The World of Charity Startups
When we think about companies and corporations, we often think in terms of bottom line, stock price, and growth potential. We throw around terms like “value stock” and “investor optimism,” and we consider these metrics to communicate a company’s value. Obviously, they are important since they are a primary measurement of a successful, sustainable company. However, to quip on the infamous quote by Mitt Romney during the 2012 election, corporations are comprised of people, and people need more than a bottom line.
There is a certain level of social contract inherent in the corporate, cultural arrangement. In fact, Forbes notes that, “a recent survey of global-c suite executives revealed that 84% believe that society expects business to take a more active role in environmental, society, and political issues than it did five years ago.” Consumers provide corporations with their vast resources, and there seems to be an emerging, inherent social contract that companies use these resources to improve their communities. Corporate giving seems obvious when the high revenues and vast resources of Fortune 500 companies are available, but how can startups get involved in this necessary practice?
Startups are in a precarious position because they lack the resources of an established corporation, but they are replete with enthusiastic employees wanting to make a difference on many fronts. Tori Utley, writing for Forbes, remarks that as a startup grows, “cultural add-ons often become the Ping-Pong tables, the food perks and guitar hero over the noon hour.” However, she goes on to note, millennials, the burgeoning workforce of the start-up, care a lot about the place they work and its impact on the world. This is good news for cash-strapped startups who want to integrate charitable giving into their business structure because it can allow them to divert “culture” resources to meaningful causes that build employee investment and identity within the company.
A recent Business article makes several compelling connections between start-ups and charities, noting that both of them suffer from an insufficient or wasted advertising budget. Startups have the opportunity to pair their limited resources with charitable giving opportunities that accelerate the brand and make a meaningful impact on the causes that are most important to them. In short, purposes can be combined to create a unified advertising and charitable giving infrastructure that maximizes resources and cultural capital.
Finally, and perhaps most obviously, startups can leverage their skills and services to contribute to causes intangible rather than just financial ways. The Economist identifies FinTech as a major startup wave disrupting the financial industry through efficiency and risk assessment, and these companies can disrupt the corporate giving structure in the same way. Leveraging their ability to make loans and other financial investments to non-profits and charities is a form of corporate giving that is action-based rather than overtly financial. The ideas are endless, but the possibilities are profound.
Studies indicate that there isn’t a direct correlation between a company’s earnings and their generosity. Therefore, it seems like start-ups have an opportunity to make outsized benevolent impacts in the same way that they can make transformative impacts on various business sectors. A strategic approach to corporate giving by start-ups is a win-win for the company and the community, so it’s time to get to work.