{"id":60316,"date":"2023-10-11T08:00:24","date_gmt":"2023-10-11T12:00:24","guid":{"rendered":"https:\/\/businessesgrow.com\/?p=60316"},"modified":"2023-10-29T07:42:49","modified_gmt":"2023-10-29T11:42:49","slug":"generosity","status":"publish","type":"post","link":"https:\/\/businessesgrow.com\/2023\/10\/11\/generosity\/","title":{"rendered":"The Generosity Paradox: Why Corporate Giving Can Be Perilous"},"content":{"rendered":"

\"generosity\"<\/p>\n

Like nearly every person who took a college economics class, I grew up in the Milton Friedman school of corporate thinking: A business should serve its shareholders … and that’s it. There wasn’t much room for environmental activism, community outreach, or charitable generosity.<\/p>\n

\"Milton

Friedman<\/p><\/div>\n

Obviously, times have changed. Business is more than making money. HOW you make the money also counts, at least most of the time.<\/p>\n

Milton Friedman<\/a> was a Nobel-Prize-winning economist, but his most famous statement was swept away forever in 2018. The world’s largest investment firm, BlackRock, shook Wall Street with an edict to business leaders that companies need to do more than make profits \u2013 they also need to contribute to society if they expected to receive support from the investment company.<\/p>\n

The BlackRock CEO wrote, \u201cSociety is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.\u201d<\/p>\n

He said that if a company doesn\u2019t engage with the community and have a sense of purpose, \u201cit will ultimately lose the license to operate from key stakeholders.\u201d<\/p>\n

The New York Times<\/em> called this a watershed moment, one that raises all sorts of questions about the very nature of capitalism. The world\u2019s largest investor saying that companies have to be about more than money \u2013 and declaring that it plans to hold them accountable \u2013 is a bracing example of the evolution of corporate America and the undeniable impact of civic responsibility.<\/p>\n

The Generosity Paradox<\/h2>\n

We are in a period of time where generosity is a two-edged sword. Tom’s Shoes found this out the hard way.<\/p>\n

Beginning in 2006, the company gave away one pair of shoes for every pair it sold. The one-for-one model is straightforward and self-explanatory; you buy a pair of shoes, and one is given away. Toms has been called the pioneer of this model; whether they invented it is not as important as the attention they brought to it.<\/p>\n

One for One created contagious word-of-mouth marketing for Toms. Consumers felt good about making a purchase, and the cool-looking shoes served as a badge of giving honor, letting everyone in the world know that the wearer is a charitable citizen of the world.<\/p>\n

But the whole thing backfired, and it started with one comment on the company’s Facebook page:<\/p>\n

You should know that when you buy a pair of Tom\u2019s Shoes, they ship a pair to a developing country, which undermines the ecomony there and can cause local vendors to have to shut down. Most families in developing countries are large so that is a number of people who are no longer receiving support. I have lived in the deepest darkest depths of Africa (Sudan) and no one is going shoeless. Tom\u2019s does more harm than good.<\/p><\/blockquote>\n

Tom’s was not solving the root problem. They appeared to be generous but were actually doing harm to local economies in developing countries. The company eventually ended the One for One program.<\/p>\n

Although this was a well-known case study, we live in a world that has a heightened sensitivity to greenwashing and over-hyped generosity.<\/p>\n

How to be Generous the RIGHT WAY<\/h2>\n

My Marketing Companion Co-Host Keith Jennings<\/a> has studied the psychological, sociological, and economic aspects of generosity like few other humans on earth. I guess you could say it’s his job since he’s vice president of community impact for Jackson Healthcare<\/a>.<\/p>\n

This was an exceptional opportunity to explore the business case for generosity. Some of the highlights of this show include:<\/p>\n