Shared value is key theme for business and philanthropy

Private Matters, December 2012

Deloitte | Private MattersIncreased blurring of the boundaries between for-profit and not-for-profit organisations is advocated by Deloitte’s not-for-profit specialist, Tharani Jegatheeswaran. 

In today’s uncertain economy, with government funding for community programs and donations from individuals decreasing, there is no doubt that corporate philanthropy is becoming increasingly important to the funding base of not-for-profit (NFP) organisations.

Long gone are the days of companies merely “giving back”. Today, corporate giving is much more strategic and more focused than ever before. Rather than giving small amounts across a large number of not-for-profits, companies are giving larger amounts to a smaller number of not-for-profits.

Tharani Jegatheeswaran, Client Director, Not-for-profits says: “Today, companies are more focused on developing strategic partnerships with NFP organisations. They are targeting NFPs with similar values, brand alignment, and a commitment to producing results (i.e. producing real social change).”

Her advice to NFP organisations is to adopt a more targeted approach to selecting corporate partners. “By choosing companies that have similar values (ie. those that believe in what you believe in) to your NFP organisation, you are more likely to develop stronger, longer term relationships.”

Deloitte has a list of tips for success for NFP organisations to consider when approaching corporates for sponsorships. High on that list of tips is - “be innovative”.

“Corporations love innovative approaches to solving complex problems, including their own.  NFPs that are able to articulate a value proposition premised on ‘mutual benefit’ are more likely to be attractive. A NFP that can show how they can add value to a company – by improving staff engagement, strengthening the brand, and/or making them more competitive in the market – will have a higher chance of success,” she says.

The future:

As both the influence and impact of corporate philanthropy increases, there is a greater appreciation of the role that business can play in addressing societal needs.  

This idea is the central premise underpinning the concept of “shared value”, being advocated by Michael Porter and Mark Kramer of the Harvard Business School.  

“Shared value”, as defined by Porter and Kramer, “... is a change in mindset that involves creating economic value in a way that also creates value for society by addressing its needs and challenges. It is not social responsibility, philanthropy or even sustainability, but a new way to achieve economic success.” (2011 Harvard Business Review feature article, titled Creating Shared Value: How to reinvent capitalism—and unleash a wave of innovation and growth).

Tharani believes that this concept will define the future direction of business and corporate philanthropy and recommends that NFP organisations stay ahead of the curve with regards to its development.

By adapting a ‘shared value approach’ to business and corporate philanthropy, Tharani believes that we will be better able to connect a company’s success with societal improvement - thereby benefiting the company, the NFP organisation and the broader community.

She leaves Private Matters’ readers to contemplate a pertinent quote from the CEO of PepsiCo, Indira Nooyi, about the role of business can play in society and in enabling social change.

“Companies can no longer perform and toss the costs back to society.  We believe that the new future is public and private partnerships, where companies feel responsible for society at large. How can we as a company do better, by doing better?”

(PepsiCo has embraced the concept of shared value with its mantra "Performance with Purpose", the foundation of how it does business. For PepsiCo: “Performance with purpose means delivering sustainable growth by investing in a healthier future for people and our planet”. Source: PepsiCo website).

For further information please contact:

Tharani Jegatheeswaran  
Director - Not for profits
Deloitte Private
Tel: + 61 2 9322 5292