There are few things that can truly influence and touch almost every facet of a business and its stakeholders. There are even fewer aspects that have the power to change the mission and reputation of an established enterprise or new startup company. Corporate social responsibility (CSR) is one of those factors, a phenomenon impacting every industry from technology to business and entertainment to advertising.

CSR encompasses initiatives made by a company to evaluate and contribute to development by delivering economic, social and environmental benefits. As a CEO, corporate social responsibility means taking accountability and providing beneficial programs for every stakeholder whether that be an employee or an investor.

Like CSR, crowdfunding works to bring various stakeholders together for a mutually admired cause. In its most basic form, crowdfunding allows for donations from a large group of people to a project or cause via various platforms. Crowdfunding has emerged as an alternative form of financing that collects funds from the ‘crowd’ and channels them into various social causes or business projects.

Businesses looking to excel in CSR may be doing so for a variety of reasons and can work to implement a similar strategy. As such, crowdfunding can help a company increase available funding, raise awareness and engagement, and build communication channels. Companies can also take a lesson from the values behind why crowdfunding is such a success:it unites an incredibly diverse spectrum of individuals over a common cause creating the opportunity to make an impact.

The Rise of Corporate Social Responsibility

CSR originally came to be frequently when a company was facing reputational damage or amid a crisis. Giving back to the community or a charity somehow made up for the faults or stumbles the company was facing. CSR was an optimal damage control tactic, and was used to mend bridges with a company’s audience and their consumers.

CSR in business has evolved with the marketplace. With an increasing number of companies implementing CSR programs as a permanent component to their business model, consumers have come to expect formal CSR from the brands they are loyal to. This is made evident from yearly consumer trust surveys conducted first by Edelman and recreated by other research and analytical firms.

Living in the digital age can be difficult. With ever-evolving technology and a society separated by computer screens, the world and our relationships can seem small, distant and isolated. The combination of CSR and crowdfunding are doing their part to bridge the gap between companies and the communities they serve. Now the brands you love are being challenged to be more involved in the consumer’s life and community, whether that be raising money for a local hospital or offering their employees college tuition while they work.

Crowdfunding, the act of financing a project through small contributions from many people, may seem like a distant and lonely endeavor that only takes place through computer transactions within the digital space. However, this is not the case. Instead, crowdfunding should be seen as tool to bring together different people and communities with similar interests and passions. Whether is it financing a local business or the sequel to your favorite movie that never got picked up; crowdfunding extends to and encompasses every industry.

The New Consumer

The millennial consumer is the most complex yet, demanding qualities in companies that have never been asked of before, such as connecting with brands and an increased focus on CSR. Holding the highest percentage of purchasing power, Millennials have corporations at their beck-and-call, adapting to each desire to earn favor with the generation that changed everything.

Over the last decade, CSR has become a popular topic due to the new consumer wanting more from companies than just quality products and services. Consumers now want companies they buy from to prove that their ethics and what they care about are in line with what the consumer cares about, such as social and environmental issues.

The new consumer, otherwise known as the millennial consumer, has played a large role in pushing companies to challenge themselves and create better CSR programs. Companies are implementing any and everything from pet maternity for their employees to giving back to the local activity center or hospital.

The Gains of Giving Back

The internet and new technologies have opened an infinite number of doors for both the crowdfunding industry and CSR programs. The platforms we use every day are making it easier to bridge communities and causes through social media and the democratization of information.

Perhaps one of the most incredible and engaging cases of philanthropy that showed the power of bringing community together was the amyotrophic lateral sclerosis (ALS) ice bucket challenge. This began to raise both money and awareness for the disease, ALS, by challenging friends to donate and if they didn’t do so in 24 hours, they had to dump a bucket of ice and water on themselves. This movement sparked recognition from individuals suffering from the disease, their friends and families to eventually celebrities and raised both awareness and money for the cause.

The Crowdfunding Effect on Corporate Social Responsibility

CSR can learn a lot from the crowdfunding industry, from how companies in the space do business to the methods and strategies deployed in financing projects. As previously mentioned, companies are looking to increase their CSR in an effort to not only make the company more ethically righteous, but to ensure that they do not fall behind in this millennial driven world. If CSR is the demand of the highest player in the industry, then CSR is what is needed for companies to continue to prosper.

Companies that have been implementing crowdfunding attributes into their CSR business strategy have come to realize that this tactic helps leverage technology to expand funding opportunities and to collect different fields of expertise while increasing transparency. For example, the money raised for the Sunrise Association was a direct result of the power of crowdfunding and how it can bring communities together for a common cause. Beyond the scope of just funding, crowdfunding also works to generally raise public awareness and engagement and increase a market reach that can reveal an opportunity from the crowd.

Following that, rather than just large commercial banks having their hands in the funding of a certain business, crowdfunding produces a much more democratically diverse access to capital. Crowdfunding platforms provide a unique space, where CSR can interact with donors, employees, customers and local communities. Crowdsourcing has the ability to go beyond just funding; it also helps to be beneficial for a company’s over CSR strategy. A true analysis of this phenomenon for a CSR perspective can have extremely beneficial results for changing a company’s culture and business model.

This article was originally published in the July/August 2017 edition of Private Lender magazine.