At ImpactCo, we firmly believe that business has the power and responsibility to transform society. However, to achieve this, it is essential to distinguish three concepts that are often confused: philanthropy, doing the right thing and social impact. These approaches are different ways of generating value, but each has different implications and scope.
Where are we today?
After more than 15 years of driving the purpose economy, we have attended countless events on sustainability and social impact. Despite progress, we are still far from the necessary transformation in the business world.
The problem lies not in the free market, nor in the figure of the entrepreneur, but in the disconnection of certain actors with the essential values of social justice and sustainability. When companies prioritise ego or greed over the common good, they miss the opportunity to build a balanced society. And without a healthy society, the market, along with business, inevitably declines.
In this context, it is crucial to understand the differences between philanthropy, doing the right thing and social impact, and how each can contribute to change.
1. Philanthropy: giving back to society from profits
Philanthropy is the act of using profits generated by a company, after paying taxes, to support social or environmental causes. Many companies choose to create foundations to channel these donations, obtaining tax benefits as well.
While all contributions are welcome, ImpactCo suggests that, rather than creating new foundations, existing organisations should be supported and that philanthropic actions should be genuine and discreet. To do otherwise could lead to scepticism among stakeholders.
2. Doing the right thing: a minimum standard
In addition to honest tax compliance, ‘doing the right thing’ involves adopting ESG (environmental, social and governance) principles in business operations. This approach seeks to minimise the negative and enhance the positive impacts of corporate activities.
While this is a step in the right direction, it is not enough to classify a company as a social impact generator. Having an ESG department or publishing a sustainability report does not radically transform an organisation. It is the beginning, not the end of the road to a true economy of purpose.
3. Social impact: transforming from purpose
Social impact companies go further. These organisations have a clear purpose that improves people’s lives and protects the planet, while meeting a demand in the marketplace.
What characterises a social impact company?
They have a double bottom line: economic and social, both of which are equally important.
They put their purpose before short-term profits.
They design innovative products, services and value chains that contribute to a fairer world.
They see positive impact at the heart of their business success.
These companies do not seek to maximise profits at any cost, but achieve them as a direct consequence of their positive impact.
Why do we need social impact companies?
Business transformation is not just desirable, it is essential. Without companies committed to social and environmental impact, we will continue to see rising inequality, degraded ecosystems and a less habitable planet.
At ImpactCo, we help companies evolve towards sustainable and positive impact models. This change requires innovation, strategic partnerships and a long-term vision, but it is the only way to ensure a better future for generations to come.
En ImpactCo, ayudamos a las empresas a evolucionar hacia modelos sostenibles y de impacto positivo. Este cambio requiere innovación, alianzas estratégicas y una visión a largo plazo, pero es el único camino para garantizar un futuro mejor para las próximas generaciones.
Let’s build the future together
Transforming the way we do business not only benefits society and the planet; it also ensures a sustainable marketplace and competitive businesses.
Let’s do the right thing, practice responsible philanthropy and, above all, transform our companies into engines of positive social impact.
Ready to take the plunge? At ImpactCo, we are here to accompany you.
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