Soul Economy

There are 1.3 million SMEs in Australia, accounting for 96 per cent of all businesses (Sensis, Feb 2007). With SMEs playing such a prominent and important role, I was keen to find out the more about how they are giving back to the community. Much of the research focused on corporate philanthropy in the form of monetary donations, volunteering and other forms of “giving”.

Volunteering is an important part of CSR for Australian companies. In a 2006 survey undertaken by Volunteering Australia, 54% of respondents ranked corporate social responsibility considerations as the main reason why their company engaged in volunteering programs. Overall the survey findings revealed that corporate volunteering is regarded as a positive and worthwhile endeavour for the company and its employees.

In a recent Sensis survey of Australian SME community involvement, a huge 86% of SMEs donated and participated in charity activities in 2006. Monetary donations were the most popular way to contribute, accounting for 70% of “giving”. The average time volunteered by each Australian SME totalled 227 hours, including 37 per cent of businesses giving more than 60 hours of their time to charity. SMEs expect this trend to continue in 2007 with 89% indicating they will increase or continue their levels of contribution.

The government report on “Giving Australia: Research on Philanthropy in Australia” (Oct 2005) further supports the significant contribution of SMEs. Businesses with 1-10 employees gave the largest amount overall accounting for $1.5 billion or 47% of all business giving. This group makes up 89% of corporate Australia. Of businesses with less than 11 employees, 66% participated in some form of giving, for businesses with 11-50 employees it was 77%.

It is interesting to note that small business contributes more in the form of goods and services compared. For example, compared to larger companies with 501+ employees, businesses with under 11 employees were more likely to give accommodation and strategic planning and management advice as well as staff training and employee time than the overall averages.

These figures are very impressive and I commend SMEs for their efforts particularly as they do not have access the vast range of financial, time and people resources that the larger organizations have, yet they still contribute.

At the same time, however, larger businesses are giving more with 96% of those with 501+ employees participating in some form of giving (20% of all business giving). The research also revealed that large businesses tend to engage in more sophisticated forms of giving, such as community business projects and sponsorship, and tend to have developed program for giving. SMEs on the other hand displayed a concern that giving contradicted their responsibility to stakeholders and their giving was generally less organised and more reactive than large business, although there is a strong interest to change the latter.

With SMEs playing such an important role in Australia, as well as in other developed and developing countries (in OECD economies SMEs and microenterprises account for over 95% of firms in developing countries more than 90% of firms outside of the agricultural sector — Promoting SME for Sustainable Development, SNV &WBCSD) there is certainly the argument for SMEs to apply a more strategic approach to corporate philanthropy that provides a “win” for both the business and society.

A good example of this is the winner of the UK Business in the Community’s Small Company of the Year 2006 in The Impact on Society for a Small Company Award, Happy Computers. They are an IT training company employing 42 staff. Social inclusion and positive impact are integrated into all of the company’s activities from the design of training to the choosing of suppliers and payment terms. Its aim is to make people more effective in their use of IT and in their management. They also have a variety of initiatives to benefit the wider community including that they have paid an endowment for one acre of rainforest for every 50 courses run for the past 16 years, they donate10% of pre-tax profits to charity – 4% in cash donations and 6% in paid time, the company ‘banks’ 100 hours of time a year that can be drawn down by any member of staff to work on for a specific charity and much more!

The benefits to the business are increased staff productivity, community recognition and customer satisfaction — when comparing Happy to its competitors out of 11 categories, Happy came first in 8, second in 2 and third in one. To find out more visit www.smallbusinessjourney.com/Page144.asp

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