Startups and philanthropy: How doing good will help you do well

By Editor March 5, 2015
SUB building

Trevor Neilson, GPGBy Trevor Neilson, co-founder and president, Global Philanthropy Group

We’re seeing a transformation in the way companies, particularly startups, engage with social good. What was often a siloed, small-scale corporate social responsibility effort is now more often a highly integrated effort, embedded in the company’s DNA from the beginning. The lines dividing making money from making a difference are blurring. The one-for-one model made popular by TOMS Shoes is a great example, as are apps like Charity Miles, which leverages corporate partners to donate money to nonprofits for every mile you walk. You can do well and do good in the world at the same time.

This trend has implications for startups that may still see themselves as exclusively profit-seeking. In this soon-to-be-run-by-Millennials world, philanthropy can no longer be an after-thought, but is instead a critical success component. In a recent study, 87 percent of respondents agreed that “business needs to place at least equal weight on society’s interests” as it does on its own interests. Another recent study showed that 55 percent of consumers believe CEOs need to make a long-term commitment to address societal issues. Consumer expectations are simply shifting—they want to use their buying power to accomplish something good in the world.

No longer can startups afford to wait until they make it big to launch a corporate social responsibility campaign. Social good needs to be front-and-center, and be supported by the highest levels of leadership. Some might argue that it’s foolish to spend venture capital funds on something non mission-critical before the firm is even generating revenue. But social good is a powerful tool for actively engaging and retaining users—showing them that you care, that you’re creating a positive impact in the world, and that you want to do more than sell their data for advertising. The halo effect of consumer trust and loyalty toward a socially responsible brand is a proven mechanism, and one that startups should embrace.

Whether they want to or not, companies are going to have to deal with these issues. Regardless of what the product is or what the user interface is like, companies will collide with social issues in one way or another. Social networking platforms are dealing with bullying, harassment and suicide calls for help. Food and consumer goods startups have to deal with supply chain issues. Travel platforms face labor issues, human rights concerns and carbon footprint critiques.

The challenge is that founders don’t typically prioritize social good efforts when launching their business. There are so many other issues to address, from refining the product to fundraising to user acquisition, that social good often lies by the wayside until it no longer can—until there’s a crisis. It doesn’t have to be this way. Why not proactively address social good from the very beginning? Why not embed it in your business model and company culture from day one? Not only does this mitigate against future PR attacks, but it actively engages and attracts people to your platform.

This integration can take many forms. It may be committing a percentage of app sales, offering a ‘connect to get help’ functionality within the platform, sharing your engineers’ expertise with a fledgling nonprofit, or inviting your users to pay it forward. Pledge 1% is a great example of this. They encourage startups to pledge one percent equity, time and product to nonprofit organizations. And it’s gaining traction—well-known tech leaders like Marc Benioff of Salesforce and Jeremy Stoppelman of Yelp are taking the pledge. I expect many more to follow.

Not only is pursuing a double bottom line—both profit and social good—the responsible thing to do, it’s the smart thing for your startup.