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Is “Purpose” Always a Good Thing?

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As the range of organisations claiming to have a social purpose widens, we explore some of the potential challenges and unintended consequences.

These days we are often told that all organisations should strive to have a “social purpose” of some kind, and that an increasing number of them clearly want to live up to this aspiration. Traditionally, the idea of organisational social purpose was the preserve of the charitable or nonprofit sphere, but now organisations from across all sectors are vying with each other to proclaim their purpose-led credentials.

In many ways this is good news – there are plenty of sizeable challenges facing the world today, and the wider the range of approaches and assets we can bring to bear on them, the better. So if everyone wants to join the purpose party, should we just welcome them in? Well, yes, to some extent maybe we should. However, I have begun to think recently that there may also be arguments for urging a bit of caution in our rush to embrace the idea of organisational social purpose. Before any of you get worried, I should make it clear that this isn’t the set-up for some kind of contrarian (and somewhat out of character) Milton Friedman-esque hot take along the lines of “companies’ only purpose is to deliver financial returns to their shareholders”. I certainly don’t think the idea of social purpose is suspect or problematic in itself; only that its adoption may have unintended consequences and implications for the future that we would do well to heed.

Corporate social purpose

Let’s look first at the question of companies professing a social purpose. This is obviously not a new phenomenon; indeed arguably the idea that companies could ever be thought of as not having a social purpose (or at least social responsibilities of some kind) is a relatively recent development in historical terms, as it was only really with the development of modern industrial capitalism in the late 19th and early 20th centuries that this idea took root. Before that, it was fairly natural to think that companies had to pay some mind to their role within society above and beyond simply making money – either because that was a requirement of being granted the necessary corporate status (which was the case in the development of corporations in the US, as traced by Jonathan Levy in a fascinating chapter on “Altruism and the Origins of Nonprofit Philanthropy”), or because there was a degree of ‘enlightened self-interest’ in ensuring that the local community (which also provided most of the company’s workforce) was happy, healthy and fulfilled. For a while in the 20th century, however, thanks in part to people like the aforementioned Milton Friedman and his famous argument that “the social responsibility of business is to increase its profits”, it became the prevailing view that companies’ sole purpose is to make money and deliver returns to shareholders. Eventually even Friedman rowed back on this hardline view, and people started to rediscover the idea that profit might need to be combined with some sort of wider purpose: at first in the form of Corporate Social Responsibility (CSR) and corporate philanthropy, and then latterly in the guise of concepts like Shared Value and the “triple bottom line”.

In recent years thinking about the social role of business has evolved further, so that now an increasing number of companies are proclaiming that a social purpose is at the core of what they do (rather than being a by-product of making money or selling widgets, as they might have done in the past). To see this, one has only to watch TV or listen to the radio for a while and you will probably be struck (as I often am) by how many adverts for companies now focus on their corporate volunteering, charity work or sustainability efforts – sometimes to the extent that it would be hard to know what product or service the company in question actually offered if you weren’t already familiar with them.

A whole slew of consultancy reports has noted this growth of “purpose” in the corporate world and offered opinions on what companies should do in response to this trend (E.g. This one from Gartner, or this one from Ernst & Young). To take just one example, a 2021 Deloitte report stated that:

“Whether it’s creating a more equitable world, reaching net-zero emissions, or protecting consumer privacy, to name a few, many organizations are redefining the articulation of why they exist and how they make an impact beyond profit. For many, having “purpose” drive much of their business and operations has gone from aspiration to strategic priority.”

Put like this, it all sounds great – so why might there be reason to question the rapid proliferation of purpose in the private sector?

What is driving the adoption of purpose?

The first question we might ask is why are companies all of a sudden so keen to jump on the purpose bandwagon? Putting aside any cynicism, we should allow that in some cases (hey, maybe lots of cases, what do I know?) this is driven by a genuine concern about social and environmental issues. This seems more likely to be true when original founders are still involved in some capacity, since their ability to shape their company’s ethos and values in their own image is presumably greater than that of an appointed corporate CEO (although some of the latter do also manage to push purpose-led agendas). But the embrace of purpose is certainly not just about those at the top of companies doing things simply out of the goodness of their hearts: increasingly it is clear that a significant part of it is down to the fact that customers and employees look more favourably on companies that are able to offer a compelling narrative about the wider good they do in the world, and are therefore more likely to buy from them, or to want to work for them. This kind of bottom-up pressure for the adoption of organisational purpose is vital in the context of for-profit companies, as it helps to turn something that could be seen as warm and fuzzy do-gooding into sound commercial sense (which may help to overcome the objections of purpose sceptics).

One potential concern at this point may be that by offering people the promise of employment that not only meets their salary ambitions and career goals, but also allows them to feel that they are working towards a higher social purpose, for-profit companies may be contributing to a brain drain from the nonprofit world. This is not because I think that nonprofits have some kind of monopoly on work that serves a social purpose, or that people should necessarily have to sacrifice all of their salary goals in order to do a purpose-driven job (Lord knows, I would like to feel useful and get paid well just like everyone else…) The point is just that if we accept this state of affairs, then it puts a far greater onus on us to have faith that the “purpose” being proclaimed by for-profit companies will result in benefits to society that are equal to (or, indeed, greater than) the benefits that have historically been delivered through nonprofits and civil society. And, as we shall see shortly, there may be reasons for some scepticism on this front.

Who gets to define purpose?

In everything that we have been saying so far, we have been assuming that when a company proclaims it has a “purpose” it is talking about something beyond just making more money or out-competing its rivals; namely the production of social or environmental value, or public goods, of some kind. But this then raises a number of questions. For instance, who gets to decide what is of value to society and what, therefore should count as a legitimate social purpose? And if a for-profit organisation claims to have a social purpose, how do we scrutinise them and hold them to account against this claim?

When it comes to defining “purpose” we might once have looked to civil society organisations to take the lead in specifying what social value means, or to act as gatekeepers of some kind. But a key feature of the ‘corporate purpose revolution’ in recent years has been that for-profit organisations now seem quite happy to decide for themselves what social value means and then assert this confidently to the world. The big risk here is that when this supposed sense of purpose is not made concrete in any way through an organisation’s legal and governance structure (as it would be for a nonprofit), the chances of it getting diluted or sidetracked are much higher. Even if the founders or current management of a company are totally committed to a stated social or environmental purpose right now, who is to say that they will feel the same in the future? Or that future management or owners might not have very different values and priorities? There are certainly plenty of instances already of companies that were set up as social enterprises being taken over by larger corporations thanks to their success and then having their “social” element dialled down or quietly jettisoned.

(Image by B Labs, CC BY-SA 4.0)

It is these kinds of concerns, of course, that have led to the development of new initiatives such as the B Corporation, which offers companies a means of enshrining social purpose within a for-profit legal structure, so that it has a better chance of withstanding any potential changes of ownership or management. It has also led to high-profile instances of founders taking more radical steps, such as Patagonia owner Yvon Chouinard’s decision to hand ownership of his company over to a newly-created nonprofit entity in order to protect its mission and values. (For more on that story, see this previous WPM article). But whilst making purpose formal in ways like this may help to give more confidence that companies will stay true to that purpose over the longer-term, these mechanisms are not watertight. There have already been a number of high-profile instances of companies whose B Corporation status has been brought into question due to concerns about their business practices: Brewdog, for example, lost their B Corp status in 2022 after revelations came to light about poor treatment of staff; meanwhile  the status of content moderation company Sama hangs in the balance pending the outcome of a case brought against them as part of their partnership with Meta in Africa, where they stand accused of exploitation and union busting. This has led to wider concerns that the B Corp certification may be losing its value as a measure of companies’ genuine commitment to purpose, and that it might even be exacerbating the growing problem of “purpose washing” by providing unscrupulous companies with an easy means of claiming social good credentials that are not accompanied by a sufficient degree of scrutiny or accountability.

Purpose washing & Moral licensing

In the context of environmental issues, there have long been concerns about “greenwashing” – where companies make claims about their green credentials in order to gain reputational benefits and deflect attention from environmental harms they are doing through their commercial activities. With the rise of the idea of corporate purpose, this has expanded into wider concerns about “purpose washing”, where – as the name suggests – companies deliberately adopt the trappings of purpose-led organisations in order to gain legitimacy and draw attention away from their business practices and any harms they might be doing through them.

(Image by Stay Grounded, CC BY 2.0)

As an aside, there is a long and rich history of philanthropy being seen as a tool for wealthy businesspeople to burnish their reputations and dampen down criticism of their business interests. This really came to the fore in the Gilded Age of the late 19th and early 20th centuries, when figures like J.D Rockefeller and Andrew Carnegie were known for their vast and conspicuous philanthropy, but were also seen by many as unscrupulous “robber barons” whose wealth only came about as a result of monopolistic business practices and union-busting. In Carnegie’s case, attention is often drawn to his employment of armed Pinkerton detectives as strikebreakers in the Homestead Strike of 1892 (contrary to his public statements in favour of unions), which resulted in the deaths of 16 men and many injuries. In Rockefeller’s case, meanwhile, concerns about his businesses were so widespread that G.K. Chesterton was led to write in his 1909 essay “Gifts of the Millionaire” that: “his philanthropy is, as we have seen, offered as a defence or expiation of his alleged commercial methods. If we are to set that philanthropy as a virtue over against his vices, then we have a right to ask if it is really virtuous. The question is about his morality; the question is whether he got his millions by tyranny or fraud.”

There is still plenty of criticism of philanthropy being used as a tool to mask problematic wealth creation today of course – some of which is unfair, some of which entirely justified –  but we should note that this is slightly different to the cases we are considering in this article, where the claim is not that philanthropic activities legitimise or excuse the modes of wealth creation that make them possible, but rather that the modes of wealth creation themselves reflect a social purpose.

What does purpose washing look like in practice, you might ask?  Well, in some cases (as highlighted above) it might involve adopting specific legal forms such as the B Corporation in order to gain a visible marker of legitimacy that can be used to deflect criticism, but that is a fairly labour-intensive route to go down. In most cases, it is more likely to consist of just using the appropriate language (“shared value”, “sense of purpose” etc) in glossy corporate reports and social media. My own personal favourite example of this genre is the tobacco company Philip Morris International, which regularly pops up in my LinkedIn feed in the form of promoted posts in which suitably earnest-looking employees explain that, whilst we might have assumed that the company’s mission was to sell more cigarettes, in fact everything it does is driven by an unshakeable commitment to the purpose of “delivering a smoke-free future”. (Which is of course to be achieved through getting everyone to start vaping and using e-cigarettes, rather than just, you know, stopping using tobacco…)

(Image by Joe Haupt, CC BY 2.0)

It is easy to poke fun at this kind of corporate comms (and it is fun too, if I’m honest), and I would imagine that many people share my sense of scepticism about PMI’s claims to higher purpose (particularly given recent news that the company is opening a new cigarette factory in Tanzania, which seems like an odd way to transition to a smoking-free future). However, this is obviously a fairly extreme example. In less egregious cases, should we be prepared to allow that that sometimes a company’s claim to be driven by a purpose is genuine, even if we disagree with it? If so, then the accusation of purpose-washing becomes more complicated as we are faced with the question of whether it is the motive of the company that is the important factor, or their activities. If they are doing something that we consider bad, but doing it due to a genuine belief that it serves a social purpose, is that purpose-washing, or something else?

One potential answer to this question may come from the concept of “moral self-licensing”. This is a term used in social psychology and marketing to describe the phenomenon by which individuals and organisations may engage in immoral actions as a result of engaging positive ones, because their confidence in their own moral self-worth has been sufficiently enhanced for them to feel “licensed” to do so. (The classic individual example is where you allow yourself to eat some chocolate or have a glass of wine because you went to the gym earlier). In the case of companies, the danger may be that the adoption of an organisational purpose is entirely genuine (rather than being cynically done for purpose washing), but that this still leads to problems because it provides the company with a basis for self-licensing to engage in harmful or problematic activities in other areas. (For more on moral self-licensing, check out the conversation I had with Patricia Illingworth for the Philanthropisms podcast).

Whose Profit, whose purpose?

The final point to consider on the for-profit case is that in most of what we have said so far there has been an implicit assumption that a company embracing purpose means doing something qualitatively different to what it would otherwise be doing or what it has done in the past. However, there is a growing trend among some business leaders to challenge this assumption, and to argue that what their companies were doing anyway does benefit society and thus constitutes a social purpose.

This is not an altogether new idea: there have always been philanthropy naysayers among the top echelons of capitalist society who argue that they are already doing plenty of good through their own process of wealth creation, and therefore that they do not need to give money away as well. John Paul Getty, for instance, once famously said that “the best form of charity I know is the art of meeting payroll”. (Which obviously conveniently elides a whole bunch of important distinctions between charity and justice-based rights, but let’s park that for now…) The Mexican billionaire Carlos Slim Helu, meanwhile, declared that he could “do more good by building solid companies than by going around like Santa Claus donating money.” The difference today is that this idea seems to have gained more significant traction across a wider group of business leaders, particularly among tech moguls who seem especially prone to believing that the products and platforms they have built are not only extremely lucrative vehicles for their own enrichment but also powerful tools for making society better. As a case in point, Elon Musk has suggested that his companies (SpaceX, Nerualink, Tesla etc) are “all philanthropy”, and way back in 2014, Google’s Larry page suggested that he would rather give all of his money to Elon Musk than to charity. The most hardcore version of this kind of ideology even has even been given a jazzy-sounding name now: “Effective Accelerationism” (or E/Acc). And this appears to be growing in popularity amongst precisely the sort of wannabe-alpha-tech-bro-Ayn-Rand-fans that you would expect to lap up an ideology that tells them that what the world really needs is just more of what they were already doing, and which has made them lots of money. (For more on E/Acc check out the February edition of the WPM newsletter).

This point about tech progress being rebranded as social good is not merely a theoretical one either; it is already having real-world implications – the most notable case in point so far being the soap opera surrounding the firing and rapid re-hiring of AI poster boy Sam Altman as CEO of OpenAI, which many commentators argued was due to a division within the company between a group of tech “boomers” (i.e. those who think that the best way to solve society’s problems is just to develop more tech, faster) and group of tech “doomers” (i.e. those who believe that tech development, particularly of AI, poses major risks for humanity and needs to be carefully controlled or even stopped). Many observers were quick to characterise the boomers as merely classic rapacious capitalists out to make a fast buck, but others argued that this was too simplistic as in many cases they appear to genuinely believe that tech development is a social good, so their claims might well be made in good faith (whether you agree with them or not). For more on how we should understand this situation and its implications for philanthropy, check out this WPM blog from last year.

 

Purpose and nonprofits behaving badly

One might assume that the kind of problems we have been considering do not apply to nonprofit organisations, since purpose is much more fundamentally at the heart of what they do. However some aspects of organisational purpose may still bring challenges and unintended consequences: the problem of moral licensing, for instance, is one that applied to nonprofit organisations just as much as it does to for-profit ones. Whilst nonprofits are (in theory, at least) definitionally not trying to maximise profits, so they are unlikely to use their purpose to justify commercial actions, that purpose may still be used to justify other things, such as failings in the organisation’s own governance or culture, or operational activities it undertakes that may be controversial.

In a fascinating recent paper (published jointly with Allison Russell, Muel Kaptein and Lucas Meijs) the philanthropy academic Isabel de Bruin Cardoso explores the way in which the “NGO Halo Effect” can lead purpose-driven nonprofits, and those who work within them, to end up engaging in bad behaviour. The NGO Halo effect describes the way in which the positive impression created by an organisation’s mission-driven and not-for-profit nature leads people to make wider assumptions and generalisations about the organisation’s moral standing. The paper argues that this halo effect can result in bad behaviour via three different mechanisms: moral justification, moral superiority and moral naivety. Moral justification refers to situations in which the elevation of an organisation’s mission and purpose leads to an overly consequentialist “end justifies the means” mentality, in which valid concerns about how an organisation operates are discounted on the basis that the mission is of such evident importance and value that it trumps all else. Moral superiority, meanwhile, refers to situations in which an organisation does not try to justify actions that it accepts might be problematic or unethical, but rather argues that the actions are in fact morally acceptable because the NGO has determined that they are, and it has an elevated moral standing that allows it to make such determinations (even where this might run counter to existing laws or regulations). Finally, moral naivety refers to situations where problems occur because people working in NGOs are not sufficiently overseen or held to account as a result of an assumption that as they have chosen to work in a purpose-driven organisation they “must be good people”, thus leading to unethical behaviour not being prevented, detected or dealt with.

I explored the relationship between philanthropy and our assessments of individual moral worth in a previous WPM article. I argued there that we need to be careful about any naïve assumptions that just because someone is on the face of it very charitable, they are necessarily a “good person”, without first putting their philanthropic acts into the required wider perspective. The same clearly goes for organisations, with the added twist that an organisation’s sense of mission or purpose can also have an effect on the actions and behaviour of those who work or volunteer for it. As De Bruin Cardoso and her fellow authors argue:

“Beliefs in the supremacy of the mission, the inherent goodness of NGO employees, and the strengths or effectiveness of the NGO’s mission relative to other policy interventions or organizations can be positive indicators of NGO employees’ commitment to “doing good” in service to society, but they can also lead them, somewhat paradoxically, to be more willing to eschew policy and procedure when it seems justified or even convenient.”

It is worth noting, of course, that there are situations in which civil society organisations need to have a certain sense of moral certainty in order to do their work: one need only think of examples in which CSOs are working on human rights issues that run counter to the laws or policies of repressive governments, or where they are using direct action tactics in campaigning. Which is why the question of moral licensing or moral justification may not be all that clear-cut: one person’s “brave moral stand”, for instance, may be another person’s “bad behaviour”. It is also easy to see how an organisation (or its employees) which uses its mission or purpose as a basis for justifying certain actions may start off limiting itself to actions that are relatively uncontroversial, but then over time may expand into activities that are more controversial or even clearly unethical.

I want to make it absolutely clear here that I am not saying that having a purpose inevitably means that nonprofit organisations or the people who work for them will end up behaving unethically, simply because they feel justified in doing so. As with for-profit companies that claim a social purpose, that would be a totally unwarranted inference. What we do know is that we cannot assume that the fact an organisation has a social purpose or mission somehow ensures it will not act unethically or engage in bad behaviour, as this is clearly not the case. And furthermore, in some cases, the fact that the organisation has a professed purpose can actually be an important of understanding why bad behaviour occurs.

 

“Vocational Awe” and nonprofits

We have considered various ways in which embracing social purpose might, counterintuitively, lead people or organisations to behave unethically. But does being purpose-driven also increase the risk that organisations or individuals are themselves more likely to be the victims of unethical or exploitative behaviour?

In the case of organisations, I think the answer is a fairly unequivocal “yes”. It is easiest to see this in the case of charities that are delivering public services under contract for local or national government agencies: I have heard many times from the leaders of such charities that they feel as though the mission-driven nature of their organisations makes them particularly susceptible to being taken advantage of when it comes to funding cuts or changes to contractual conditions. The problem is that whilst a for-profit company would almost certainly just walk away if it found itself faced with a bad service delivery contract, and would be able to justify that on strictly commercial grounds, a charity delivering the same service will often find it much harder to do the same thing, since it will be aware that the people it is trying to serve (and for whose benefit it presumably started delivering the service in the first place) would likely suffer if the charity pulled out, and this would feel like a dereliction of its mission. As a result, you end up hearing many stories of charities that find themselves stuck in increasingly problematic contractual relationships to deliver services, because they fear what will happen if they turn their backs on the contracts. Research from NCVO earlier this year even suggested that the majority (87%) of charities delivering government contracts are now having to subsidise them in order to cover the full cost of delivering the service. Similar findings from NPC suggest that the median amount charities receive from government for delivering services is 65% of the value of the contract, and that as a result charities are subsidising state provision to the tune of £2.4bn a year. It seems reasonable to assume that this level of exploitation would not be possible if these were not purpose-driven organisations.

As well as exploitation at an organisational level, we have already noted that being purpose-driven can lead to individuals within organisations being exploited as well (either by those outside the organisation or, in some cases, by others within it). It is useful here to introduce the notion of “vocational awe”, which I came across in a really fascinating article in the field of Library Studies (no, really) by Fobazi Ettarh. The article argues that it is precisely the sense of reverence that librarians have towards their own profession and the institutions they work in, and the sense that their work is a “vocation” or a “calling” rather than just a job, which leads to many of the problems facing libraries. For example under-compensation, where people are not paid enough for the work they do, and it is excused with reference to the value or purpose of the work they do. Or as Ettarh puts it:

“Through its enforcement of awe through the promotion of dramatic and heroic narratives, the institution gains free, or reduced price, labor. Through vocational mythologies that reinforce themes of sacrifice and struggle, librarianship sustains itself through the labor of librarians who only reap the immaterial benefits of having “done good work.”

There is also the danger of job creep, where over time additional responsibilities and expectations are placed upon library employees (without additional compensation) and things that were once seen as “going above and beyond” become normalised as part of the role. The further challenge is that because librarianship is seen as a vocation, the people doing it identify strongly with the profession and see it as symbolic of their own values and worth, and as a result are more likely to be resistant to structural critiques (which they interpret partly as criticisms of themselves), which makes change even harder to achieve.

It should be clear at this point that the reason this article piqued my interest is that it really feels as though you could do a Find and Replace for “libraries” with “charities” and it would feel just as true. The charity or nonprofit sector has all of these problems: people getting underpaid and overworked, high levels of burnout, occasional resistance to structural critique etc. And all of them stem to a greater or lesser degree from a similar sense of “vocational awe”, where people working for charities see the work they are doing as much more than a job: something which has value and importance, and which says a lot about who they are as people. The problem, as with libraries, is that this sort of narrative can be used as the basis for exploiting people. This needn’t even be a conscious or deliberate process (although in some cases it definitely is). It might just be that those working in charities start to ask more and more of those around them (and indeed, of themselves), on the basis that the organisation’s mission is important and the need is great – and over time this leads to a situation in which people are overstretched and underpaid, and they eventually they burn out. (As many people in the nonprofit sector appear to be doing right now). A recent article in Time magazine bears out this idea, arguing that the desire for more ‘meaningful’ work may bring with it a greater risk of burnout for precisely these reasons (“When meaningful work backfires”).

 

So What Now?

As I have made clear a number of times throughout this article, my aim is not to argue that organisations having a social purpose is somehow questionable or inherently problematic; rather it is to make the point that at a time when an increasing range of organisations are vying to lay claim to the “power of purpose”, we need to heed the words of Voltaire (or, if you prefer, Spiderman’s Uncle Ben) and recognise that with this great power comes great responsibility. People want a sense of purpose, and increasingly they want to work for organisations that can help to give them one. That presents a huge opportunity, if that sense of purpose can be used to mobilise people and to inspire them to put their energies towards addressing some of the major societal and environmental challenges we face today. But it also presents risks: such as the risk that the language of purpose can be co-opted by cynical actors who use it to burnish their own reputations whilst in reality continuing to act in ways that harm society or the climate; or the risk that even those who are genuinely motivated by a sense of purpose lose sight of the wider context in which they are operating and end up engaging in unethical or exploitative behaviour. If we are to avoid such pitfalls, we need to acknowledge these risks and do our best to guard against them; and that will undoubtedly require us to place claims of organisational purpose under greater scrutiny. The trick, of course, will be to do that without tipping over into paranoia or cynicism – which isn’t always easy, but if we can manage it, I think our efforts to get meaningful action across sectors on the biggest challenges of our day will be the better for it.

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