Member Article

The idea of achieving purpose alongside profit has been part of the business world for centuries, but the importance placed on it has reached new heights in recent years. How can charities help?

“In every corner of our lives and our country, civil society can be found. In every community and every city and town, civil society plays its vital triple role: bringing people together, campaigning to solve pressing problems, and providing services – particularly to those who are otherwise marginalised and overlooked.”

So begins “Unleashing the power of Civil Society” the culmination of two years’ work of the Law Family Commission on Civil Society chaired by Lord Gus O’Donnell, facilitated by Pro Bono Economics and funded by the Law Family Charitable Foundation. The Commission’s aim has been to research how the potential of civil society – charities, community groups and social enterprises – can be unleashed to harness and enhance the powerful community bonds that exist in our nation. 

Stop us if you think that you’ve heard this one before. The Commission readily acknowledges that this is the latest in a long line of initiatives to get business, the public sector and the social sector to work together for the common good: most recently, we have had the government’s Civil Society Strategy in 2018 and then the Kruger Review in 2020. 

But while the Commission does present its own wish list of 26 specific recommendations- which include a call for strategic investment from funders in the productivity of the social sector, the data available to and about it, and a dramatic acceleration in the partnership between civil society and business - it announces that this report is not its final act and that now its focus turns to helping to realise the change it prescribes. 

The Commission considers proposals under six headings:

1. Building productivity and organisational effectiveness  
2. Creating timely, accessible data and robust evidence about the sector 
3. Improving the scale, distribution and impact of funding for the sector
4. Bringing business and civil society together.
5. Strengthening relationships with policymakers
6. Unleashing potential at local and regional level 

Sustainable shoots of growth 

There is much already to build upon.

While the Commission suggests that the government should make unclaimed Gift Aid of £380 million per year available to improve the charity sector’s productivity, there is an oven-ready set of proposals formulated by the Charity Tax Commission in 2019 to reform charity tax which would release even more funds.

Work is already underway on improving the data available to charities through the efforts of the National Voluntary, Community and Social Enterprise Data and Insights Observatory, funded and hosted by Nottingham Trent University Twenty-first century charity regulation and practice driven by data, the new gold., Robert Nieri (shoosmiths.co.uk).

And organisations such as the Charities Aid Foundation and the Beacon Collaborative, as well as numerous local initiatives around the country seek to encourage greater philanthropy – among all of us, not just the wealthiest.

Mutually beneficial collaboration between business and civil society

We know at Shoosmiths that bringing business and civil society together is full of mutual opportunities. The Commission reports that 88% of the public now believes business should play a greater role in relation to social responsibility, tackling social issues and contributing to achieving net zero goals, and paying a fair share of taxes. Two thirds of millennials consider businesses’ social and environmental commitments when they decide where to work, and there is mounting evidence that purpose-driven businesses outperform those without a strong purpose and that ignoring social and environmental concerns can contribute to instability and damage a company’s social licence to operate.

The Commission provides some examples of fruitful collaboration. A partnership between a leading autism charity and a law firm allowed the firm to learn about autism and develop a service specialising in providing legal advice to people with autism and their carers. The charity received advocacy for its beneficiaries on a pro bono basis – worth potentially millions of pounds over the long term.

And a relationship between small youth empowerment organisation 2020 Change and its corporate partners allows brands to access focus groups with young people from the black community to gather feedback on products and marketing materials, while 2020 Change benefit by gaining placements and employment within the corporate partners. 

The Commission’s recommendations around business and civil society include creating opportunities for both sectors to come together where they have shared goals, including to improve the measurement of businesses’ social impacts and the value of civil society partnerships. 

So, that’s the theory, but what can we all do to make the vision a reality? 

Business Doing Good Roundtable 

On the day the Commission reported (26 January) and together with Brewin Dolphin and RSM, Shoosmiths convened a second “Business Doing Good” roundtable in Manchester with local companies and charities to explore how we in the North West can facilitate more purposeful and “sustainable” business, in collaboration with civil society. 

The roundtable demonstrated resoundingly an appetite to conduct business in a sustainable and socially responsible way. Of the many issues discussed, the question of how business can quantify the value added by taking a socially responsible approach was a recurrent theme: as companies are ultimately accountable for increasing profit margins, how can an alternative measure of social value be devised which will be as compelling as financial profits?

The concept of a triple bottom line based around the 3 Ps of People, Planet and Profit represents a different way of assessing success; however, within each of these categories there is no standardised way to determine value. The B Corp legal requirement provides a framework within the context of section 172 of the Companies Act 2006 to redefine ‘success’ to encapsulate both the success of the company for the benefit of its shareholders, as well as through having a material positive impact on society and the environment. 

Although there is still no consensus as to the way social value should be measured in a business context, there is a real will to invest in socially responsible projects and around our table there was recognition that “perfect is the enemy of good”: while the Commission calls for the UK government to aim to reinstate the requirement for businesses to report their contributions to charities and civil society, wouldn’t it be great if for starters more businesses signed up to pay the Living Wage, especially at this time?  

Shoosmiths will continue to promote dialogue and connections between sectors, and keep abreast of new guidelines for sustainable, socially responsible ways of doing business as these evolve.

In the meantime, if you would be interested in joining us, RSM and Brewin Dolphin with our Business Doing Good roundtable programme, whether in-person or in a virtual form then please let us know. 

 

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