A few months ago I moderated a pitch event during which entrepreneurs were tasked with presenting: the market need for the opportunity they intended to pursue, how their product or service would meet that need, and how their business would help their community.
Pitch after pitch included a well-thought-out business case followed by an explanation of how profits would be disbursed to a meaningful cause. After one particularly abrupt transition between the business case and the altruistic conclusion, one of the judges critiqued that the business case was weak and the helping-the-community part didn’t seem related. The entrepreneur retorted that part of the assignment was to explain how her business was helping the community and she was merely fulfilling the requirement. A conversation on best ways for businesses to “give back” quickly ensued. Judges offered explanations such as, “the more money a business can make, the more it can give” and “you’ve got to make the money first, and then you’ll be able to help people.” One judge suggested this was easier for one business in the room which was a medical practice. In his opinion the business full of doctors was uniquely already giving back every day because they helped sick people all day long. Thus they were relieved of additional social requirements to help the community.
As long as a business is involved in voluntary free exchanges with its customers, there is no other way to earn a profit than to meet a customer’s needs.
The conversation, soon drifted to corporate social responsibility (often referred to as CSR) as judges reminded entrepreneurs of numerous large corporations who are setting good examples by returning a share of their profits to the community via some high profile internal and external charitable organizations.
While giving can be good, I’m cautious about recommending that businesses “give back” because of what the term might imply. If we say that businesses should “give back” are we implying they’ve somehow taken something or ended up with something they now have a moral obligation to return?
I couldn’t help but interject a couple of thoughts in the entrepreneur/judge dialogue. I reminded the entrepreneurs that if they are setting up their businesses properly, then they are helping their community just by showing up to work. This is true not only of medical businesses, but of those in any industry. Entrepreneurs are most successful when they identify a need or desire of people in the community and then meet that need by arranging the necessary resources into a lower priced offering than what those in the community would have paid had they met their needs and desires on their own. As long as a business is involved in voluntary free exchanges with its customers, there is no other way to earn a profit than to meet a customer’s needs (certainly some businesses find ways to cheat the community, but those business aren’t engaging in the voluntary exchange I was referring to which is promoted in numerous business training programs across our country.)
It is wonderful that so many organizations are putting deep thought into ways they might use their profits to improve our world. However, it seems that instead of praising them for going above and beyond, our society is increasingly demanding these CSR programs as atonement for the company’s profit making. Even the airline I am riding with as I type this feels compelled to advertise which cause will benefit from a portion of the proceeds in order to entice me to trade my cash for a snack box.
Instead of pushing for businesses to “give back,” should we encourage them to “give again”? They’ve already given to us once by enhancing our lives with airline flights, appliances, groceries, computers, and entertainment options we never could have had at anything close to current prices if we had had to make them ourselves. Is this alone is a noble raison d’etre? When they elect to give again should we instead say, “Thanks again”?
What do you think?
