Attached you will find a copy of the G8 Young Business Joint Declaration encouraing our countries' leaders to support, invest and encourage economic growth through the entrepreneurship of young business owners.

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Over the past 24 hours the term innovation has been bantered about without clear definition.  Depending on who you ask at you will get the following feedback on what innovation means to them:

• Access to new knowledge
• Access to new markets
• Access to new suppliers

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“What are the innovations we need to re-launch the economy?”

This is the topic of the G8 Young Business Summit that I will be attending this week.  Pretty hefty question, and one that is timely in light of the recent vote that happened in the US Congress on the Climate Change Bill.   Young entrepreneurs from around the world will be gathering in Stresa, Italy for two-days of workshops, debates, presentations and networking on issues surrounding social innovation and green technology.  read more »

 

(Photo provided by Mike Scullen) 

I was just at the anti-G.W. Bush rally outside the Telus Convention Centre in Calgary, Alberta. 

Here's the image: A line of predominantly white men over the age of 50 with a smattering of women and perhaps a handful of others representing other minority groups in suits wrapped around the Hyatt hotel along Stephen Avenue Mall.  Across from them a group of protestors who, in contrast to the well-dress businessmen, looked like a rag-tag bunch.  In-between the media, some police on bikes, some cops with cameras and others like myself who are there because we don't support Bush and his former agenda, but we also recognize that our city is built on oil dollars and, right or wrong, it is Bush's policies that made some of our city (read those who were standing in line) very wealthy over the past decade.

So here's my limited take on the whole thing - when you have a legitimate claim that Bush has committed crimes against humanity and then you put up a placard that equates what is happening in Iraq with genocide you water down your argument and make your cause look like a joke.  If you want Bush on trial for what he has done and to be held accountable for his actions, make legitimate claims on the poster-board. 

One of my favourite signs was one that read, "The Geneva Convention Does Not Apply to the Elite."  This passed in front of me when I was standing beside Brett Wilson, CEO of First Energy and member of CBC's the Dragon's Den, standing out from the rest of the suits in his signature jeans and sneakers.  There is something to be said about Calgary's elite standing in line to listen to the man who single-handedly ruined the American economy through poor foreign policy and economic decisions and who is going to be sharing his thoughts on where business should be directing their energies over the next few years. 

I wonder what these people are going to take out of this presentation, what are they going to apply to their own lives, what are they going to tell their kids when they go home tonight about what they learned from the former leader of the United States?

A friend asked me if I had a ticket (which was selling for $400 each... and they say we are in a recession) would I use it.  For sure I would! I want to know what he is saying inside those hallowed halls of the Telus Convention Centre.  I especially want to know how the City of Calgary is justifying the expenses that are being put towards Bush's visit.  Let's be clear, whether you supported Bush and his administration or not, it is your tax payer dollars that are being sucked up during his visit here.

That's my rant for the day.  Back to philanthropy and such next post.

There are five stages of corporate philanthropy:

1. Cheque-book Philanthropy
2. Strategic Philanthropy
3. Community Investment
4. Corporate Social Responsibilty (CSR)
5. Corporate Citizenship

Social capital is the thread that ties these concepts together.  Using this concept businesses can recession-proof their companies.

In my previous post Bullet-Proofing your Corporate Karma, I presented five ways for you to ensure that your community reputation stays intact during this down-economy.  This post looks at how you can take your community partnerships to a new level in a down economy.

From a business development perspective, charities are going to be impacted by the recession just as businesses will be.  They will have fewer dollars to communicate their message and fewer avenues to share their story with (as companies pull out of community projects, decreases the community contact).  When you look at this contracting market there is opportunity for your business to jump into this void.

What does this look like?

1. Cross-promotions: Charities need new and creative vehicles to tell their story.  Your company has the marketing vehicle and the need to connect with a new market.  By evaluating what type of client you are looking for, you can source out the types of charities that your client will be attracted to.  Negotiating a cross-promotional package is a win-win-win for: your business, the charity, and the client that you are attracting (you are supporting the charity that they are supporting).
2. Employee Cost Reduction: On average it costs Canadian companies, 3x an employees' salary to train someone who leaves within the year (this obviously decreases the longer an individual stays with a company).  This is an expense your businesses cannot afford... in any economy.  One way to retain employees and to cut costs associated with those individuals, is to shorten the work week while connecting with your community partner.  What does this look like?  You can offset the expense of that person by having him/her "work" for a charity that is aligning with your business.  In essence, this individual is now acting as an ambassador, both for your company and for the charity.  You are minimizing the costs for the charity by providing them with an employee so that more money is going towards what their mission is.  There are two ways you can save money - by donating the value of the hours of that person to the charity you can garner a tax credit OR you can negotiate a shorter work-week with that individual generating an actual cost-savings.  The result: You are strengthening your position within community which will directly correlate to your bottom line.  One final justification for this work-schedule model is - studies have shown that Gen Y'ers would sooner have a day-off for volunteering than financial compensation.  Playing into that emotional paycheque is just as important as financial compensation.

These are just two cost-effective ways of Recession-Proofing your company.  I would like to hear how you are using community partners to shore-up your business during these tough times.

One of the first things to go during a tough a economy are the "little extras" within your company.  Many businesses, small and large, see community investing as one of those "little extras." 

During weak economic times, Community Investing and CSR policies and activities should NOT be considered a perk.  What these two company standards offer, are a place to hang your hat in community and a method of leveraging your brand when your competition is handing out pink-slips.

One company that is not only honouring their commitments, but has said that they are going to be expanding their company (and hopefully therefore their community connections) is West Jet.  In an interview on last night's news, Sean Durfy, President of West Jet informed the media that during a recession, discount airlines actually fair quite well.  In fact, he feels that they will be looking at expanding their services within North America and Internationally (Mexico). 

Here are five things that you can do to Bullet-Proof Your Company's Social Karma:

1. Honour your previous commitments to the best of your ability
2. Communicate openly with your community partners and identify other ways to leverage your company brand without compromising integrity
3. Share your concerns with your employees - some of them are also committed to the same charities that you have partnered with on a corporate level
4. Review your community investment and CSR policies to ensure that they still align with your company's values.  Make sure you share your findings and encourage feedback from your employees, clients, community partners, shareholders and other interested parties
5. Last, but not least, highlight the important things that you have been doing within community and how they have strengthened your business overall.  By showing how your community engagement has positively impacted your bottom line (staff retention, increased sales, etc.) you can justify the "little extra" that your company has put back into community

What are you doing to strenthen your company's social karma in this economy?  I look forward to hearing your suggestions and sharing them with the rest of the readership.

In both the US and Canada, governments are announcing their economic stimulus packages.  Obama brings on a team of economic advisors ranging from Harvard policy experts and Stanford University economists to past government beauraucrats; Harper met with interest groups across Canada to ensure that his package reflects the needs of the citizens.  At the end of the day the charitable sector wasn't forgotten, but I am not sure it was engaged effectively either.

I wonder, for example, if it is better to do a large long-term investment into the economy (similar to what Obama is suggesting) instead of taking a staged approach.  A staged approach is something that, in working with charities, has been the most effective method of sustainable development.  I think our governments can take a page out of the way the charitable sector manages their finances.

1. Clearly articulate the objectives for the funding and the intended results (long-term vision = impact)
2. Identify ALL the possible sources of funding and timeline to secure those funds
3. Stage the project implementation according to the funding timing AND based on the staged outcomes in order to move the project forward
4. Build in evaluation measures and exit strategies should the program not be achieving its intended outcomes
5. Engage others in your activities

The charitable sector is a very large contributor to both nation's GDP.  Economnic slow-downs are the time to start looking at charitable organizations as partners in weathering the economic storm. 

Donors are becoming more and more savvy in the way they invest their funds.  They are also becoming more cautious of charities as tax-shelter schemes become more prominent in the news.  This means that these individuals are choosing to invest in organizations that have strong reputations, good governance and sustainable funding.  Businesses should be looking for similar clients.  Going where these types of donors are going means that that is also where your business growth can be found.

 

This morning I gave a presentation to the Centennial Rotary Club of Calgary on Dexterity Consulting's business model of Karma & Cents - The Business of Philanthropy.

What follows is a copy of the speech.  It is not a direct transcription.  Thanks for reading!

Good Morning!

It’s so nice to be in a room of morning people – we are a rare breed.  Thank you for allowing me to start your day off.  I am truly honoured to be a part of this group.

Over the next twenty-five minutes or so I want to talk to you about Business Karma and Common Cents.  Cents as in dollars and cents…  If there is one thing that you take out of this lecture, it is the direct correlation between business growth and effective corporate citizenship.

I want to start by taking a show of hands survey:

Who here is has some concerns about our country’s economic future?

Without disclosing personal business secrets, who thinks there is going to be an adverse effect on your business as a result of the economy?  You are talking to someone who helps people give their money away – This is a fear that I can totally relate to!

Last question – who here is seriously looking at their charitable giving practises this year, and is really thinking about where they are investing their community money, either personally or corporately?

If you aren’t thinking about it – this is going to be an interesting lecture for you, because you will walk away with some tools for understanding the BUSINESS OF PHILANTHROPY.  If you are thinking about your charitable giving, you will walk away with some questions to direct to your recipient organizations so that your relationship is one of a strategic business partnership as opposed to an unknown but required expense.

Yes, you heard me correctly – THE BUSINESS OF PHILANTHROPY.

“…the single most important thing to remember about any enterprise is that results exist only on the outside. Inside an enterprise, there are only costs.” 

Peter Drucker - was a writer, management consultant, and self-described “social ecologist.”  Widely considered to be the father of “modern management,” in his essay ''Management as Social Function and Liberal Art,'' he defines both for-profit and non-profit management as essentially human endeavours.  

So if for-profit and non-profit management is based on the human endeavor, should we not treat relationships between these two entities from the same starting point?  If the key differentiating factor is the profit motive, then is a business only there to create profit? 

Drucker argues, that profit is not the explanation, cause or rationale of business behaviour and business decisions. 

Rather, profit is the test of the validity of those decisions.   What is the typical life-span of a start-up company?   

UNDER THREE YEARS!   

When I started my company, I received funding from the Canadian Youth Business Foundation.  As part of the funding requirements I have to write a quarterly report back stating how my business is doing.  One of the questions that is asked is, is the company is still operating?  Keep in mind, this is for ONE YEAR FUNDING.  So, if companies measure their success based in annual increments and celebrate at year three mark – how are they determining that success?  The traditional model states that they determine it by profits.   

So back to the original question – what is a business? 

As Robert Urbanowski points out in his book Kickback, which I have a copy to give away today, a business is to fulfill a need.  I need a widget and you have one to sell.  You are fulfilling my need.  A hospital fills a need – to heal the sick.  The Rotary Club fulfills a need – to provide resources for eliminating polio in developing countries.  So when you boil right down to it, charities and non-profit organizations are just as much businesses as businesses are. 

There are currently just over 161,000 charities and non-profits in Canada.  The average Canadian spends less than 0.75% of their annual income on community investments.  We spend almost 2% of our income going to the movies and eating expensive popcorn. 

Knowing these statistics how can you as an individual or business owner possibly generate social impact?  You make your charitable decisions the same way you run your business.  If you run your business based on the need to make a profit as opposed to based on the need of the consumer, then your decision making will be based on decreasing cost to increasing profit margin.  That cost savings may be reflected in the offering of a cheaply manufactured product and one that possibly had little thought as to the long-term societal impacts.  Your customers’ satisfaction may be #2 or #3 in the decision-making process. 

However, if you make a product that fulfills the need of your customer, you will undoubtedly increase your sales because people will TRUST you more. It is the TRUST factor that plays in the Karma and Cents business model. 

My father always said, that TRUST is something you earn and can easily be lost, and then is hard to regain.  The charitable sector is built on this concept of trust.  As community investors we are sometimes duped into believing that they are a charitable organization therefore they must be trust-worthy. 
 

How many of you have experienced a charity being less-than-forthcoming with their information? 

How many of you made a donation and then found out a few months later that the money wasn’t directed where it was supposed to go? Did you know that you, as a donor you have rights? 

On my website is a copy of the donor bill of rights.  I invite you to review it – see if your “rights” are actually being honoured. 

I would like to share with you two examples of two large national organizations who jeopardized the trust that their donors had in them – 

Who has heard of the Banyan Tree Foundation?  What have you heard?   

In essence it was a poorly crafted tax shelter scheme that ended up costing the individual “donors” millions in back taxes and impacted the operations of several large-scale organizations. The Banyan Tree Foundation was based out of Toronto that had made multi-million dollar pledges and transfers of funds to major charities like the Special Olympics.  The commitments were based on dollars that were not available for donation and were collected and falsely reported back to the CRA.  They lost their charitable status mid-2008 because of the tax shelter scheme they were running.  It is also important to note that the donors were held accountable for the false tax receipts they were issued as part of this scheme.  If you do not know the proper questions to ask and that you are ALLOWED to ask those questions, then it is easy to be suckered into a concept that purports helping community but is really not. 

The other organization that had lulled its donors into a false sense of trust was the Red Cross in response to the Tsunami.  The overwhelming response to the call for support was so incredible that the organization did not have the capacity to manage all the gifts and ended up taking a large portion of those dollars and redirecting them to other initiatives without donor permission.  When the story leaked to the press that this had occurred, the Red Cross was forced to go back and inform their donors that the dollars weren’t spent as instructed.  They not only had this ethical obligation to report back, but they had a legal obligation because otherwise they could have lost their charitable status. It is important to note that to my knowledge they have rectified this situation and there are no questions pending as a result of the Tsunami donations. 

When entering into a relationship with a charity, the same approach should be adopted as if entering into a business partnership with another company.  Why?  Depending on the nature of the community investment, your corporate name is directly affiliated with that business.  If that organization ends up losing face, not following through on commitments, not managing its finances properly or otherwise not addressing the need that they are mandated to follow, you and your company can be adversely impacted.  On the flip-side a well constructed partnership agreement can see huge returns. 

So how do you enter into a well thought out business partnership with a charitable organization? First you look at yourself and your business.  What are your true business values?  How do they align with the charities you are currently supporting?  Then you look at your community, however you define that, and you ask yourself – what is my vision for what society should look like?  Do my values mirror that vision?  Does my business feed into that vision?  Do my community investments support that vision?  Do my actions strengthen that vision?  After you have asked these questions you are ready to start looking for community partners.   

The partners are not necessarily with charities.  You can be generating social capital and making positive societal impacts through your customer base, your vendors/suppliers, your employees and your Board of Directors.   You won’t have to look too far to find the partnerships.  Nor will you have to wait too long to see a marked Return on Investment, both socially and financially.  People are attracted to people who are innovative and outwardly focused.  They have an energy that draws people in.  Businesses are simply a collection of people who are working towards the common goal of fulfilling a need.  By translating your vision and values into your business model you will be creating the Karma and the Cents that will carry your business forward, even during these tough times. 

Thank you so much for your time.  I would be happy to answer any questions.  While we are doing questions, there are feedback forms on your table.  If you could please take a moment to complete them.  I will draw a name at the end of the breakfast for a copy of Robert Urbanowski’s book that I referenced during this lecture.

 

One of the many good things about the holiday season is that it gives me the opportunity to catch up on reading that I have been putting off.  In my pile of MUST READS are several back issues of The Atlantic, Walrus Magazine, Corporate Knights, Business Edge and Mompreneur.  There are not only magazines in the pile, but several books.  One that I had started a few months ago and put aside due to lack of time.  I have since returned to it - The World is Flat: A Brief History of the Twenty-First Century by Thomas L. Friedman.

This book was published in 2005 and with the ever advancing use of technology, especially Web 2.0, it has been updated since the version that I read. 

Mr. Friedman lays out 10 "flatteners" that have shaped the world we are in today, and for me clearly explains how we got into the economic position we currently are in.  But it also got me thinking about how the Charitable Sector can apply some of these concepts.  Learning from what has transpired in the corporate sector as a result of these flatteners (good and bad), I believe there is an opportunity to improve knowledge sharing/ transfer of information between organizations.

Brandy Agerbeck of Loosetooth.com created the following illustration based on what Friedman is saying in his book:

 

Taking Friedman's 10 flatteners I have come up with a list relevant to the non-profit sector:

Friedman's Flattener	Dexterity Flattener	Application to Charitable Sector
Fall of the Berlin Wall	Non-Profit and Voluntary Sector official recognized	Governments around North America began recognizing the economic powerhouse behind the charitable sector.  This in turn paved the way for additional resources to be directed at some of the innovations that were being developed within the sector (not including academic institutions)
Netscape Goes Public	Organizations start integrating technology into their agencies	Telling the agency's story became easier and quicker with the integration of technology.  Not only could organizations highlight their services on a local level, but they could find out about others who are offering similar services in other parts of the world and connect with them too.
Workflow Software	Universities offer degrees in Non-Profit Management	Jobs in the charitable sector become careers.  Professional associations are created and the positions within the sector are legitimized.  Salaries slowly start to reflect the education of those running institutions.
Open Sourcing	Still Under Construction...	Charities have a history of "turf" issues.  This is most likely due to the way that fundraising has been occurring over the years.  What we are seeing now is a breakdown of those silos.  Innovation can only come from cross-pollination of ideas.  The charitable sector is pushing this, most notably, in the academic medical research labs.
Out Sourcing	Third-Party Fundraising becomes the norm	The Rotary Club is probably one of the most visible of this type of out sourcing.  From special events in support of organizations like CAWST and Ronald McDonald House to golf tournaments and parties for Seniors.  These third-party events take the burden of special event planning off the shoulders of recipient organizations allowing them to focus on what they do best - service delivery addressing a need.
Off Shoring	Community Economic Development	It used to be that international development NGO's would go into a country, tell them what was wrong, fix it for those people and leave them in maelstrom.  Ultimately, one would see abandoned equipment and complete lack of know-how by those who were on the receiving end of the aid.  What we are seeing now is a complete reversal of this approach to development.  Communities are putting together what they feel they need to survive.  They are developing the plan and identifying the best ways to implement that plan using indigenous resources.  NGO's are providing some of the technical support, financial investments and resources, but otherwise have empowered those who need the help to figure out how to do it themselves.  What we are seeing as a result are communities growing and learning from within.  As well, products that are produced in those communities are being sold in North American shops like 10,000 Villages thereby generating additional revenue for the community.
Supply Chaining	The Community Campus Idea	A friend of mine used to live in Moncton, NB.  When she moved their from Ontario she was so impressed that she had to go to only one building to get her new drivers license, her new provincial health insurance card and various pieces to start her new life in this new location.  She quipped that if she had to do this in Ontario she would be driving all over town and standing in several different lines to accomplish the same thing.  Clustering is something that is happening within the charitable sector around North America.  I believe this mostly driven by property values and not so much by ease of use for the client, regardless, it is happening.  Organizations that provide services to a similar clientele are starting to share work-space.  As a result, HR and intellectual resources are being shared thereby streamlining the supply chain of the service.  Now a person who is dealing with unemployment issues can also seek assistance for food hampers, emergency shelter, job training and the like.  Each of these services may be provided by different organizations housed under the same roof.  One of the challenges facing these groups however, is the privacy laws around personal contact information.  Each Cluster has had to create statements around how clients' contact information is being shared within the Cluster.  As this model evolves and strengthens new laws governing privacy may be created.
In Sourcing	Capacity building organizations like the Centres for Non-Profit Management and Centre for Philanthropy are created	Access to cross-sector information is made available to organizations.  So an organization that deals with women's health that is going through a management transition can learn from an organization that deals with homelessness that recently went through a similar transition.  The information is "stored" within other agencies that specialize in capacity building and non-profit management.
In Forming	United Way begins facilitating collaborative work between its funded agencies	Donors and other stakeholders begin "forcing" the organizations in which they are involved to work with each other to benefit the common good. Imagine Canada and other similar agencies begin fostering relationships between businesses and charities to share knowledge and best practices.
The Steroids: Digital, Mobile, Personal and Virtual	Web 2.0 and Proof of Impact Philanthropy	Kiva, Donors Choose, ChristmasFuture, Net2 - International charities begin showing proof of impact of donations.

 

Lucy Bernholz is the president and founder of Blueprint Industry & Design Inc.  She is also the author of the blog: Philanthropy2173 has put together similar ideas around how the philanthropic sector is flattening.

So why is this important?  As we move through the ever growing quagmire of our current economic times, understanding the forces at play is important.  I believe that we can take some of these ideas, learn from them, and then apply them more effectively to the charitable sector.  We need to do this now, especially in light of the shrinking economy.

I gave a presentation today to CAFE Calgary about philanthropy and business.  Canada's charitable sector is a $10 Billion per year industry, so it only makes sense that businesses start looking at engaging in business relationships with charitable organizations.  Attached to this post are copies of the slides that I used, though the conversation did veer in different directions as the people around the table contributed their personal experiences.

The conversation of business and generating social capital has been in the news quite a bit lately with the collapse of Freddie Mac and Fannie Mae.  Social enterprise or entrepreneurship is about putting the social need BEFORE the profit generation.  My friend Ben and I have been looking at different models of social enterprise and how to ensure their viability.  At this point in time, the Canadian government's tax laws have not caught up with the innovation coming out of the business sector around social business models.  I think it is going to be a ground up push to create the change needed to facilitate more social enterprises are successful in not only meeting their social mandates, but also their profit mandates.

As Bill Cook, President of Ethan Allen, pointed out, it is hard to look at charities as businesses.  The idea that philanthropy can have a return goes against the meaning of the word.  My response to this is that we have put an economic equation on the word.  In its original form, philanthropy is the Love of Mankind.  How you show that love differs from culture to culture.  In North America, we have equated this form of brotherly love with financial measurements.  Since that is the case, then should we not carry it through to the end?  If we are making an investment in community, is that not a type of business transaction?  I would say it is, in that case, I would treat the relationship as a business relationship and put an expectation for a return on that investment?

At this time I would like to thank Karen Whiteman and the Board of CAFE Calgary for giving me the opportunity to speak to such an interesting group of people.  Companies represented around the table ranged from Ethan Allen (home furnishings) to Castle Financial to a steel manufacturing company.