Wealth Matters: When the Social Mission Comes Before Making a Buck

Philanthropy has long been a big part of business, with chief executives dictating where charitable dollars should go or how employees ought to volunteer their time. But some entrepreneurs are letting their customers drive the giving by how much they spend.

“My research basically shows that companies give back for two primary reasons,” said C. B. Bhattacharya, a marketing professor who holds the Zoffer Chair of Sustainability and Ethics at the University of Pittsburgh’s Katz Graduate School of Business. “It’s the right thing to do — corporations need to give back to society — and they believe it’s the smart thing to do, in terms of stakeholders taking notice of what you’re doing.”

Still, there isn’t a road map to success, and the journey can be full of bumps. When Richard and Ashley Perkin started Gells four years ago to manufacture belts, they thought they had landed on a clever way to link sales to causes they believed in.

The couple, who live in Southport, Conn., selected five small charities that they wanted to help. They also had belts in five colors, each matched to a charity that took a share of 5 percent of sales. The only problem was, most customers bought navy blue belts, which Gells had linked to the Blue Ocean Society for Marine Conservation.

“The Blue Ocean Society was getting a greater share of the 5 percent, and that didn’t seem right to us,” Mr. Perkin said. “It also became an accounting headache as we went into stores.”

The couple changed tack and decided to split the money earmarked for charities evenly.

Such logistical problems are not uncommon, particularly for a small entrepreneurial business. Pledgeling, an organization that works with companies on their corporate giving strategies, aims to help with this. As part of its “give and grow” program, it operates the charitable component of a company’s business, vets the recipient groups and aims to make the accounting process smoother.

It also created an impact calculator that can be displayed on a company’s website to show customers how their purchases are helping, said James Citron, chief executive of Pledgeling.

Article source: https://www.nytimes.com/2018/11/30/your-money/social-entrepreneurship.html?partner=rss&emc=rss