Getting a High Five For Giving

The other week I went to my local Whole Foods Store and at checkout was asked whether I would like to contribute a dollar to "Empower Women Through Credit". There in front of me was a flier with a picture of a woman named Gloria, that explained the story of her business and how with a micro loan from Grameen America, in partnership with the Whole Planet Foundation, was able to start a successful flower stall business in Queens, New York. With this assistance she is now planning to expand into a flower shop.

When I agreed to add the $1.00 to my bill, the employee at the cash register gave me a big high five. I was wowed by this guy's enthusiasm over a mere dollar and wondered what it takes for a business to motivate the employees to care so much and in turn to inspire the customers to give.

I give Whole Foods "high fives" for using these five important strategies to successfully to build their philanthropic program that serve as examples for other businesses to follow.

1. Have a clearly defined structure within the organization, which could be as formal as a foundation, a department, or just a team -whose purpose it is to develop the organization's philanthropic plan.
2. Develop a vision, strategy, and some good ingenuity for executing the vision that aligns with the main purpose of the business.
3. Educate your customers. Provide them with information about the philanthropic programs they will be helping support. Give the cause a real face, like Gloria's.
4. Engage the customers. Ask them to help support your cause by donation. Encourage their giving with matching programs, discounts, or rewards.
5. Involve and inspire the employees. They are your best fundraisers and their enthusiasm will infect the customers with a desire and willingness to help.

Mostly, a “high five” attitude may be the most powerful tool any organization can have to help support worthwhile causes, such as ones that go towards Gloria's flower business and the many other micro entrepreneurs that Whole Foods and Grameen Bank help support.

The Fourth Sector

In this era of recession and pricey bank bailouts, much of the public feels a creeping sense of unease about the role of corporate business in America. But for Mike Hannigan, founder of Give Something Back Business Products, there’s cause for hope.

Hannigan’s company, co-founded with partner Sean Marx two decades ago, donates the majority of its profits to local charities. As a result, the Berkeley-educated Hannigan has begun to chart a promising new path for corporate leaders. With Marx holding the reins of the company’s day-to-day operations, Hannigan has taken his insights to the road as speaker, lecturer and mentor for a new generation of business leaders. The best part, too, is that his message portends a new, robust arena of corporate giving within the business sector.

Be sure to check parts one, two and three of our interview. They lay the groundwork for this fourth and final installment of the conversation, in which Hannigan shares his fascinating vision for the future.

Q: What do you see as the future of the company? And do you see other companies following your lead?

MH: In the seventies, when I was in college as a student activist, there was a whole group of student activists like me. We were everywhere back then in the early-seventies. But I didn’t know a single one of my peer group that said, okay, I’m going to be an activist for the rest of my life, and I’m going to use business as my tool to reach those goals.

Business was not presented as a tool for somebody who was focused on producing social benefit. Business is now seen as a pathway to do something good for the world. You can’t go to a major business program at a college today and not find a huge chapter of people who are there because they want to integrate business with some corporate social responsibility. So it’s very mainstream. Every curriculum in the business schools has a significant element of responsibility as far as the core curriculum.

That didn’t happen fifteen years ago. There’s this whole network of national organizations that are similar to [how] the chambers of commerce supports the regular business community: Social Venture Network, Investor Circle, Business for Social Responsibility, B-Corp. There’s hundreds of these national and local organizations which are clearinghouses for business people, people who use the tool of business but have social responsibility as a core organizing element.

So in the past fifteen years especially I think we are kind of on the threshold of this fourth sector of the economy. There’s the non-profit sector, which is about a hundred years-old. You got the government sector. You got the for-profit sector. Now you’ve got this whole kind of consolidation of what’s called almost a fourth sector of the economy.

You’ve got billions of dollars now in investment capital coming to fund investment in businesses like this. You’ve got lots of successful models: Give Something Back, Newman’s Own, Patagonia, Ethos Water, Method, Seventh Generation. Hundreds of companies now that are organized specifically by people who see business as a tool to accomplish viable social benefit.

So I think fifty years from now we’ll look back at the early twenty-first century and say, oh, that’s where the fourth sector of the economy started off. Because the business community and the government community and the non-profit community are not really up to the task of figuring out a way to distribute the unbelievable wealth this country has.

That’s what we’re a part of is that whole kind of movement to create the institutions that will facilitate the workings of the market on behalf of the community as a whole, and let consumers play their role in doing it. I’m very optimistic about where we are in terms of creating this longstanding institution. I think twenty years from now, people will look at companies like Give Something Back and there will be thousands of them.

Q: I grew up in Northern California, and I can totally see the Berkeley influence in what you’re saying. It’s really cool.

MH: I totally agree with you there, but I tell ya, I will have a conversation with someone in St. Louis and it’s basically totally consistent with those bedrock, middle-American values. Anybody would support the idea of the marketplace. We’re not arguing for the elimination of our competitors. What we’re trying to do is create an alternate strategy that consumers and citizens can pursue to their benefit, both commercially and environmentally, and in other social ways.

So we’re not saying let’s eliminate the exploitative business world. We’re saying let’s transform the business world in a way that considers the power of the community as stakeholder to create a better world. And you know, there’s not a lot of people that can find fault with that.

We’re a market-based organization. Our goal is to go out and aggressively compete our competitors whenever we can. In an ethical way. And the beneficiary of that is everyone, not just a few people that happen to own stock in the company.

The Perception Game

Like any hard-charging corporate leader, Mike Hannigan has profits on the mind. Nearly two decades ago, Hannigan, alongside longtime business partner Sean Marx, founded Give Something Back Business Products, a Northern California-based office supply company. Since then, they’ve won press, plaudits, and yes, plenty of profits.

What sets GSB apart, though, is where they direct those profits. Unlike most companies, Give Something Back Business Products devotes the majority of their earnings straight into the coffers of local charities. As Hannigan explained during the first part of our exclusive four-part interview, Give Something Back Business Products utilizes a thoroughly unconventional business model. So unconventional, in fact, that it occasionally leaves peers in the business world scratching their heads.

In part two of our conversation, Mike describes his efforts to maneuver the prickly game of perception as he forges a bridge between the worlds of business and philanthropy.

Q: In those early days of starting the company - you and your co-founder Sean Marx in the early and mid-nineties, when you were first starting up - were there a lot of people who kind of just laughed you out of the room?

MIKE HANNIGAN: There still are.

Q: Really?

MH: I mean, we still have problems. One year – I think it might be our third year - when we first got onto the Inc. Magazine 500 Fastest Growing Companies List, we were also the award winner for the worst corporate name. Because the Inc. people couldn’t figure out Give Something Back. That’s not a business. That’s like a non-profit. That doesn’t say anything about selling office products.

So we constantly have to overcome this perception that we’re asking customers to make a financial sacrifice in order for just a social benefit. I mean, every company gives its profits away. Every company. They give it away in dividends to the stockholders for appreciation of the stock. No company sticks the profit in a mattress somewhere. Eventually it gets distributed to the owners as appreciation or dividends. So that’s an argument we have to make to the consumer.

The consumer, though, they don’t have the option of spending more. If we can get in the door and we can say, well, okay, so what’s important to you? And they’ll say, well, I need to have competitive prices. So we’ll say, let’s see what you got. And then they compare with what we have and they say, you guys are cheaper, or the same.

Also a significant portion of our business comes from winning closed competitive bids where the winner is not even known until the envelope is opened in public and the lowest bidder is determined. Closed, competitive bids. Everyone submits their prices, and the buying company opens the packets and the lowest price wins the deal. We win more than our share of those.

But you’re absolutely right. Initially, the perception of a competitive business could survive in our marketplace and give its profits away was a counter-intuitive proposition, but I think in the past ten or fifteen years, that’s less and less so. It’s still a hurdle we have to overcome, but once we overcome it, there’s a stickiness to our customers that I think most of our competitors don’t have. Once they actually see that, oh geez, they got this box of pens for a buck sixty-nine. They used to pay a buck seventy-nine. Then you’ve got a customer for life.

The concept of the community as stakeholder is a novel one, to be sure, and Hannigan is relentless in educating the public about his endeavor. But how does Give Something Back Business Products allocate the generous funds it donates to charities each year? Tomorrow, in part three of our conversation, Hannigan reveals the mechanics of his company’s giving.