Sometimes it takes a brush with death to make you realise what’s important.
That was certainly the case for me, when a climb of the Matterhorn in 2013 with my son Harry nearly ended in disaster. I fell twice, once on the way up when I slid towards a sheer drop and certain oblivion. Only an ice axe deployed at the last second saved me from the edge.
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Then on the way down, while abseiling on a long rope, I slipped and while trying to use my feet as brakes, broke my leg badly.
I only made it off the mountain thanks to an Italian rescue helicopter crew, who winched down a woman named Roberta to pluck me to safety. I thought she was an angel when she appeared, and I still do now.
The injury I’d sustained meant I had a lot of time to reflect while recuperating in hospital. I felt strongly that I had been given a second chance, and I needed to make the most of it. I was starting the second half of my life, and I had to decide how to use it for good.
I became much more focused on my purpose as a person and also that of the organisation I lead, Reed Group. What did we want to do as a company? What did I want to achieve with the rest of my life? It was soon afterwards that we settled on our company purpose, encapsulated in just four words: improving lives through work.
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It’s simple, memorable and sums up our purpose as the world’s biggest family-owned recruitment company. More importantly, it’s something that we find can readily inform the actions of our team every day. By using it to determine how we do business, we find we can balance the need to deliver shareholder value with our desire to do good for society.
That’s important because our version of free market capitalism clearly hasn’t worked for many people in our society. Yes, it has delivered opportunities for people to succeed, boosted innovation and helped lift millions out of poverty.
But it’s clear something has gone wrong when the UK has among the highest levels of inequality in Europe, millions of people are economically inactive and mental health is deteriorating across the developed world.
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If you look at the FTSE 100, less than one per cent of their net profit goes to charity. Indeed, while FTSE100 profits have increased 49 per cent over the past decade their charitable donations are 13 per cent lower than they were 10 years ago.
We need a new model. The idea I have alighted on is a new movement of companies which balance their desire to deliver for shareholders with that of delivering for people and the planet.
There has been a rise of purpose-driven companies since the start of the 21st century which seeks to achieve this balance. One of these purpose-driven structures is in its infancy, particularly in the UK market, but holds great promise.
The rise of the PhilCo movement
A ‘foundation-owned’ company is a company which is owned, in part or in full, by a charitable foundation.
We want to build a movement of like-minded foundation-owned companies which put philanthropy at the heart of their culture, identity and structure. Hence the name we have coined: Philanthropy Company or ‘PhilCo’.
What is a PhilCo? Simply, it is a company which is at least 10 per cent owned by a charitable foundation. The PhilCo movement aims to encourage businesses to embed philanthropy into their ownership structure.
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Reed has done this by transferring 18 per cent of its shareholdings to the Reed Foundation, which has given away millions of pounds to good causes. This means all our colleagues, or as we call them, ‘co-members’, work the equivalent of one day a week for charity. Our foundation also helped to establish Big Give, the UK’s biggest match funding platform which doubles donations to thousands of other charities taking part in its fundraising campaigns. To date, it has raised £300 million.
We know PhilCos work. The idea of foundation-owned companies is much more prevalent in Europe, particularly in Denmark, where it has been incentivised with tax breaks. Some of the world’s biggest brands adopt this model: Ikea, Rolex, Lego, and Bosch are all examples of companies that include a foundation in their ownership structure.
The evidence is clear that this model is good for staff morale and retention. PhilCos also last longer: in Denmark, the 40-year survival rate is 10 per cent for non-foundation owned companies but increases to 30 per cent for foundation-owned companies.
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We want to build a new community of PhilCos here, with at least 10 per cent of their shareholding held for charitable purposes, recognised with a new PhilCo hallmark.
If we succeed, the wins for business and society are potentially immense. Government cannot do everything, so let’s use the PhilCo model to unleash a thousand small battalions doing good for people and the planet.
James Reed is Chairman and CEO of Reed. To find out more or join the PhilCo movement, please email philco@biggive.org
