Growth for Society
How to support businesses and charitable organizations aligned with your values.
This is a chapter preview. To read the full chapter, click here.
TL;DR
- How we spend our money has real consequences for the types of goods and services businesses provide as well as how they respond to world events
- Opportunities to invest with your values include community-supported agriculture, general obligation bonds, and impact investing
- You should donate money even though you pay taxes and invest in socially responsible initiatives. Donating a portion of your income to charity benefits others and fosters a healthy relationship with money.
As previous chapters have demonstrated, money is a resource to reach personal and financial goals. Similarly, organizations use money to reach their own set of goals. Some of these goals relate to the organization's financial performance, while others pertain to its societal influence. Any money given to an organization helps it reach these goals. Therefore, the organizations we choose to spend with, invest in, and donate to can reflect our values and vision for society.
Spending with your values
All businesses demonstrate values, either explicitly, for example, by publishing a mission statement, or implicitly, such as how they treat their employees. Understanding these values and how to identify them can inform which companies we choose to support.
Most consumers prioritize price and convenience over identity and values when making purchase decisions. Nevertheless, how we spend our money has real consequences for both the types of products and services businesses provide as well as how they respond to world events. For example, in response to a series of nonprofit campaigns and a graphic viral video that showed marine biologists pulling a straw out of a sea turtle’s nose, Starbucks pledged to eliminate plastic straws globally by 2020. Similarly, following years of demand for reduced vehicle emissions and the commercial success of the first zero-emission full-size electric vehicle in Tesla, other major vehicle manufacturers set dates ranging from 2025 to 2035 for the cessation of traditional internal combustion engine vehicle production.
Make your dollar go farther by learning which businesses you consider worth supporting and which you don’t. When you can, prioritize spending on local businesses, small businesses, and those that align with your values.
Local businesses
Local businesses are those owned and operated by members of your community. Supporting local businesses has a variety of positive effects. Local business owners are key contributors to the communities they live in, providing goods and services that support their neighbors and define regional culture. Money spent on these businesses is quickly recirculated back into the local community, as these companies pay state and local taxes that larger chain corporations may not be subject to. Local business owners create jobs for their neighbors and, as residents themselves, have a greater appreciation for their business’s role in community development.
For example, following the positive reception of performances done from his residence in Yellow Springs, Ohio, comedian Dave Chappelle opened a comedy club in his hometown to promote local talent. Dave’s status in the comedy industry attracts renowned performers to the 4,000-person town, boosting economic activity and its burgeoning cultural influence. By using his influence and business to support his community, Dave also brings national attention to regional social issues in an effort to effect positive change.
Dave Chappelle performing on his property in Yellow Springs, Ohio
Supporting small businesses is also good for the environment, as buying locally requires less packaging and transportation and, therefore, contributes to a smaller carbon footprint. Without your support, local businesses could fail to compete with larger chain corporations or online retailers. These competitors may not share your community’s values or feel responsible for contributing to its success. By supporting local vendors, you can help ensure these organizations continue to have a positive impact on your neighborhood.
Common categories of local businesses are shown below.
- Dining: Restaurants, cafes, bakeries, and bars
- Shopping: Boutiques, toy stores, gift shops, and flower shops
- Cultural: Bookstores, music stores, and novelty shops
- Services: Cleaning and repair services
A number of resources connect customers with local businesses in their area. For example, Yahoo Local is a searchable database of community business listings. Angi and Yelp promote user reviews and recommendations of nearby restaurants, shopping, food, entertainment, and services. Google Maps allows you to search for and get directions to businesses based on location.
Small Businesses
According to the Small Business Association (SBA), the United States is home to 28.8 million small businesses — 99.7% of all US businesses. Small businesses have played an integral part in spearheading the fast-paced growth of our country since its inception — boosting the economy, creating jobs, and enabling financial independence for successful owners.
While small businesses take on many different forms, the common denominator is size. The SBA categorizes companies with 1-500 employees as small businesses, although this varies by industry. Many local businesses are also small businesses, and many small businesses serve local customers. Therefore, the benefits of supporting both often overlap. Both local and small businesses innovate in their respective industries, and both support the economy as employers and taxpayers.
Nevertheless, many local businesses grow beyond the small business designation, and many small businesses don’t serve customers located where they operate. Because of the Internet, small businesses can target customers regardless of where they’re domiciled, often choosing where to operate based on the availability of resources instead of proximity to potential customers.
When you support small businesses, you also provide for the livelihood of the owners. Doing so encourages innovation by enabling them to bring products and services to market that otherwise wouldn’t exist. For example, retailers on Etsy make arts and crafts sold directly to customers. Money spent on these items goes directly to the creators, supporting their livelihood and financing their efforts to bring more unique products to market.
In addition to Etsy, small businesses can be found on sites like Amazon Launchpad, which showcases products from recently launched startup companies, or through social media by searching the #smallbusiness hashtag. Check whether your state has a database of online small business retailers. For example, California Shop Small is an online marketplace to connect with and buy from California small businesses.
With local and small businesses, support isn’t limited to buying from them. If you had a positive shopping experience, consider supporting their brand with a positive review or referral on social media. Doing so can raise the business’ profile and encourage future customers. The more customers a small business has, the more likely it is to grow and continue providing differentiated products to you and others. Everybody wins.
View this post on Instagram
Businesses with your values
Any business, regardless of size or location, can demonstrate values you wish to support. To identify the values of businesses you shop with, search their website for a mission statement — a concise explanation of a company’s culture, value, and ethics — or use a site like Comparably. Comparably is an online platform that provides culture and salary data for public and private businesses. Users can search companies for employee reviews of leadership, diversity, and compensation packages. The site allows you to research not just how a company portrays itself but how this portrayal lives up to employee standards.
Chick-fil-A’s company profile page on Comparably
For an organizational track record, websites like Good On You, Done Good, and Project Just tell you where a company stands on issues like labor conditions, material sourcing, and waste. If you’re curious, investigate where a company leans politically by tracking dollars spent toward campaigns and charities. Open Secrets allows you to search for donations made by companies as well as individual members, owners, and their families. Remember that contributions made by people associated with an organization do not necessarily reflect its politics.
Corporate Social Responsibility
Corporate social responsibility (CSR) is a self-regulating business model that holds companies accountable to themselves, their stakeholders, and the public. Engaging in CSR means that, during the ordinary course of business, a company operates in ways that positively contribute to society and the environment.
There are four primary types of corporate social responsibility: environmental, ethical, philanthropic, and financial. Companies pursue environmental responsibility by supporting efforts to reduce their carbon footprint. Ethical responsibility applies to a company’s fair treatment of employees and customers regardless of age, race, culture, sexual orientation, or gender expression. Philanthropic responsibility examines a company’s spending on charitable endeavors and considers the company’s engagement with partners. Lastly, financial responsibility ties all of these efforts together by holding companies accountable for investing in their CSR initiatives. Without financial commitment, an organization's social pledges could ring hollow.
There isn’t a single database to determine whether a corporation practices corporate social responsibility and, if so, which kind(s). Nevertheless, most companies that engage in CSR incorporate it into their brand. Ben & Jerry’s, for example, prominently displays their role in social initiatives on their website and through social media.
based
Additionally, several international organizations were established to standardize corporate social responsibility. B Lab, a nonprofit network “transforming the global economy to benefit all people, communities, and the planet,” created the B Corp designation in 2006, a private certification of for-profit companies that consider the impact of their decisions on workers, customers, suppliers, community and the environment. You can search for member B Corporations through B Lab’s website. As a nonprofit organization, the standards set by B Lab aren’t legally enforceable. Nevertheless, you can reference members as a starting point for identifying socially responsible businesses.
Because corporate social responsibility can look different across business types, industry-specific organizations have also been created to define best practices in their respective markets. For example, in the hospitality industry, the LEED and Green Globe certifications rate the environmental practices of member hotels. In the fashion industry, Vogue Business covers sustainability efforts made by popular brands, and in the food industry, the Food Industry Association tracks corporate initiatives regarding animal welfare, sustainability, and food waste. These organizations represent a small sample of the effort underway to improve CSR visibility to consumers.
Investing with your values
Once you are ready to begin investing, consider opportunities to capitalize projects, funds, and initiatives that align with your values. Strategies include community-supported agriculture, general obligation bonds, and impact investing.
Community-supported agriculture
One low-risk approach for investing in your local food system is participating in Community Supported Agriculture (CSA). CSAs connect consumers and producers to create a more equitable and transparent local food system. Farmers charge an upfront fee to participating community members at the start of a growing season. In exchange for this investment, they deliver vegetables, fruit, and other farm products made using these funds to members throughout the season.
CSAs benefit local farmers by providing them with the upfront money needed to capitalize on an entire growing season. In exchange, consumers receive nutritious food delivered within days of harvest. To find a CSA search the CSA Directory for farms and participating networks near you.
General obligation bonds & pooled investment products
General obligation (GO) bonds allow you to invest in local government projects aimed at improving the community, such as infrastructure and affordable housing development. GO bonds are debt instruments backed by the issuing municipality’s creditworthiness and ability to levy taxes on its residents. Issuers repay invested money in the form of dividend payments. In general, GO bonds are low risk, low yield, and can be purchased in denominations of $5,000. While there are different methods of purchasing GO bonds, they can typically be bought using a brokerage account.
Impact investing
Impact investing is an investment strategy aimed at generating specific social or environmental benefits in addition to financial gains. Impact investments vary by asset class and desired outcome. While impact investors expect a return on their investment, their primary motivation is generally to produce positive social change. Impact investment opportunities are available to individuals via online platforms, including SVX US, Ellevest, and OpenInvest.
Impact investing is often associated with environmental, social, and governance (ESG) investing, which refers to a set of company standards used by socially conscious investors to screen potential investments. Investors that factor ESG into their strategy research company initiatives and may refer to ESG ratings provided by credit agencies like Moody’s or S&P Global.
For individual investors, the easiest way to participate in ESG is through a mutual fund or ETF that incorporates ESG into their investment thesis. Many robo-advisors provide access to diversified ESG funds. If you don’t use a robo-advisor, ask your broker or financial advisor for referrals.
Donating with your values
You should not expect a return on all the money you spend and invest. Donating a portion of your income to charity benefits others and fosters a healthy relationship with money. Thanks to the internet, there are unprecedented opportunities to donate. If we can help others without significantly sacrificing our well-being, we should.
You should donate money even though you pay taxes and invest in socially responsible initiatives. While money spent on taxes in part funds philanthropic endeavors, you can’t control which efforts are supported or how officials administer this money. Similarly, spending with or investing in socially responsible businesses does make a difference, but ultimately, these companies are beholden to their shareholders. As a result, many charitable causes do not receive sufficient capital from the government or private enterprise.
Non-governmental and non-profit organizations address this disparity by providing concentrated support regardless of political or corporate sponsorship. In 2021, Americans donated $326.87 billion to these charitable organizations, many of which would not survive without this generosity.
In addition to the social benefits of donating money, doing so has personal benefits as well. Donating money demonstrates confidence in your budgeting and future earning potential. It’s an admission that our relationship with money is dynamic. At some points in our lives, we may be fortunate to receive more money than we anticipated, while at other points, we may have less. Consistently giving through these seasons of surplus and deficit affirms that, regardless of your situation, others are in greater need.
View this post on Instagram
Additionally, a life without giving assumes we will be happiest if we reserve our entire net income for our own best interests. While higher levels of income are associated with higher levels of emotional well-being, studies show that this peaks with annual earnings of $75,000. Conversely, individuals who donate money to charity report being happier than others, regardless of their income. In fact, individuals earning as little as $22,000 annually reported feeling better when they donated to charity, and even those who thought spending money on themselves would lead to greater fulfillment reported higher levels of happiness when they donated to charity.
If you earn enough to cover necessary expenses, consider donating up to 10% of your net income to charitable organizations. Doing so can make a considerable impact without sacrificing your quality of life.
You can find local opportunities to donate via word of mouth or through community centers such as schools, town halls, and places of worship. Online, Charity Navigator hosts a nonprofit database that allows you to search for organizations based on values, trending topics, and donor ratings. GiveWell takes a different approach, recommending international charities that aim to provide the most significant measurable difference per dollar.
For any charity you consider supporting, make sure they are filed as a tax-exempt organization with the IRS. Also, try to verify that the charity spends the majority of the donations it receives on the causes it supports instead of administrative expenses. Refer to Charity Navigator and Guidestar.org for comprehensive charity data. Lastly, you can check ratings on the Better Business Bureau to ensure there aren’t legitimate complaints against an organization you want to support.
The government rewards charitable giving with favorable tax treatment. When you donate cash to a public charity, you can generally deduct up to 60% of your adjusted gross income. This amount varies depending on your tax bracket and if you donate non-cash assets, so consult a tax advisor to assess your situation.
In addition to money, consider donating part of your schedule towards helping others by volunteering. Just as charitable organizations require financial capital to operate, human capital — the economic value of a worker's experience and skills — is also required. Many opportunities exist for both short and long-term engagements. In addition to the resources mentioned above, check whether your employer hosts volunteering events and visit VolunteerMatch, JustServe, and DoSomething.org as starting points for identifying service opportunities. When deciding how to volunteer your time, consider your unique strengths that could benefit others. Like businesses, nonprofits require people with a diverse array of backgrounds, skills, and experiences to thrive.
Whether by money or service, we all need a helping hand from time to time. As your relationship with money develops, make sure to be that hand for someone else.
