Recession Driving Changes in Corporate Philanthropy
Companies also looking to incorporate volunteerism into their corporate culture
Not long ago, corporate philanthropy didn't involve much more than writing a check to
So, for instance, companies may allow their employees to volunteer while on the clock, or they might reward customers for their volunteerism. Many are giving goods rather than cash and focusing more on areas in which they have expertise, so that
The entire notion of corporate giving is "starting to get a lot fuzzier," says
Some of the new developments in corporate philanthropy are being driven, in part, by the stubborn recession. According to a survey by the CECP, 60 percent of companies cut their philanthropic donations from 2008 to 2009, and most of those trimmed them by more than 10 percent. That has helped fuel the move toward giving time and goods rather than money. According to a survey conducted by the Chronicle of Philanthropy, when companies were asked how the recession has changed their philanthropy, by far the largest number said they were encouraging employees to volunteer more. "Companies and employees are seeing their communities in greater need, but they don't have as much cash to give," Coady says.
But volunteerism is also increasingly in the zeitgeist, and companies that want to attract the best recruits are trying to incorporate that into their corporate culture. "This generation of 20-somethings coming into the workforce have gone through high school and colleges that have service volunteerism requirements. And they define philanthropy by action, not cash," says
President Obama's focus on volunteering has helped nudge companies as well.
Companies are also focusing more on specific causes to which they think they can contribute particular skills or knowledge. The clothing retailer Gap realized it had more to offer than just expertise in folding T-shirts, says
So Gap started the program This Way Ahead, which teaches job skills to poor youth in
"Nonprofits are businesses," says Deloitte's Hochberg. "How do you recruit? How do you develop talent? How do you use technology? What's your financial management strategy? What's your marketing strategy? These are business questions."
Companies are also mixing and matching these approaches.
That experience is common, says Coady. Programs like volunteering and matching employee contributions can have as much to do with making employees happy as with serving the community. "A lot of the business case for philanthropy has to do with morale and retention," she says.
Wait, the business case for philanthropy? That's right: More and more, companies are trying to use philanthropy to build their businesses at the same time they're doing good. Now that "corporate social responsibility" has matured from a buzzword to standard business practice, it's becoming more common to think of philanthropy and business not as two separate things, but things that are mutually reinforcing.
"There is also a marketplace case to be made for this," says Hochberg. "When we're out there doing this work, we're showcasing what Deloitte is all about, which is solving business problems. We just happen to be doing it for the
Long-term goals. Nestlé, the Swiss food giant, has led the way in this trend by developing a philanthropic focus that is closely aligned with its long-term business goals. It focuses its charitable work on helping boost productivity among the farmers it works with, reducing water use, and developing more nutritious products. "For our business to be successful in the long run, it must consider the needs of two primary stakeholders at the same time: the people in the countries where we operate and our shareholders," Nestlé's corporate leaders said in a statement.
Other companies have followed Nestlé's lead.
Nestlé even changed its articles of association to say the company aims for "long-term, sustainable value creation" rather than short-term financial gains. And its chairman, Peter Brabeck-Letmathe, has gone so far as to say he doesn't believe companies should be involved in charity work at all. "I'm personally very much against corporate philanthropy," he said in a television interview earlier this year. "You shouldn't do good with money which doesn't belong to you. What you do with your own money, this is absolutely fine."
But this attitude has raised the question: If it's smart business, then at what point does it stop being charity? If these are things companies should be doing anyway, why do they deserve a pat on the back (and a tax break) for it?
"If the business is explicitly enhancing its profit along the way, is it really altruism? Isn't that just good business?" asked a report published this year by the CECP, based on research by the consulting company
Give to get. And reasons for cynicism are not hard to find:
Given the strenuous public relations efforts that usually accompany corporate philanthropy, it's easy to ask whether a company's intentions are genuine.
The idea that corporate philanthropy should be win-win "is a very appealing proposition. You can have your cake and eat it too! But it's an illusion, and a potentially dangerous one," wrote
This new paradigm has also left some out. Arts and cultural organizations, like theaters, museums, and public radio, have all seen their donations drop. The
Close cooperation with businesses can carry risks for nonprofits as well. After the BP oil spill, the environmental group
But defenders of this form of philanthropy say that, as self-serving as it might be, it's better than the old approach, which too often was just writing checks with no strategy. "I would much rather see a
Like it or not, a more hands-on approach to corporate philanthropy will likely become more common. "Social problems will become increasingly complex and widespread over the next decade," the CECP report said. "At the same time, societal expectations that companies should take a substantial role in addressing those issues will escalate." Pressure from shareholders, however, means that companies will likely have to act in ways that improve the bottom line as well. It's a balancing act that will challenge CEOs for years to come.
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Recession Driving Changes in Corporate Philanthropy
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