Exit Corporate Social Responsibility, enter Outsourced Philanthropy

Soon, businesses will need to take a decision: become serious about corporate social responsibility or end the practice altogether. Those who choose to be serious will have to outsource it.

Corporate social responsibility as marketing

Since the pandemic began, if you’re fortunate to still have a job, then you may have been doing it from home. To make this possible, you’ve been employing different software tools. You’ve been using Zoom, or a similar program, to attend meetings with your colleagues. You might have been using Microsoft Office, or Teams, or Slack, or Google Docs, or a number of other collaboration applications and platforms. They usually function well, help you get your job done, and you would be far less productive without them, if you’d be able to work at all.

Now, your company didn’t actually make those software tools. There was no in-house team of tech geniuses who built your laptop from scratch before handing it over to you. No, your company bought all of its tech equipment from another company which, you know, makes them. In addition, your company regularly buys a host of services from outside suppliers – legal, maintenance, catering, etc. All this is so commonplace that you never think about it and are now wondering why on earth I’d be bringing it up – it makes perfect sense for an organization to focus on its core competency and outsource the rest to external suppliers of goods and services. Businesses have been doing so for decades.

Here is the catch – not when it comes to improving the world. Not when it comes to Corporate Social Responsibility. No, in this area most corporations have kept a firm grip throughout the different outsourcing waves, and still do. The result are various internal CSR programs and the teams running them. The result are glossy reports boasting impressive numbers of “people reached” and their heartwarming stories. This practice has been remarkably stable. From time to time an article will announce “outsourcing CSR” as the next big thing, with a graph and everything; then nothing would happen.

Is this time different?

This is not an article on whether corporate social responsibility is a sham or not. Those kinds of texts have been around for twenty years, and the verdict is in: CSR is a marketing tool which certainly results in some good being done but which can’t be accepted as compensation for bad business practices elsewhere or as a substitute for regulation and oversight.

I want to ask the follow-up question: what if a company is serious about its CSR efforts and actually wants to protect the climate, promote racial justice, empower women or preserve democracy? What if the customers and the shareholders are on board, and the only question is how to do it?

Such a company is immediately faced with a sobering realization: the business of fixing things is extremely complicated, and requires unique tools and skill sets.

Yes, you can just give money to a women’s rights group in the Maldives or create some token jobs through a social enterprise and say that you’re “doing your bit.” But those changes won’t be lasting unless you have a holistic approach. If you really want to improve the position of women in the Maldives then you need to support changing legislation so they can inherit property. You need to catalog women’s rights groups and train and finance them. You need to work with men’s groups to change perceptions. You need to lobby politicians (legally) and do impact investing in small businesses that provide women with sustainable jobs. You need to fund independent media that influence points of view, and get the religious leaders on your side.

Is this a high ask, perhaps an unfair ask of one single company? Yes, it is. That’s the whole point. Systemic change is devilishly hard, and takes serious infrastructure.

What it takes to be serious about CSR

Take the example of the Altruist League: it took us five years to build a network of analysts around the world to identify and track tens of thousands of civil society organizations. Then we needed to fine-tune our change theory, working with a dozen universities around the world, creating a full in-house think tank in the process. Then there are the right connections – with the governments, the legal experts, the international organizations and the activist training networks – those took ages to build, one by one. Then account for different regions, languages, cultures and regulatory frameworks (we operate in 93+ countries), and you begin to understand the complexity. And we haven’t even begun discussing the technology, the use of satellite data or of artificial intelligence models.

Now, does it make sense for an organization that, say, makes and distributes food to build such a philanthropy operation? Probably no more than it makes sense for them to code their own version of Zoom.

And this is why the outsourcing of philanthropy advisory and corporate social responsibility is at last upon us. Mind you, this is not a shift in the perception of such activities within a business – they are still firmly in the “cost” bucket, together with communications, marketing and the rest. But this is a cost that is increasingly seen as a very justified one. In this respect, the trajectory of CSR with the best businesses has been similar to that of human resources. HR used to be boring admin work until it dawned on executives that if they didn’t attract the best people they couldn’t run the best businesses.

In my experience, the push for making corporate social responsibility real does come from the belief-driven executives from time to time, but this is not the norm. In a majority of companies, it is the customers and the employees themselves that require it. Shareholders are not far behind: with their awareness of social and climate issues evolving, they are beginning to ask ever more probing questions. The society at large – in particular the regulators – are catching up. CSR is then poised to be, to quote Helen Keller, “a daring adventure or nothing at all,” and each business will need to make its choice. Those who choose to go for it earnestly will need unprecedented, sophisticated external support. Now there’s your next billion dollar industry if there ever was one.