Philanthropic efforts can be a way to not only feel good about your enterprise, but help boost employee morale and ultimately enjoy greater success.
It may seem like a business contradiction to say gifting assets can actually be good for profit. But philanthropic efforts can be a way to not only feel good about your enterprise, but help boost employee morale, improve the business’s image and ultimately enjoy greater success.
There’s an obvious appeal to giving back to society for high and ultra-high net worth individuals, tied to a legacy one can be proud of. Said plainly, it’s good for the social growth of our economy. The large charitable gifts of billionaires such as Warren Buffet, and corporate philanthropy of companies such as Apple and Salesforce.com, show giving and supporting communities so they prosper is top of mind for many of the world’s top businesses and entrepreneurs.
How a business does things, rather than what they do, as well as thinking about philanthropy, environmental and social governance, must be part of corporate values, says Katherine Waller, director of relationship management at RBC Wealth Management in London.
“It’s important to the growth of businesses, individuals and to also ensure communities thrive. If I think about the individuals and businesses I work with, have their companies done better because they’ve got stronger values and they live by those values and they give back to their communities? Yes, they have done – and continue to do – incredibly well,” she says.
Commissioned by RBC Wealth Management, The Economist Intelligence Unit (EIU) undertook a study of 1,051 high-net-worth individuals (HNWIs), including 207 respondents in the United Kingdom, from March to May, 2018. The survey explores how the meanings of legacy and wealth are being redefined across regions, genders and generations.
And research suggests there’s no shortage of desire to affect positive societal change through giving. According to The new face of wealth and legacy survey, 61 percent of business owners and entrepreneurs in the UK say it’s important to them their business makes a positive charitable impact on the communities in which they operate.
While the benefits to the community are the ultimate aim, the benefits to the donor company start with the effect the giving has on staff, says Waller. Giving employees a charitable goal can improve company engagement, and add an emotional connection to their place of work.
“It creates an environment in which people will work harder for you and want to stay there because of the culture. They feel like they’re giving back and are part of a community,” she says.
This can help employees to bond and work together better, which can improve productivity, as well as reducing costly employee turnover and general disruption.
Business owners surveyed in the UK say it’s also important to them to protect the livelihood of employees and their families (71 percent).
“The more turnover you have in a company, the harder it is to work as a team,” says Waller. “If your staff is working together for a common good and a common goal and without the disruption, your company will thrive,” she continues. “Your values will be felt by employees and clients alike and people will want to join you, ultimately adding to the success of all involved.”
Many companies are getting into the act of increased charitable giving, combined with an embracing of environmental social and governance (ESG) business practices, which are a set of standards investors increasingly use to choose where to put their money.
“Where you see businesses that incorporate – not necessarily charitable – but fair trade values, or looking after their suppliers and customers with certain values in mind, it often leads to greater long-term success,” says Rob Douglas, director at RBC Wealth Management in London.
Having a business that is identifiable with a cause, such as a retailer that sources its products from a hard-hit community – in turn helping to support it – gives customers a brand story that makes them feel good about supporting it.
This notion is supported in The EIU research, with 33 percent of business owners saying they align their spending with causes important to them.
“As a consumer, I want to know my money is going towards something good, and it’s the same for the businesses I work with. It’s important to their reputation that they partner with and invest in companies whose values align with their own.” adds Waller.
With the number of charities and social causes growing daily, entrepreneurs need advice to help them determine their philanthropic priorities and set up foundations or other giving vehicles. For family-owned businesses, this can mean making sure stakeholders are on the same page. Investors also benefit from expertise on selecting targets that align with their own values and goals.
“You have to consider what’s important from a family point of view,” says Douglas. “For example, do you want your children involved; do they share the same interests and goals? If a foundation or family charity is being established, then what kind of multigenerational kind of legacy do you envisage? The reality is these things are extremely personal,” adds Douglas.
While a steady profit is a goal for any business, Waller says clients she’s worked with who are exiting business consider philanthropy to be a core value. They often limit potential buyers to those that share their values, putting the cause before the bottom line.
“If their values are to make sure the company is giving back – and making communities thrive and prosper – they want to make sure the buyer has the same values, not just for the continuity of the staff, but also to the continuity of that business.”
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