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When economies face a downturn, companies need to make cuts to survive. Often, the axe falls on social impact initiatives that can be seen as nonessential to the company’s core business. These cuts may help the company stay afloat through a few tough quarters, but that’s a short-sighted view.
The need for social good and corporate social responsibility (or CSR) programs actually skyrockets when belts tighten. Those programs often serve the people most impacted by tough economic times, who could use even more support. According to the 2022 Global Humanitarian Assistance Report, the number of people in need of humanitarian assistance globally has shot up by 90.4 million since before the pandemic. Meanwhile, funding for humanitarian assistance has nearly plateaued—increasing just 2.6% since 2018, after growing 10% annually between 2012 and 2017.
So how can social impact leaders preserve their programs through thick and thin? By aligning what they do with the core business activity. In other words, by generating revenue—and even profit—that contributes to the bottom line.
This may sound antithetical to the goals of an impact organization: How can you generate social impact if you’re also responsible for turning a profit? In reality, it’s not only possible, it’s a reliable way to ensure the survival of your programs when times get tough, and to continue to work on issues important to you and your employees.
Building on solid ground
In a down economy, efficiency and return on investment are the priorities keeping every business leader up at night. This is why it’s so important to build your social impact programs on a firm financial foundation from the start.
In business, there is no more solid ground than adopting a P&L (profit and loss) for your division, department, or team, so that your group is accountable for its own revenue and costs. If your team is nothing but a cost center, then ultimately you’re dependent on an executive’s good will to keep your programs funded. That’s why organizing social impact teams as revenue generators is the key to ensuring both their survival and their continued impact.
Here’s how it works at Twilio. Twilio is a customer engagement platform, which means we power digital interactions between a business and its customers across channels like text, phone, chat, email, and contact centers. Say you need to change an upcoming flight, so you call your airline’s customer service representative to rebook, and then receive an email from the airline with your new ticket. Twilio’s technology powers the contact center behind the customer service agent who helped you, and the email platform that sent your ticket.
With Twilio.org, we sell that same communications technology at a discounted rate to nonprofits that use a range of digital channels (text message, voice or video calls, email, etc.) to engage beneficiaries or volunteers, which helps them better address issues like long-term well-being, support for humanitarian crises, and improving health outcomes. That revenue supports the costs of running Twilio.org and funds more R&D (developing new products to serve these nonprofits, for instance). What’s left over is profit, a percentage of which we reinvest into Twilio.org, and the rest of which goes to the company’s bottom line.
This model ensures that our social impact arm is not simply a do-good team, siloed off to the side. Instead, we have a seat at the table and are involved in key business decisions. Note that this isn’t about making “the business case for social impact.” This is about reframing social impact as a vital part of a healthy business—one whose mission includes generating profit to increase social good.
Pinpoint your purpose
For this model of integrated impact to work, social impact programs need to be deeply aligned with the business. The idea is simply to make sure a company’s social impact work is no longer separate from the core business, and to connect that company’s products to the change it seeks to affect.
This will look different depending on what your company’s value proposition is. My company makes communications software, so we provide digital-engagement technology and financial resources, such as discounts and grants to help nonprofits scale their reach and impact.
For example, The Trevor Project, the world’s largest suicide prevention and mental health organization for LGBTQ+ young people, uses our communications technology to connect youth in crisis with trained counselors. Another example of aligning impact and revenue is Rothy’s. Fashion is one of the major polluting industries in the world. As a shoes and accessories retailer, their goal is a fully sustainable production cycle, where the company creates products from recycled materials like plastic bottles, aims for zero waste and LEED certifications at its workshops, and even recycles shoes after they’ve been worn into their new products. Purpose is built into their business goals, and profit helps them scale their sustainable operations—a win-win.
Full integration is the goal, and where your social impact team sits within the company matters. If your company is sales-driven, social impact should sit under sales. If your company is product-driven, put it under product. Integrating the social impact team into the right part of the company ensures that it stays in lockstep with corporate priorities. This is even more important in a down economy, when all business units need to practice focus and discipline in order to remain in sync with the company as it evolves.
More than just window dressing
One common critique is that CSR programs are publicity efforts meant to burnish a company’s reputation without making a meaningful change. Making a CSR team into a source of revenue, and aligning it with the value proposition of the company, can help assuage that concern by ensuring that the team is literally aligned with the company’s most fundamental objectives. However, it’s also important to ensure that profit isn’t the only goal. Profit is merely the tool we use to enable us to continue growing impact. Those goals often benefit the company’s brand, but that’s secondary.
In addition, social impact programs are especially valuable in keeping employees engaged—a big concern today, when the labor market is so volatile. Data shows that companies with giving and volunteering programs have 2.3 times the employee retention rate than those without one. And at our company, 87% of employees indicated that the company’s commitment to social impact makes them proud to work here.
Tough times create constraint but can also create momentum. Building a P&L and structuring your social impact team in the right part of the business means you don’t have to make a hard decision when budgets dry up. Instead, you can continue doing good when it matters most.
Erin Reilly is the chief social impact officer at Twilio.org.