The chorus of voices calling for more responsible capitalism is loud and powerful. The public are demanding it, with 88% now believing business should play a greater role in social issues, such as tackling homelessness and crime. Consumers are driving it. They are four times more likely to purchase from, champion and trust a brand if they believe it has a strong purpose. And employees are requiring it. Research shows about two thirds of millennials take a company’s social and environmental commitments into account when deciding where to work.
The business case for companies to become more purposeful is equally strong. Research by the Harvard Business Review and EY suggests that businesses which prioritise purpose have an edge on revenue generation over their less socially responsible competitors. They are also more likely to have expanded geographically or launched new products, and stock performance can be up to 7.6% higher.
The community groups, charities and social enterprises which make up the social sector are experts at purpose – they exist to have social impact. It is a strange phenomenon then that the links between businesses and the social sector appear to be very thin.
This is about more than donations
New research for the Law Family Commission on Civil Society, run by Pro Bono Economics, reveals that businesses in England support small social sector organisations through financial donations, in kind contributions, pro bono support and employee-supported volunteering to the tune of around £2.4bn a year. To put that into context, it is around 0.061% of private sector turnover, or an average of £456 per business.
This is just one measure of the relationship between the two sectors but it is not the only one that suggests that businesses and the social sector are running on parallel tracks. Both sectors are moving in the same direction on purpose, but the junctions where they meet are few and far between.
There are many benefits to forging closer ties
Where the sectors do come together, both sides stand to benefit in spades. Businesses can access the social sector’s deep expertise – whether firms are looking for help marketing products in a way that avoids stereotypes or for mental health advice for their employees.
The social sector’s reach into communities is unparalleled – from the agricultural communities living and working across the world that are embedded in food supply chains to initiatives supporting young people from under-represented groups who could be the diverse talent of the future. A thriving social sector is as important to businesses as strong public services, and not just as a safety net. The presence of social infrastructure like libraries and community centres has been shown to increase footfall spending on high streets, for example.
The deeper and more committed the partnership between businesses and the social sector, the greater the benefits. Take the legal firm which provides pro bono services to a leading autism charity. Through that partnership, the company’s volunteer team gained expertise in representing people with autism and noticed a gap in the market. The team became a specialist unit and a new line of business was born. Meanwhile, the charity’s service users receive pro bono support from lawyers with an unparalleled understanding of their unique needs. Both benefit the longer and more closely they work together.
Harnessing the untapped potential which exists in these partnerships can also help to fill the trust deficit which has long plagued firms. The public is not persuaded by businesses’ commitment to their ESG goals, and this is particularly true for younger generations. According to a recent study, 70% of Gen Zs and millennials believe that businesses focus solely on their own agendas rather than considering wider society. But trust in social sector organisations is significantly higher.
Create the opportunities to come together
An important first step towards unleashing the potential of this partnership is to increase the junctions at which the two sectors interact. Three quarters of social sector organisations say that the biggest barrier to working with businesses is simply the lack of opportunity to meet with them.
If businesses really want to put purpose and profit on a par as they emerge from the pandemic then reaching out to social sector organisations that work in their fields is a great place to begin.