Man in a pink shirt

There are huge opportunities for companies prepared to pursue purpose with the same vigour they pursue profit…

… it’s where the two align that the magic happens, says Graeme Marsh, Head of Foundation at the McCarthy Stone Foundation

Graeme is a panellist at the RealService and GRESB partnership event, hosted by Canary Wharf Group. He took time out to tell us about his work, the importance of ESG and his passion for corporate philanthropy.

So, what’s a typical day for you at the Foundation?

It depends on the time of year but there are really three key elements to my role.

One is fundraising, we are always trying to keep money coming in. This might be attending an event with suppliers or supporting our colleagues in McCarthy Stone.

Two is grant making – we are either administering a grant programme, distributing a grant programme or preparing a grant programme. That never stops.

Third is governance and organisational management. I might be preparing papers for my trustees, researching, managing our finances, or writing policies. Corporate foundations present unique governance challenges, which is a part of my role I really enjoy.

I wear multiple hats and my email in-box is full of correspondence from all sorts of varied people. It’s what makes the job very interesting. It changes minute by minute and some of that is because of how I work best. I’m not one to concentrate on one thing for eight hours, I prefer to divide my day into chunks and that gives me the variety.

What keeps you up at night?

There are some dire situations going on across our world, from conflict to environmental damage, and I’m a natural worrier, so it could be anything!

Within our sector in the UK, we are all concerned about the consistent drop in those donating to charity, combined with the increased cost bases we all face, and an over reliance on underfunded local authority contract work seeing further cuts. It’s sad that so many traditional forms of philanthropy within communities seems to have died out, although there is a slowly building industry in social investment and business with community benefit, which I hope continues to grow.

There’s also the notion of social responsibility as an individual; it’s been abdicated to governments, corporates or just ‘someone else’. We need more control over that. I worry that going forward, have future generations got that sense of individual responsibility and the belief that, as individuals, they can impact others? Or are they being raised with the sense that it’s the state’s responsibility or corporates’ responsibility?

Many of the challenges we face can be tackled, but it does start with individual responsibility and a strong sense of social purpose. Getting ahead of others sometimes seems to be more important to people than us all achieving together.

Your panel at our partnership event with GRESB and Canary Wharf Group is looking at ESG from a social value perspective. Why is social value so hard to quantify and how should we tackle it?

ESG is an emerging field and, as such, there’s a lack of expertise and still real challenges around how we can measure social value when it can’t be reduced to a bottom line. This isn’t a new problem; the sector has been grappling with this for years.

Corporates seem to get their heads around the E and the G – which is often covered by legislation – but not the S. The penalties for contravening FCA regulations can be severe and the reputational damage is potentially huge, but on the social stuff there is still a lack of understanding about what it means to businesses, beyond the more obvious charity washing and virtue signalling.

If you go down the Porter & Kramer argument, they say corporates should be investing in this because they are making their society better and that can give them a competitive advantage.

If you go down the Friedman route, he would say this isn’t the responsibility of corporates because they exist only to make profits for their shareholders; he’d say it’s not their money to give, and that companies giving money to charity is ultra vires to their purpose for existing. However, customers are thinking and acting differently to the 1970s and pound for pound, many will choose to support a business they perceive as ‘socially responsible’ ahead of one that isn’t. 

And then you get the challenges around what happens when government funding gets reduced, particularly where charities are delivering public sector contracts, often without full cost recovery.

We’ve seen it over the years with the Conservative party; local authority funding cuts, the age of austerity, and the dreadful impact that deprivation has on quality and quantity of life.

When we lose small charities it has a real impact with knock-on effects

When we lose small charities because of escalating costs and falling donations, that has a real impact with knock-on effects – typically increasing the reliance on the state. That, in turn, leads to too much government influence and control over our sector and an unhealthy dependency on statutory support.

The problem can be addressed by greater investment in our communities, and consideration of the social values business can add. I recommend checking out the work of Professor Michael Marmot for more information on this.

Another thing we are seeing is an emerging – but still small – charitable investment space where businesses are set up with a community interest purpose. These are companies set up with the community in mind and with less bureaucracy and a much lighter touch around regulation than charities. There’s also the rise in sustainable investing and areas like renewables, that historically may have been viewed as an ethical choice that came with a lower return, but now offer both positive social impact and the potential for a strong financial return.

Tell us about your experience in the charitable sector

When I began working in the charitable sector I started in Tanzania, Rwanda and Uganda. I think what you become conscious of out there is the impact and interactions of bigger forces and the structural challenges that drive inequality and poor life outcomes. This isn’t as clear sometimes in the UK. It can be hard to think of austerity when we still see people queuing overnight for the latest piece of Apple hardware.

There’s a different model of philanthropy. The model here is very much of the rich giving to the poor, the haves giving to the have-nots.

The model out there is much more community oriented, more horizontal, helping your neighbour. We used to have that in the UK, with mutuals, building societies, co-operatives, working men’s clubs etc, but capitalism has moved the dynamic on that. Of course, as the middle classes in African countries grow, we are seeing a more western style of philanthropy alongside this.

Since my time in Africa, I’ve been fortunate to work in animal welfare, which remains a core passion of mine, and now leading a corporate foundation for McCarthy Stone, a job I love and enjoy immensely. I truly believe in bridging the gap between the private and third sector, where there are huge opportunities to do great things.

Between 2016 and 2022 the FTSE100 saw a 179% increase in profits but charitable donations dropped from 2.4% to 0.8%

What challenges do you see in the corporate workplace?

Many companies once owned by families and rooted in local communities are now owned by global corporations, who while they may talk a good game on purpose, often struggle to operationalise this.

The latest corporate giving data from Charities Aid Foundation showed that between 2016 and 2022 the FTSE100 saw a 12% increase in cumulative revenue and a 179% increase in profits, but over this time, charitable donations dropped from an average of 2.4% of pre-tax profits, to 0.8%, a real time decline of 17% (considering inflation). Had this proportion of giving been held at 2.4% , it would have meant an additional £3.7 billion of funds for our sector, that’s an additional £22,000 for every registered charity in England and Wales.

You could argue that the two are mutually opposed: you can have a purpose-driven business or a profit-driven business but it’s hard to serve both masters. It takes real commitment to manage this tension, but it is possible and there are companies who achieve this. A corporate foundation is just one way of bringing these two together, creating separation and independence while bringing the accountability and transparency required by charity law.

McCarthy Stone’s foundation is strategically aligned with the company’s own purpose to champion the role, wellbeing and happiness of older people, working to support grassroots community groups working with older people across the country. And they aren’t the only prominent brand doing so, with high street names like John Lewis, Greggs, Asda, Costa, Vodafone and Nationwide, all supporting their own corporate foundations.

However, if a business is having a difficult time, it can be hard to marry up the message of doing more for charity when you need to make money. Yet the evidence suggests this seems just as difficult when businesses are in profit as well. Corporate foundations do help signal a commitment to this and many companies did step forward during Covid to make up shortfalls in fundraising at their foundations, even in the face of declining profits.

Then that begs the question, should the government step in? Do we trust them to redistribute this money if they take a bigger chunk of it, and what are the wider consequences on growth? 

Or are they prepared to put legislation, or at least good practice suggestions, in place that ups the commitment of businesses to give to charity? We are already seeing legislative requirements for things like Biodiversity Net Gain and the value of community work recognised in Considerate Constructor Schemes, so it may not be quite as naïve as it sounds to think this could happen.

However, a corporate is simply a legal structure; it’s those tasked with leading them who need to be socially responsible.

Does creating legislative thresholds simply encourage Friedman’s criticisms, what he called “hypocritical window dressing”, the cloak of responsibility where so long as you do X and Y, to tick your CSR box, you can do whatever else you please.

His argument was essentially that you shouldn’t bother but you should trust your taxes and your own staff to make their own societies better. However, Friedman seemed to consider this a zero-sum game, when the reality is there is potentially much to gain.

Charities are often the voice for those with little social agency

I’m not sure any political parties are really friends of the charity sector, although there has been a great deal of tension between the current government and the ability of charities to use their voice for campaigning and advocacy targeted at political parties. Charities are often the voice for those with little social agency, and it is (in my opinion) not just in line with their charitable aims, but actually incumbent of them to speak out in service of those they support.

Charity here was rooted in the religious institutions, with Quaker families like the Cadburys or Rowntrees leading the way in better working practices for employees. Charitable work was first enshrined in legislation in 1601, It was around way before the welfare state and the NHS. The welfare state has expanded and there’s always this dilemma around what’s the responsibility of government, of charities, of the private sector? Is it all the fault of market failure or state failure – where do you go with that? It’s just a rabbit hole.

How can individuals change this? Can my little pocket of resistance make a difference?

It’s the same principle of ‘why should I bother voting because either Labour or the Tories will get in?’

A movement starts with a small group of people and the British people are a huge consumer group. If we acted collectively on things we could change them. We have though become reliant on many of the systems that create harm to sustain us. We will all need to make different choices if we are to show the large private sector organisations that we want them to do more.

The question is, can we act collectively as individuals more, and not just when there’s a crisis like Covid-19. Can we do it ongoing?

My call would be for all companies to make a more long-term commitment to ESG and philanthropy

You’re a very passionate advocate; do you have a call to action?

I don’t want to seem naïve, but my call would be for all companies to make a more long-term commitment to ESG and philanthropy. A commitment beyond what is legislatively compelled and instead one driven by aligning purpose with actions, and with the drive for profit. I am proud to work for a business where they recognise the value of purpose alongside profit. Profit does not need to come at the expense of purpose, it can even come as a result of it. However, the gap between business and philanthropy is still wide and needs closing.

But in balance to that, it has also to come from individuals. We must all stop looking to ascribe blame, and instead take responsibility, inspiring others to do the same, and holding to account those we vote for to represent us along with those who provide our goods and services.

I believe you can influence the behaviour of corporates through the actions of individuals. If companies felt they wouldn’t get the best staff if they weren’t leading on this (and there’s an element of this already happening), they would make changes. The best people want to work for the best organisations.

However, we can’t rely on capitalism and profit to drive ethical changes for purpose. There has to be a quid pro quo and when it happens it might be legislative – stick – or it might be driven by improvements in reputation and brand equity – carrot.  Would we need to put corporation tax up if businesses were doing more to promote a better, happier, healthier society?

These things must be earned and fought for – if we want less deprivation, better health outcomes, less inequality, less environmental damage and a better society, we have to earn it and fight for it ourselves.

We can’t just sit back and say the government should be doing it, especially when you look at those in power. Positive societal change begins with us all as individuals, using our agency as best we can to influence, help, and inspire others. How will you do that?

Share this article