Editor's Note: This guest post comes from Colleen Poynton and Anna Ruman at Investing In Communities.
“You gotta spend money to make money.” It’s a familiar phrase, and whether you’re a company spending millions on advertising or a nonprofit paying a full-time grant writer, new income comes at a price.
But what if we replace the word “spend” with “give”? Imagine the resources that would be unleashed if philanthropy became an integral part of profitable commerce, rather than simply an afterthought.
At Investing In Communities (IIC), we are doing just that. Our model allows real estate professionals to replace traditional business development costs with client-directed philanthropy. When professionals receive business through participation in our program, they donate, through IIC, at least 10% of their commission to the nonprofits their client selects. That 10% pledge is less than what professionals spend on comparable business development services. Thus real estate professionals earn more money by giving some away, while at the same time empowering their individual or corporate clients to become philanthropists.
The IIC model aligns the interests of individuals, businesses, nonprofits, and professionals to create “shared value” – the combination of public benefit and private profit – at a time when the private sector is reevaluating “corporate social responsibility.” While businesses continue to make charitable donations, many are also looking for ways to generate social benefit directly through their operations – what Harvard’s Michael Porter calls creating “Hybrid Value Chains” (HVCs). HVCs cultivate a more equitable relationship between the nonprofit and for-profit sectors, and allow companies to generate social benefit through the standard operation of delivering goods and services.
We believe that any company – large or small – can create shared value through innovative cross-sector partnerships. For example, imagine that a bank works with a professional participating in IIC to lease office space: the bank could direct the resulting philanthropy to nonprofits working on foreclosure mitigation or property rehabilitation. This would stabilize property values, prevent further defaults, and serve both the bank and the community’s interests – quintessential shared value.
When Hybrid Value Chains cultivate the mentality of partnership, as IIC does, they fundamentally alter the old noblesse oblige dynamic between nonprofits and for-profits. For example, IIC aggregates the nonprofit sector and activates its most valuable resource – the passion of its supporters – to drive business to socially responsible professionals. When nonprofits share IIC with their supporters, they empower their supporters to make a socially responsible choice. Thus, although real estate professionals fund our philanthropy, their relationship to the nonprofit beneficiaries is truly symbiotic.
By catalyzing shared value creation across the private sector, models like ours create an ecology in which for-profit and nonprofit actors no longer sit at opposite ends of a one-way street. They unite in a mutually beneficial cycle that creates value for all participants and broader society.
Editor's Note: Tides' fiscally sponsored projects are now eligible to receive contributions through IIC's donations program.
Colleen Poynton is the Manager of Business Strategy and Development and a former Princeton AlumniCorps Fellow at Investing In Communities. Anna Ruman is Operations and Marketing Analyst and Harvard Center for Public Interest Careers Fellow. IIC's mission is to help socially responsible consumers and professionals connect to generate funding for nonprofits. By leveraging competitive markets and the passion of nonprofit supporters, IIC empowers individuals and businesses to generate funding for nonprofits for free. Since May 2010, IIC has generated more than $100,000 for 30+ nonprofit organizations.
Image via Flickr user Diana Parkhouse, used under Creative Commons license.