By Peter Scher
Corporate philanthropy was once defined by the checks a company wrote to charities. But money, while critical, is only one of many assets a company can bring to bear – and often times, it is far less powerful than the skills and capabilities that companies can draw from their business operations and apply to solving big social challenges. That is why increasingly global corporations are rethinking their approach to corporate responsibility, evolving toward a model in which traditional donations are supplemented by innovative programs and initiatives that tap into the core strengths of the business.
This trend is evident across industries and across critical social causes. When natural disasters strike, retailers and logistics companies are often among the most effective responders, leveraging their supply chain expertise to help governments (and sometimes independently) deliver food, water and temporary shelters in a matter of days. Technology and Internet companies are turning their algorithms and access to vast troves of data to do everything from monitoring for the outbreak of infectious diseases, to creating platforms for political organization in emerging democracies.
Bringing skills to bear
The financial services sector is no exception in this growing phenomenon. For example, at JPMorgan Chase we are building a fast-growing Social Finance business. Some of our firm’s smartest investment bankers are now fully dedicated to finding funds that invest exclusively in businesses that are addressing critical local challenges. One such fund is IGNIA, a Latin America-based fund, through which we helped deliver a $3.1 million investment in Barared, a low-cost telecommunications and correspondent banking company in Mexico. Barared provides its services to Mexico’s low-income populations through public telephone booths located in neighborhood retail outlets such as convenience stores and pharmacies.
In the past, companies like ours might have found it sufficient to simply donate that kind of money to a Mexico-based non-profit. What is so exciting about this new approach is that it allows us to maximize our impact by unleashing the skills, expertise and relationships our bankers have built throughout their careers. And we are only scratching the surface. Today, our principal investment in this space is $50 million. We expect that to grow significantly in the coming years. As importantly, we expect other financial service companies, investment groups, high-net wealth individuals and others to start putting capital to work in similar programs.
A collective responsibility
We are still in the early days of this new model of corporate social responsibility. In the coming years a key challenge will be finding the right models for measuring impact. But there is reason for optimism. Global corporations can contribute technology, talent and capital at enormous scale. The upshot will be partnerships that empower the world’s non-profits and other problem solvers with powerful tools, access to great minds and unprecedented sources of financing.
The bottom line is that global enterprises and the men and women who lead them are realizing that our long term success will be defined by our collective ability to lift more people out of poverty, preserve our natural environment, educate rising generations and create the fundamental conditions for widely shared prosperity. And the best way to do that is to apply our robust capabilities to helping solve these great challenges.
That is where ever more energy and focus is being directed in our company and among global corporations generally. As much as any development in recent years, this growing movement should be a source of great hope for us all.
Peter Scher is Head of Corporate Responsibility at JPMorgan Chase & Co.