Archive for October 7th, 2011

October 7, 2011

There’s No Such Thing as Corporate Philanthropy!

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.”

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