Corporate Philanthropy does not, or at least should not exist.
While corporations may give to charitable causes, it is not or should not be out of an altruistic sense of corporate social responsibility. Instead, done properly, corporate giving is simply a marketing or research-and-development investment. Let me explain.
Several years ago, I moderated a panel of corporate giving officers for the Association of Fundraising Professionals Greater Philadelphia Chapter. One of the panelists was from a bank, at the time one of the nation’s largest credit card issuers. She told the group that there is no such thing as corporate philanthropy. I saw the mouths of about 100 people drop open. They were either surprised by this news or were shocked that a corporate giving officer would actually admit this. The giving officer from the bank went on to explain that corporations exist for only one reason: to enhance shareholder value. The bank contributed money only where a positive return on investment could somehow be expected.
Many people expect for-profit businesses to act with “Corporate Social Responsibility.” CSR is a term that came into use in the late 1960s. While there are many definitions for CSR, Wikipedia defines it as “a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms.” Today, many nonprofit professionals seem to think that one component of CSR should be corporate philanthropy; they think that corporations should “give back.” News media have even recently done reports on the role of corporate philanthropy.
However, that’s not why corporations exist. Again, they exist to make money for their shareholders, not to perform selfless acts of charity. As for “giving back,” corporations do this every time they pay taxes, provide jobs, pay employees well enough so they can also pay taxes and donate money. As for corporate giving, it needs to accomplish something not just for the charity, but also the corporation.
Marc Gunther, a senior writer for Fortune Magazine, wrote in 2008, “I’m not a big fan of corporate philanthropy. Too often, it’s a feel-good exercise, generating little value for a company’s shareholders. At its worst, it allows CEOs to use other people’s money to glorify themselves.”
On the other hand, corporate giving can benefit the charitable sector while also building shareholder value. Gunther went on to describe giving by General Electric, as an example: “Where’s the payoff for shareholders [from contributions to healthcare in Africa]? ‘We’re building reputational value and trust in places in the world where we aren’t known,’ [Robert] Corcoran[, President and Chairman of the GE Foundation] says. The company is also driving sales. While GE was launching a healthcare project in Rwanda, Paul Kagame, the nation’s president, asked to meet with Corcoran because the country wants to exploit methane gas under Lake Kivu, on the border with the Congo. Corcoran arranged for Kagame to meet John Rice, a GE vice chairman in charge of infrastructure, and the company is now on the verge of selling its equipment to Rwanda.”
In my own career, I’ve had experience with the idea of corporate giving as investment. A large university was implementing a coordinated direct-mail/phone fundraising campaign. However, they lacked sufficient budget resources to contact all of the alumni. So, they contacted a national video rental company headquartered in the same region. The university had no direct connection to anyone in senior management, but they were able to get access to the CEO. He promised the university a sizable challenge grant that allowed it to move forward with the campaign. The development staff was very happy.
That happiness was short lived, however. Within days, an angry marketing director contacted the university. He explained that the CEO had seized part of his budget to provide the grant. Unfortunately for the marketing director, who had fewer dollars with which to work, the CEO had not reduced his goal. So, the marketing director told the university that they could either help him reach his goal or forget about a grant the following year.
I worked closely with the university, and we developed a plan. The corporation was named in all campaign materials since they were providing a challenge grant. In addition, alumni were encouraged to go into one of the chain’s retail outlets to get a special university video rental card and be entered into a drawing for a free cruise. The cruise was donated by a cruise company that was thrilled with the targeted advertising reach.
The result was that the video rental company exceeded its marketing targets and, therefore, renewed its support to the university. The university was able to conduct its first-ever phone campaign which exceeded expectations. The alumni were happy because they had an opportunity to win a cruise while supporting their alma mater and having that support magnified by the challenge grant. And, the cruise company benefited through successful advertising to a target market it valued. Everyone won. But, it wasn’t altruistic corporate philanthropy. It was a corporate investment that benefited the university.
So, if you want to raise more corporate dollars, especially during these challenging times, don’t submit a grant proposal simply thinking that a corporation should give-back by giving to your organization. Instead, think how your organization can deliver value to the corporation. The value may be delivered in the short-term or the long-term. The value may simply be goodwill, or more video rental members, or it might be a vibrant arts scene that makes it easier to attract top-notch executives to the area. However it is defined, the more value you can reasonably and appropriately demonstrate, the better your chances will be for getting your request funded.
That’s what Michael Rosen says… What do you say?
UPDATE (10/10/11): I will be interviewed on Blog Talk Radio’s program hosted by Philanthropy Plus. The topic will be: “There’s no such thing as Corporate Philanthropy!” The interview will air live on Wednesday, Oct. 12, 2011, 11-11:30 AM EDT, at http://ow.ly/6Teu0. A recording of the interview will also be posted at that site for those who are unable to listen to the live event.