Why philanthropy doesn’t have to come at the cost of startup success
It may seem counter-intuitive to start thinking about giving money away, but baking philanthropy into your business model from the start is well worth the effort.
Starting your first business is an exhilarating cocktail of excitement and terror.
Day one is a rush — the branding, the announcement, rolling out the business plan, building the infrastructure. Then on day two, the greatest possible example of blank page syndrome: how do you spend your time and money when the clock is ticking and every dollar and every hour is precious?
It may seem counterintuitive to start thinking about giving money away — but make no mistake, baking philanthropy into your business model from the start is well worth the effort.
Scalable impact
Linking corporate success to impact amplifies the reward of every new deal, every new hire, and every new milestone. In the case of donating money to highly effective charities, the selection of causes and organisations can also be as exciting as any other part of early business planning.
The reality is that the power for change in the corporate sector, even for a small business, is immense. For example, if you are passionate about animal welfare, attempting to convince friends and families to change from cage eggs to free range may yield you five converts over a year (and perhaps even cost you some friends along the way!). If they each ate two eggs per day, that might save 3650 eggs from being sourced from batteries.
However, a typical café uses hundreds of eggs per day. If you could convince your local to change suppliers that 3650 figure would be hit in only a week or two. For a national chain, that time is reduced to a matter of minutes or hours. More importantly, the impact remains the same regardless of whether individual customers care or even know about the cause.
For tackling the world’s most serious challenges, the corporate sector must be at the forefront of change.
Wealth inequality
This immense power for good is amplified by the incredible privilege we enjoy by living in the wealthiest country in the world as of 2020.
Running a lean operation in the early stages of starting a business is crucial to maintaining healthy cashflow and every expense must be carefully considered. Some are clearly discretionary. Others are non-negotiable, like tax, wages, insurances, legal fees, or accounting.
It can therefore be easy to think that donating money is only for the very rich or hyper-profitable, or necessarily comes at the cost of growth. However, the marginal power of a dollar is such that even a small business can have a clear and measurable impact.
For example, if you earn $95,000 per year, you are in the top 1% of income earners in the world. If you were to donate 10% of that income, you would still be in the top 1% of global income earners. By using hard science to find the greatest bang-for-buck per dollar donated, the impact of even relatively small donations can be profound.
Just as importantly, the process of integrating philanthropy into the business model can be as enjoyable as picking a logo or colour scheme.
Starting early
Corporate social responsibility has become a core component of business as younger generations demand brands do more than ‘talk the talk’ on major social issues. This isn’t just hyperbole: according to McKinsey, more than 90 percent of S&P 500 companies now publish ESG reports.
Setting up your own business with a commitment to social and environmental impact is therefore a smart long-term move. As you scale up, calls from investors, customers, and staff to consider your impact will grow — so why not bake it in from the start?
In our industry, we often see organisations struggle to secure their networks and applications because cyber security is an afterthought rather than built into the design.
This inevitably drives up the cost and complexity of remediation.
In the same way, it’s easier to tweak a policy to match your growth than completely overhaul business operations to align with new ESG goals.
Inspiring others and finding likeminded clients
Empirical evidence shows that those that donate wealth feel greater levels of happiness and wellbeing — and better yet, it is infectious to those around us!
This isn’t to say you should expect every customer to know or care about your mission; at Phronesis Security we see our impact as a happy by-product of our core business.
We understand our clients don’t entrust their most sensitive data and systems to us because they believe we are charitable — a mission can never replace trust or quality.
What it does mean is we often find ourselves working with people who share our values and ethos, which produces enduring and meaningful partnerships.
It is also important to consider independent assessment and verification of your model, to demonstrate to your key stakeholders that both your intent and approach are sound.
Certifying with organisations like B Lab is a great way to show others you’re serious about ‘doing good’ and accountable to your policies and stakeholders. It can also provide a great opportunity to introduce you to a community of like-minded businesses.
Retaining staff
Having worked as an operations manager at the Australian Signals Directorate, I have seen first-hand the incredible power of mission in attracting and retaining top talent. My colleagues and I would go to work every day knowing that the work we did helped keep our country secure and saved lives. Through difficult times and with the ever-present allure of enticing private sector salaries, that sense of camaraderie and purpose bound us together.
Bringing this sense of purpose into a start-up through a commitment to mission and impact is a great way to retain staff. In an era where how you earn your money is increasingly more important than how much, knowing every billable hour is helping shield children in Africa from malaria, combat climate change, or educate indigenous students, can be incredibly powerful.
Ultimately having a positive social and environmental impact and business success are not mutually exclusive. Instead, they can work in harmony, tying impact to success and creating a pleasant and meaningful environment for your staff, clients and investors.
