Companies increasingly share business acumen to benefit charities
Companies are looking beyond simple philanthropy and are considering ways to share knowledge and expertise with charities to improve their operations
Corporate and social responsibility programmes at major companies have long offered rich pickings for charities in terms of financial support. However, do charities really just need money? Can companies contribute more by sharing their organisational expertise and business acumen to make charities as productive and efficient as those in the private sector?
While capitalism’s sceptics might question the financial motives of such a shift, especially at a time of economic austerity, companies with a strong belief in their corporate culture and ethos are testing the idea.
Japanese car group Toyota, for example, has long been a donor to charitable projects including The Food Bank for New York City, America’s largest anti-hunger charity, feeding about 1.5 million people every year.
However, Toyota wanted to bring its unswerving devotion to Kaizen, its corporate mantra – a word that means continuous improvement – to revolutionise the way that The Food Bank operations function.
Its engineers ended up reducing the waiting time for dinner at a soup kitchen in Harlem, from as long as 90 minutes to just 18 minutes and cutting the time taken to fill bags at a food pantry on Staten Island from 11 minutes to six.
At a warehouse in Brooklyn, the application of Kaizen slashed the time spent to pack one box of supplies for victims of Hurricane Sandy from three minutes to just 11 seconds.
Toyota has ‘revolutionised the way we serve our community,’ Margarette Purvis, chief executive and president of The Food Bank, told the Economic Times of India.
‘From banks to restaurants to airlines, people give money and time and we’re grateful. But it’s very rare for people to come and say This is the model that made our company great and we will share it with a charity with the hope that it will provide for the neediest people in your city. I never thought that what we needed was a bunch of engineers.’
This new form of corporate philosophy requires some adjustment in mindsets, however. The Food Bank admits that Toyota’s initial offer of Kaizen in 2011 was met with some concern at whether a production model honed on making cars could offer anything to boiling broth in a soup kitchen.
Toyota has also not yet exported the idea fully to its UK operations. ‘This is something that Toyota has focused on in the US,’ says Nik Pearson, manager of press relations at Toyota GB, the company’s British car dealership arm. ‘When you work for Toyota, you understand what Kaizen means, not just in manufacturing but in corporate social responsibility, in public relations and in everything we do.
It’s very rare for people to come and say ‘This is the model that made our company great and we will share it with a charity with the hope that it will provide for the neediest people in your city’
‘Whether our people work in retailing and sales in the motor showrooms or in manufacturing, Kaizen is central to what we do and we use it in our work in our communities. There are examples of our engineers going into communities and offering their expertise and we do work with various charities across our dealership network, whether it is at playgrounds or youth centres and try to help drive operations there.’
At sister company Toyota Motor Manufacturing UK, which employs 3,600 workers at its car plant in Derbyshire and engine factory in North Wales, assistant general manager in external affairs Nick Freeman says a different approach is taken.
‘We do a lot of charity work with Kaizen but it is more about teaching it to other companies in return for donations that we give to charities, such as the British Heart Foundation’ he explains. ‘We do very much take Kaizen into our local community and the work that Toyota has done with Kaizen at the soup kitchen in New York is interesting but we don’t have anything like that at the moment in the UK.
‘Because of our lean manufacturing approach, we don’t actually have a lot of spare employee hours to give away. But we raised £157,000 for charity by running Kaizen seminars for other companies last year. This may be a stepping stone to doing the sort of work that Toyota is doing with Kaizen at charities in the US.’
Another outfit with a strong belief in its organisational expertise is the Oxford-based Unipart Group of Companies, which has transformed itself from its roots as a motor parts distributor into a logistics group.
Its Unipart Expert Practices subsidiary works as a consultancy with clients including National Grid, Her Majesty’s Revenue and Customs and a number of British hospitals to implement practices that it has developed.
‘It’s about trying to effect change in the way that companies and public sector institutions enhance their productivity without people working harder, but with them working more cleverly and being more engaged in the whole process,’ says Unipart Expert Practices deputy chairman Lord Digby Jones, the former director-general of the Confederation of British Industry.
‘It’s about workforces being engaged in what their business is trying to achieve, engaged in its challenges, engaged in ways of doing things better and engaged in liaising with customers and suppliers. You have to have culture change. You’ve got to make sure that the employees themselves take things forward because the culture of the business, the DNA of the business, means that’s the most natural thing to do.’
Deborah Astles, head of corporate responsibility at the Unipart Group of Companies, says that this approach also extends to the corporate social responsibility work undertaken by the business.
Unipart sends its engineers into local schools to teach problem-solving techniques and its consultants into job centres to improve employability skills. It also works with the long-term unemployed to give them a ‘skills passport’ to improve their chances of finding work.
‘We’ve got some great examples of what’s been achieved by working with the charitable sector,’ says Astles. ‘It’s completely integral to The Unipart Way.’
The big dilemma for charities is whether it is better to accept organisational and skill set expertise rather than hard cash, which they claim in their marketing materials to be able to spend effectively. ‘Sometimes it takes a few conversations but we have never had anyone turn down our help,’ says Astles. ‘Most of the organisations we approach are very keen. Sometimes it is food for thought but I think most charitable organisations can see the benefits of what we offer them.
‘It’s about taking a very long-term view of how we can help charitable organisations, rather than just getting out a cheque book which is a very short-term thing to do.’
Nick Temple, director of business and enterprise at Social Enterprise UK, a national body for companies, charities and public sector organisations involved in social enterprise, believes Toyota and Unipart are part of a new trend in corporate philanthropy.
‘When it comes to corporate social responsibility, we’re seeing a surge in the number of major businesses moving away from the very traditional giving away cash to pet cause approach,’ he says.
‘Businesses are supporting their staff to engage with social enterprises and equip them with vital expertise to help them grow and develop their businesses. Many are also opening up their supply chains so that they are genuinely trading with a social purpose.
‘The likes of PricewaterhouseCoopers and Royal Bank of Scotland are leaders in this area, using inventive ways to mentor social entrepreneurs and do more business with social enterprises.
When it comes to corporate social responsibility, we’re seeing a surge in the number of major businesses moving away from the very traditional giving away cash to pet cause approach
‘Ultimately it’s about forging strong business partnerships to help both sectors learn and buy from one other.’
The premise underpinning this new approach – that the core skills utilised in business can bring commercial benefits to organisations tackling society’s problems – is also finding expression in the financial services sector through social impact investing.
‘We started to see a number of very wealthy younger investors who were saying that they didn’t want to do their philanthropy with the right hand and their investing with their left hand,’ explains Judith Rodin, president of the $4 billion-endowment Rockefeller Foundation.
‘They wanted a blended product which could have a double impact, contributing to a social or environmental outcome, whilst at the same time having a financial return.’
The Rockefeller Foundation helped to fund Social Finance, a London organisation co-founded by former Apax Ventures’ chairman Sir Ronnie Cohen in 2007, to develop social impact bonds whose returns are calculated actuarially on the basis of social gains achieved through putting private sector business techniques at work to help solve social problems.
At Peterborough Prison a trial programme has issued bonds based on the success in lowering re-offending rates.
‘If it’s successful at the level it is expected to be, the Government will save money, the re-offending rate will go down and the private investor will get paid so there is really a triple win,’ explains Rodin.
‘There are now other social impact bond programmes in the UK around homelessness reduction and other ideas. We’re introducing it to many US states and they’re using it to reduce homelessness and in reducing reoffending rates. It’s even being used by the State of California in a bid to reduce the incidence rate of childhood asthma. It’s a UK initiative that’s now being taken all over the world. The early signs are very promising.’
This article first appeared in Issue 80