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Perspectives: Are Philanthropy and Socially Responsible Business in Conflict?

Posted on the 11 May 2011 by Blab

Perspectives: Are Philanthropy and Socially Responsible Business in Conflict?By Mal Warwick, One World Futbol Project

Recently a spokesperson for the California Association of Nonprofits publicly expressed opposition to legislation recognizing the benefit corporation (such as the B Corporation) as a legal entity in my state—because he fears that at some point in the future B Corporations might seek tax breaks for investors and consequently reduce the amount of money available for philanthropy. Unfortunately, this point of view reflects the same parochialism and resistance to change that I have observed in more than three decades of work in the nonprofit sector.

Let’s be clear about what is happening here. During the past 20 years or so, the understanding has been gaining traction in the private sector that business bears responsibility not just to its owners or shareholders but to all its other stakeholders as well: employees, customers, suppliers and the community as well as to the natural environment. B Corporations don’t just talk this talk: we walk the talk, too, and we can prove it—because our certification as B Corporations requires that we meet stringent criteria embodied in a screening survey and verified by professionals working for B Lab, the nonprofit organization behind the B Corporation movement. The hundreds of B Corporations now in business—together with thousands of other like-minded companies that may not yet have learned about the value of becoming certified—are collectively making a huge difference in our society. If the California Association of Nonprofits were truly concerned about the public benefit in our state, I would think they would welcome these contributions, not reflexively dismiss them.

In the United States as a whole, philanthropy is a $300 billion industry. Americans have been contributing at this level for several years on an annual basis, a total that represents roughly 2% of our GDP. But those numbers pale beside the trillions of dollars invested in business—an estimated $9 trillion in Socially Responsible Investments alone. Philanthropy in the U.S. can and will continue to grow, but it will never reach a level even remotely comparable to the sums invested in business.

Legislation to establish the “benefit corporation” in California is a no-brainer for anyone sincerely concerned about channeling funds to meet social and environmental challenges. As the B Corporation movement continues to grow, and more and more funds are invested in mission-driven companies like ours regardless of whether they are certified as B Corporations, the resulting social impact will be impossible to ignore.

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