Purpose: On Parallel Tracks

In both virtual and physical boardrooms up and down the country, business leaders are discussing how to generate not just profit but purpose. The forces driving firms towards greater purpose are powerful: customers, investors, shareholders and employees are all demanding it – and the evidence is mounting that it makes sound business sense. Time and again, purpose has been linked to greater business success.

Leadership on this issue is coming right from the top of the private sector, with a recent survey by the Institute of Directors reporting that 62% of its members now believe that businesses should not exist solely to make money and generate shareholder profits, and that almost half feel that companies should have a stated social purpose to help solve problems in society. Many companies have made great strides in the right direction, most notably on becoming more sustainable. But there is still a long way to go before these efforts convince across the board: when asked in a study by the Centre for Policy Studies what words or phrases they thought of first when thinking about British companies, “profit over people” was voters’ leading response.

Purpose is what civil society does best. From the 19million-strong volunteer workforce to the 470,000 social enterprises which have eschewed conventional corporate structures to plug their profits straight back into impact, purpose is the primary watchword for the vast bulk of civil society.

There are numerous examples of fruitful partnerships between business and civil society organisations, from non-profits like Blueprint for Better Business which exists to help businesses become more purposeful, to organisations like Cancer Research UK whose commercial partnerships have created 43 start-ups leveraging more than £1.5billion in inward investment. Yet new research for the Law Family Commission on Civil Society suggests these partnerships are not operating at scale, as comprehensively or as effectively as they could – particularly with small social sector organisations.

Across the range of different ways in which businesses might contribute to the micro and small social sector organisations which make up the vast majority of the sector – through financial, pro bono and in kind donations as well as through employee volunteering schemes – this new research shows that businesses donated services and funds worth £2.4billion in 2019. That is a significant sum but in the context of the private sector’s turnover of £3,953billion, it pales substantially – at just 0.06% of the total. It means the average business is contributing around £450 a year to small social sector organisations.

This overall figure of private sector contribution to small social sector organisations also disguises an uneven distribution of these kinds of cross-sector relationships. Based on a long-term survey of 4,000 small social sector organisations, the new research reveals that smaller organisations serving people in rural areas, older people and ethnic minority communities appear to be much less likely to be the recipients of private sector interest than organisations which serve people with learning disabilities, carers and the LGBT community. The same is true for organisations which focus on improving health and wellbeing, reducing social isolation or enhancing the cultural and artistic life of a community, while those which focus on increasing employability, tackling poverty and helping people access basic services are higher up businesses’ lists.

This suggests that, despite having increasingly concurrent objectives about building a better world, businesses and civil society appear to be striving for purpose in relative isolation from each other. They are running on parallel tracks, but the junctions at which they intersect are few and far between.

Such a situation makes poor business sense for both sides: civil society is not harnessing the vast potential for impact the private sector can have, and businesses are missing opportunities to tap into civil society’s expertise and its deep roots with communities. When businesses and civil society do work together, the benefits can be manifold, with evidence that encouraging employees to volunteer, for example, can result in reductions in absenteeism, increases in productivity at work, lower staff turnover and improved employee wellbeing.

Harnessing this potential, seizing those opportunities and manifesting these benefits will require boosting the scale of engagement between business and civil society, tackling the gaps and improving its effectiveness. To break down these barriers, three questions will need to be answered.

There is a willingness from civil society to work more closely with business, with 35% of charities telling Pro Bono Economics that collaborating more with businesses is one of the post-pandemic changes they want to make in 2021. There is also a strong reason for business to work with civil society, to grasp the benefits a greater focus on purpose can bring – increasing growth, reducing costs, increasing external awareness and employee motivation and, ultimately, balance sheets.

Bringing these two sectors, currently running on parallel tracks, together onto a single journey towards purpose in a meaningful way promises to generate gains not just for organisations in both sectors, but for society as a whole.