Where Do Charities Fit in a Purpose-Driven Business World?

 

According to the Edelman Trust Barometer (2024), a majority of people expect CEOs to take a position on societal issues, yet trust in institutions overall remains low.

Expectation is rising faster than trust.

Introduction

Back in 2018, a wave of optimism took hold around ‘purpose-led business.’

Influential voices like Larry Fink argued that companies without a clear societal role would lose their ‘license to operate.’ At the same time, evidence suggested that purpose-driven companies were outperforming markets, and a new generation of employees expected their employers to stand for something beyond profit.

For me, the question that naturally followed was, ‘If companies step up, what happens to the nonprofit sector?’,  so I wrote an article about it in the Fast Company.

The answer being that charities would not become redundant. Instead, they would remain essential, both as delivery partners and as advocates shaping public expectations.

Eight years on, that prediction has held, but the reality has become more complex.

• In the climate space, companies like Shell have faced sustained legal and public pressure from NGOs over the credibility of their transition plans, showing nonprofits acting as enforcers, not just partners.
• In technology, firms such as OpenAI are working with civil society to shape AI safety, while being challenged on transparency and governance.
• And in consumer goods, companies like Unilever – long associated with purpose – have faced investor pressure to refocus on performance, exposing the tension between purpose and profitability.

Why It Matters

Purpose has moved from being a differentiator, to being expected by most stakeholders. But with that has come scrutiny.

Many leaders I speak to say that what once felt like a strategic advantage, now feels like a permanent test of credibility. They feel more vulnerable for trying to do ‘the right thing’ – contributing to society in a way that goes beyond making profit – than those who don’t try at all.

At the same time, the context has shifted:

• ESG has grown, and faced political and investor backlash
• Stakeholder expectations have intensified, and fragmented
• Societal challenges (climate, inequality, AI disruption) have accelerated
• Trust in institutions remains fragile

This has reshaped the role of non-profits in three ways.

1. From delivery to influence: Organisations like ClientEarth are using legal mechanisms to directly challenge corporate behaviour, not just campaign against it.
2. From partner to counterpart: Collaboration has grown but so too has tension. Groups like World Wildlife Fund (WWF) may partner with companies on sustainability, while the wider NGO ecosystem continues to scrutinise and challenge progress.
3. As a source of legitimacy: In a low-trust environment, companies cannot simply claim impact. Independent organisations provide credibility that businesses cannot generate alone.

The result is a system that is more collaborative, but also more contested.

Many senior leaders are wrestling with the tension that being more visible and active in solving societal challenges, raises expectations for them to justify where their organisation’s role begins… and ends.

What Leaders Can Do

Partnerships between the ‘for profit’ and nonprofit sectors are still important, but so too is judgement in a system where power, legitimacy, and expectations are shifting.

The questions I advise leaders to sit with include:

• Which societal issues are genuinely yours to lead on and where should you deliberately play a supporting role? What does that look like in practice?
• Where are you avoiding uncomfortable external challenge, and what risk is that creating for your decisions?

These are not easy questions to answer.

Two Other Leadership Signals to Watch

1. AI governance is becoming a shared, and contested, space: Companies like Google and Microsoft are partnering with nonprofits and academic institutions to shape AI safety. At the same time, critics argue those building the technology still hold disproportionate influence over the rules.
2. Climate accountability is moving from pledges to enforcement: Across Europe and beyond, NGOs are increasingly using legal routes to challenge corporate climate commitments. The shift is from ambition to proof, and from voluntary action to enforceable accountability.

Final thought

The past eight years have shown that as companies take on a bigger role in solving societal challenges, they don’t make other actors redundant. They make them more necessary. Because when expectations are high and trust is fragile, responsibility cannot be decided internally. It is defined by those outside the organisation – charities, communities, customers – who judge whether a company’s actions are credible.