As more people turn to more philanthropic or ‘pro-social’ work in mid- career, progressive companies need to find ways of enabling them to change the nature and focus of their work without leaving, argues technology industry expert and RSA Fellow, Steve Nimmons.
Philanthrocapitalism or venture philanthropy is a system that bases its approach to fulfilling philanthropic goals on tried and tested business concepts and venture capital investment. It typically focuses on mid to long-term partnerships, investments comprising financial, intellectual and human capital. The philosophy is the application of financial investment techniques motivated by the maximisation of return on “social investment”. This is not (necessarily) monetary return (the motivation for the investment being of a principally philanthropic nature). Venture philanthropy is characterised by partnership engagements, varying financing techniques (grants, loans, structured financial instruments), and a desire for donors and recipients to maximise quantifiable “social return on investment”.
Climate change in particular has raised corporate responsibility and ethical operations high on the agenda of corporate decision-makers. This has been hastened by the rapid development of new green technologies. Companies are cognisant of their local and global responsibilities and of the opportunities that social innovation can bring.
This awareness and motivation is rising within the workforce, as is social activism. Mobilisation and management of financial, intellectual and human capital investment requires increasingly sophisticated techniques. Businesses seeking to maximise their positive societal impact require similar advisory and management services as would be expected with any venture capital investment. There is significant potential to augment the corporate responsibility agenda, providing transparency and quantification of ‘outcomes’ for philanthropic investments.
Business ethics, ethical off-shoring and outsourcing are also being impacted by social investment thinking (this has resulted in, for example, the creation of improved health care and education schemes in areas of regional development, to benefit and retain employees through improved services). Formation of partnerships, ‘philanthropic matchmaking’, management and measurement of investment are all services for which demand will rise as developmental goals focus more on outputs than (purely fiscal) inputs.
Taking the moral case ‘as read’, it is worth stating that successful venture philanthropy and international development have many compelling benefits. Globalisation binds us to common threats, disease, extremism emerging from poverty and disenfranchisement leading to social fragmentation, migration and conflict. Localised pollution can impact global environmental factors. Improved health, education, political stability and a credible legal system, create the backdrop for sustainable socio-economic development. This in turn drives inward investment, innovation and wealth creation. Philanthrocapitalism is not of course a panacea, and requires careful integration with governmental strategy, NGOs and symbiotic relations with the ‘established’ non-profit sector.
Marc Freedman, the chief executive of Civic Ventures, popularised the term ‘Encore Career’ in his book Encore: Finding Work That Matters in the Second Half of Life. Schoolboy economics tells us that increased pay leads to increased desire for leisure time. As wealth increases in mid-career pressure on mortgage payments or the costs of raising families diminishes. In a sizable section of the workforce this begins to drive desire to not only balance work and life, but to introduce more civic minded aspects into working life. A vanguard makes the transition to Encore Careers in the non-profit sector, in education, local politics, health, social entrepreneurship and ecology; career metamorphosis has been characterised latterly by altruistic goals over wage maximisation. Companies lose often very experienced, highly ethical business role models due to their inability to structure career progression within such a transitional framework.
The demise of final salary pensions coupled with an impressive structural deficit, creates an interesting catalysing opportunity. The drive to maximise end of career earnings tails off, as this is no longer a critical determinant of retirement income. Trading income in later ‘career life’ has therefore some lessened degree of pain. Flexibility on this payment curve, where employer and employee trade salary against Encore Career goals, coupled with a corporate focus on venture philanthropy as a business function, manifests in what I call the ‘Enterprise Encore Career’. That is, the specific provision of (as Freedman terms it) ‘work that matters in the second half of life’, as an internal business function aligned to corporate responsibility.
Philanthrocapitalism should be embraced by progressive organisations and encouraged by government, particularly in times of economic pressure and where public spending is being reduced. This would combine the concepts of philanthrocapitalism as a vehicle to harness and create greater social return on investment and formalised Enterprise Encore Career goals woven into the business as usual management of human capital. This would have many benefits for employee satisfaction and retention, providing renewed impetuous and innovation in key areas of corporate responsibility. The creation of specialised internal business functions aligned to this strategy may either be ‘not for profit’ or geared towards lower than market return, as is often the case in venture philanthropy investing.
Government could assist, perhaps with tax or pension credits, innovation credits or match-funding partnerships. As social activism grows, driven by inherent altruism, increased wealth and social awareness, globalisation (and indeed social networking) the need to contain, retain and harness its potential within corporations increases. The concept of providing an internal framework for Encore Careers is certainly disruptive, yet changing economic conditions and recognition of this core behaviour certainly hints at its potential and appeal.
Steve Nimmons (Eur Ing, CEng, FBCS CITP, FRSA, FIMIS, FIAP, FLS, FSA Scot, MIET, MRI, BSc. DIS) is a senior Information Technologist and industry commentator.