Community Investment

What is community investment and giving back?

Image Courtesy Madi Robson
Image Courtesy Madi Robson

Community investment is the act of giving back to or investing in a community. As a type of philanthropy, it provides a community and its citizens with the skills and tools needed to improve their own quality of life, such as buying a home, having a job, or starting a small business.

Community investments and giving back are decisions and contributions made by individuals, neighborhoods, communities, companies, governments, and special organisations all over the world. Here, we’ll focus only on the investments made by companies.

Investments can come in any form—money, service hours, and products and services, for instance. The term “community” can mean different places: where the company operates, where it sells products, or where help is otherwise needed. For example, Toms shoes started out by giving free shoes to poor communities in Argentina, a place that wasn’t otherwise affected by the company’s operations.

We believe the best companies believe in giving back. The B Lab said it best, “We have a dream that one day all companies will compete not only to be the best in the world but the best for the world.”

Modern philanthropy dates back to the ancient world, where it was ingrained in established belief systems, including Chinese classic thought, Hindu scriptures, Judaism, and Native American beliefs, among others.

You might associate philanthropy with giving money to charity, and that’s still a huge part. However, philanthropy involves other acts of giving back too. Some of which, we discuss in this article.

Present-day giving is more organised, professional, and global than ever before. Thanks in part to technologies that allow us to connect to people in need—no matter where in the world they live.

The Biggest Issues & Why They Are Important

1. Tax Avoidance

Tax avoidance is a global problem in the business community as well as among the individual elite. Companies avoid paying taxes through legal loopholes in tax law, such as offshore subsidiaries or tax shelter investments. Even though this practice is legal, it’s rarely considered ethical.

Why It’s Important

Public services and programs are funded by tax dollars. When companies avoid paying taxes, they shift the majority of the burden to the shoulders of the community and its citizens. This is a problem specifically for the low-income and middle class groups, who feel the strain. By not paying its fair share of taxes, a company is exploiting the community.

2. Lack of Community Investment

Image Courtesy Aranxa Esteve
Image Courtesy Aranxa Esteve

A company depends on the community it operates in. It relies on the same public goods like well maintained streets, clean water, and electricity. It needs a supply of skilled workers and people who can afford its products and services.

Before the internet, companies were more tightly bound to the communities they operated in. Now, the internet has empowered more global operations. A business located in downtown Sydney sells to markets in Tokyo, Hongkong, London, and Paris. Global supply chains lead to disconnect between community and company, which sadly contributes to a lack of community responsibility and giving back.

Why It’s Important

A company should not take, take, take without putting something back into the community—or in this case, the world. It’s not only exploitative, it’s bad business. When the community prospers, the company also benefits. For example, investments in youth educational programs gives young people more skills and future job opportunities. As a result, companies gain a more skillful workforce.  Giving back is about creating a sustainable ecosystem beyond company shareholders.

Take Action: How to Support Giving Back When You Shop

Image Courtesy Evan Kirby
Image Courtesy Evan Kirby

By supporting companies who believe in giving back, your purchase can directly improve someone’s wellbeing—no matter how large or small. Doesn’t that feel good?! You bet it does.

To support companies that do good and give back, look for these certifications, pledges, and programs.

B Corp Certification. B Corps are for-profit companies certified by the nonprofit B Lab to meet high standards of social and environmental performance, accountability, and transparency. The certification helps shoppers identify companies that are trying to do good in the world.

The assessment covers the business’s impact on all of its stakeholders, including its workers, suppliers, community, and the environment. The Community section evaluates a company’s supplier relations, diversity, and involvement in the local community. It measures the company’s practices and policies around community service and charitable giving. This section also addresses products and services that are designed to solve social issues, such as access to basic health services, education, economic opportunity, and arts.

Find a B Corp business near you in B Lab’s company directory.

Fair Tax Certifications & Pledges. Some organisations have launched fair tax programs to tackle corporate tax avoidance. One such example is UK’s nonprofit Fair Tax Mark. The accreditation scheme rewards businesses that are good taxpayers. In their words, a company is certified “as paying the right amount of tax in the right place at the right time and applying the gold standard of tax transparency.”

It’s likely that fair tax programs will continue to pop up all over the world. Until a specific program exists in a company’s location, public pledges can be made to say “we do not avoid paying taxes.”

A public pledge is a step in the right direction, but without a certifying process, it has several flaws. One, there is no audit or assessment to ensure the truthfulness of the company’s statement. Two, it’s not a legally binding act. Thus, a company cannot be held accountable if the pledge is violated or completely untrue.

Community Investment Pledge & Programs. Companies can publicly commit to giving back to their communities. The best pledges are backed up by action, policies, and programs.

How might a company give back? Here are some ideas:

  • Giving to charities. In Australia, companies can become a Pledge 1% Partner, where 1 percent of their equity, product, and employee time is dedicated to their communities.
  • Funding education, tech, or arts programs. Examples are hosting youth coding boot camps or starting senior citizen internship programs.
  • Providing needed services like food access, education, child care, access to transit, and affordable housing
  • Creating jobs
  • Employee volunteering
  • Giving scholarships
  • Sourcing services from other local businesses. This keeps money circulating in the community.
  • Loaning out company assets and resources to community causes

“Buy One, Give One” Products & Services are purposely designed around giving back. This model exists for a number of product categories, including glasses, meals, and meditation services. A notable example is Toms shoes. For every pair sold, Toms gives a free pair to someone in a poor shoe-less community. A little bit closer to home, at Melbourne-based The Soup Place customers buy bowls of soup for the local homeless.