philanthropy. Though this has been very successful, I would like to see it raised to another level. Why not create a company for the Lord? Let the children participate by running it. This company could produce jobs in needy areas for those in the community, helping residents earn good living wages. Profits could be given back to community through its local schools, churches and agencies. Taxes could help build community infrastructure. Small businesses to support this new commerce would be an off shoot of this new local entrepreneurship. While the Christian entrepreneur helps with their company, the church could work in the community assisting social agencies, organizing construction and rehab projects, participating in mentoring programs and job training. There are sundry ways to help in the revitalization of the community.
This was taken for our booklet Compassionate Capitalist. CLICK HERE for your free download.