The power of two
When software company Sage unveiled plans to establish a new charitable foundation in its name, it also announced its ambitions to lead the FTSE 100 in what it calls ‘Corporate Compassionate Capitalism’.
Following on from a commitment made by companies in America to pledge one per cent of their equity, time and products to not-for-profit organisations, Sage, the world’s third-largest supplier of enterprise resource planning, hopes to go one step further by doubling the amount it contributes.
Based on a model of ‘2+2+2’, the Sage Foundation will donate two per cent of employees’ time, two per cent of its free cash flow and two of its smart technology products to any charity, social enterprise or not-for-profit organisation.
Free cash flow is that part of a company’s profits that are not immediately pumped back into other business areas, and typically represents between 15 to 20 per cent of Sage’s revenues. In financial terms, two per cent of Sage’s free cash flow is around £4 million to £5 million a year.
‘So many companies treat corporate social responsibility as a tick-box exercise, which completely misses the point,’ says Lee Perkins, managing director of Sage in the UK and Ireland. He describes other programmes as ‘inconsistent’ and shares his hopes that the Sage Foundation will help inspire its corporate peers to sign up to a similar commitment.
The Foundation will also provide grants to eligible not-for-profit organisations to create entrepreneurship opportunities for young and disadvantaged people, and has pledged to match employee donations and fundraising for charities of their choice.
Each of Sage’s 14,000 employees across 24 countries will now have five days a year for voluntary work within a not-for-profit organisation. There are no restrictions on which charity they can support because, as Perkins explains, many employees often already have affiliations with certain charities as a result of connections to friends and family.
But Sage employees have been volunteering for charities for many years. In North America and the UK, for example, they were previously given days off through Sage’s Volunteer Day Benefits Programme to volunteer on programmes such as Right to Read and Code Club, where they supported, taught and developed children’s learning and skills. And Sage Day in July allowed employees to get involved in local communities and charity work. Perkins describes the process of launching the Foundation as ‘formalising what we’ve already been doing internally’.
‘Lots of Sage employees are already involved in volunteering and grant programmes – we’re extending and building on this. We are passionate about our communities and we want to give our colleagues the tools and encouragement to go out and work with the organisations and causes they really care about. We want employees to bring their values and passions into work with them,’ he explains. ‘It’s about harnessing the start that we already have.’
Sage volunteers will provide everything from advice on ‘how to lead an organisation to someone who is painting the fence’, says Perkins.
Sage, with its Newcastle headquarters, prides itself on being very active in the North-East England community, often lending its voice and weight to regional issues, such as those surrounding the Northern Powerhouse, otherwise known, in the words of Chancellor George Osborne, as ‘a collection of northern cities sufficiently close to each other that combined they can take on the world’. In March, Sage’s chief executive Stephen Kelly spoke at an event in Tyneside, when he emphasised that the company’s 2,000 strong employees locally meant it had a huge responsibility to the region.
However, the Foundation will not only affect not-for-profit organisations in England. Perkins says that it will be worldwide, ideally functioning ‘everywhere we play’, though he admits that the company has to be careful of places where there might be trade embargoes.
With the official launch of the Foundation set for October this year, finer details like these are still being formalised, including the criteria against which grants, product and cash, will be provided to eligible not-for-profit organisations who apply for them. But Sage is nonetheless keen to get started, helping out in any way that they can.
‘There’s a huge amount we can do, whether its commercial support and advice about how they manage themselves,’ says Perkins, who himself volunteers as a mentor for other business leaders.
Other employees provide more help on the ground, such as work with homeless shelters, whilst Kelly pledges his time to digital charity Go ON UK, which aims to ‘empower everyone to reach their digital potential’.
Baroness Martha Lane-Fox, founder of Go ON UK, said of the Foundation: ‘The UK has a strong history of businesses giving back and helping to improve social and economic conditions among disadvantaged communities. As the largest UK technology company, it’s fantastic to see Sage not only take up this mantle, but in doing so, set a new global benchmark for corporate philanthropy.’
Perkins is aware that the Foundation is ambitious but nonetheless believes that it can make a real difference. Sage already counts many thousands of not-for-profit organisations among its customer base, but the establishment of the Foundation will also allow it to donate Sage One, Sage Life or X3 products, which help with online accounting and other business needs.
Notionally, says Perkins, Sage will be ‘giving the equivalent value of what we’ve gained’ from not-for profit organisations. The very idea behind the Foundation itself was about ‘finding ways to give that back’.
Charities will also receive a 50 per cent discount on Sage products, and all income from these sales will come directly to the Foundation. ‘What we wanted to do was more than we’ve done in the past,’ Perkins explains. ‘It’s about leveraging our position as a FTSE100 company, leveraging the passion of our employees and giving them the wherewithal [to donate their time].’
The foundation has already drawn praise from people in the sector, including Sage’s strategic partner Salesforce, a founding partner of the one per cent pledge which Sage intends to surpass.
‘It’s great to see plans for the Sage Foundation and its support for the philanthropic model we pioneered at Salesforce,’ said Marc Benioff, chairman and chief executive of Salesforce. ‘By integrating philanthropy into its culture on a global scale, Sage can make a difference in the lives of millions of people around the world.’
With operations in North America, South Africa, Australia, Asia and Brazil, as well as the UK and Ireland, such worldwide ambitions seem not only warranted but achievable. Sage, whose name came from ‘a picture of herbs spotted in the pub where the team held their first meetings’ according to its website, is not only part of the
Northern Powerhouse, but of a global one as well – one that is pushing the boundaries of corporate social responsibility.