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In a 1970 article entitled “The Social Responsibility of Business Is to Increase Its Profits,” economist Milton Friedman famously argued that a business exists for one purpose: to maximize returns for its shareholders. If shareholders want their money to go to social causes, he said, they’re perfectly capable of making that decision themselves, and the businesses they invested in have no right to make that decision for them – it simply isn’t what a business is set up to do.

Given this line of thinking (which remains widely held even today), many people assume that business’ interest in education is simply one more case of companies looking for new markets to conquer.

But is it really that simple?

Certainly there are companies that sell to the school market, and companies that want to manage schools. But they represent only a small segment of the total business community. The profit motive of this small group of companies doesn’t explain why businesses in almost every industry contribute billions each year to support education, nor does it explain the widespread political support that NCLB, vouchers, and other reform tools receive from businesses that have no interest in running schools.

Rather, it is the widely acknowledged crisis in public education that drives the business community – which is essentially both an investor in, and customer of, our schools – to see involvement as an imperative, literally something that must be done to ensure its own future. They see involvement in public education as an investment in the short- and long-term health of their companies, and in the continued strength of the markets they serve.

They look for the following returns on their investment in education:

• Workforce development – Employers are already complaining about their inability to find qualified workers in nearly every industry, and projections show this shortage of skilled workers will only get worse over time. This is a critical issue for the future health of US businesses, and it has become a mobilizing issue spurring educational engagement on the part of many companies.
• Market strength – Companies need more than well-educated employees to operate successfully: they also need an educated public to ensure strong domestic markets and a positive climate for business. They want good citizens to ensure a stable political climate; they want good neighbors to ensure strong communities; they want good workers, not just for their own companies but for all companies, to ensure a large base of people who can afford their products and services; and many also want an educated customer base to ensure that they can use products and services as they were intended.
• Stakeholder relations – By becoming involved with a social issue like education, companies who make a substantive investment can improve their reputations among important internal and external audiences. Companies that contribute to a cause can see higher employee morale and lower turnover; better relationships with vendors, legislators, the media, and other external forces; and a stronger brand among customers. The short-term return available through improved stakeholder relations provides an internal justification for a certain level of immediate spending as business strives for the longer-term goals described above.

But one may ask, if it’s a matter of supporting education, why not just write a check and be done with it? Why create all manner of learning initiatives, demonstration projects, contests and the like? And why throw your political weight behind ideas like NCLB and vouchers?

The reason is that the business community understands the principles of organizational improvement and adaptation, and understands that in order to move from the status quo towards superior outcomes, there are proven principles and processes that must be applied. Principles like goal setting, measurement and accountability, motivation, investment in (and use of) research, effective allocation of limited resources, and competition have helped to make America an economic superpower. And business realizes, as Jim Collins has said, that nonprofit and social organizations can drive improvement by using these principles and others, even if they set and measure desired outcomes differently.

Further, business realizes that schools, by and large, are not following these principles. They see a system with some of the greatest inputs and lowest outputs in the world, as seen in global rankings provided by groups such as TIMSS and OECD. They see no accountability and no objective reporting (at least prior to NCLB). They see deceptive reporting by the states on key metrics such as dropout rates and proficiency scores. They see a disregard for rigorous research, as evidenced by recent reporting by NCTQ.

What they see, in essence, is a system that needs drastic reform if it’s going to start producing the graduates that business – and the country – needs it to produce. And that’s why these businesses, who have thrived by applying the principles of effective organizations and markets, now want to infuse them into public education.

The business community wants to thrive, but they don’t want to do it by owning the schools: they want to do it by maximizing their investment in schools in order to ensure a strong US workforce and domestic marketplace in the future. And this is one instance in which the self-interest of business serves us all.

Brett Pawlowski is president of DeHavilland Associates, a consulting and communications firm that helps businesses help education. He is also the founder of the Business/Education Partnership Forum, an online clearinghouse featuring news, information, and resources for anyone interested in building effective business/education partnerships.