Purpose is the new disruption

It used to be the case that once businesses got to make profit they would choose to give some of it “away” or “back”. That’s now rapidly becoming an out-dated model, just as we are increasingly seeing corporate social responsibility – where an organisation continues its usual practices and out-sources the doing of good to one member of the team, leaving everyone else as they were.

When we opened Roast 11 years ago, we did something a bit unusual; from day one we allocated all the profits from one table to support good causes. To many this would be an unworkable model, extending more than organically required for the transition from loss mode to profit. Instead of looking at it as a cost, I called it an investment not just in the sense of supporting hard to reach individuals and communities, but as I was to discover after some time, into the improved commercial performance of the company.

Customers started to make a point of coming to Roast in the hope they would get to sit at that table. Candidates for job vacancies would invariably have as their first question “Can I see which is the Foundation table?” as they wanted to work for a company that did things like that.

Over time we ramped up our social impact activities, most notably with our work with prisoners and ex-offenders and one day the light switched on in my mind that this wasn’t extra-curricular work but  core commercial activity. The realisation came after I went to visit Brixton Prison when Gordon Ramsay was doing a television series teaching inmates how to cook. To cut a long story short, one of those inmates ended up coming to work for us upon release and The Evening Standard ran a story about it. On the back of that we received e-mails and calls from people saying they had never been to Roast but now that they knew we did things like this, they would start coming.

The message was clear – our customers and our employees had the same values as us, possibly having acquired them before we had and for public facing businesses in particular it’s a message that is ignored at your peril. The fact that Deutsche Bank is sponsoring the Beyond Good Business event in May shows that this is now mainstream thinking. And there’s plenty of proof to show that doing good is good for business. Communications giant Havas has developed one such movement through the creation of its Meaningful Brands programme.

A study of 1000 companies shows that businesses which have social and environmental concerns at their core have a 46% a greater “return on wallet” than companies that don’t.

So the word on any savvy entrepreneur’s mind now is purpose. Start with why as Simon Sinek says, then show us what you do, not what you say, prove you mean it and then show it works. The good news is that there are a number of impact investor funds and individuals who are seeking to back businesses that can demonstrate these key elements. To be effective a purpose driven business is one that seeks profit but uses these drivers to get there.

In the old days we used to make money with one hand and give some of it away with the other. That was the two–coin approach. Then companies started to undertake CSR and we talked of two sides of the same coin. The purpose driven business just sees one coin.

 

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The National Lottery Community Fund are invested in helping civil society organisations to develop their resilience so that they are in a stronger position to pursue their goals.

One way of developing that strength is to build financial resilience through generating unrestricted income.  Social Investment – the offer of repayable finance for organisations delivering a social purpose, from an investor who is looking for both social and financial return – can help.  It is especially useful for civil society organisations who struggle to access high street loans and, for those who are looking for investors who share their values.

Social investment can also be structured so that it is useful for commissioners and civil society organisations who are working together on early action and innovation around complex social issues; it can help by covering costs until preventative outcomes have been achieved, which in turn release funds – that may otherwise be locked up in acute care services – to repay the social investors for the preventative intervention they have financed.Since the Fund’s work in social investment began in 2010 they have commissioned a number of evaluations and research studies.

These include some in-depth, long-term evaluations which will generate a number of reports between now and 2023. You will find the reports here: https://www.tnlcommunityfund.org.uk/insights/social-investment-publications