Beyond Profit: Corporate Philanthropy and the Evolving Culture of Giving
Corporate social responsibility (CSR), defined as a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders, is a concept that often guides business practices today. Corporate philanthropy, defined as the act of a corporation or business promoting the welfare of others, generally via charitable donations of funds or time, is an important aspect of CSR. While both concepts have historical roots dating back to the 20h century, each has evolved as social, economic and political landscapes have changed.
Early forms of charitable giving were influenced primarily by chief executive officers (CEOs) based on their philanthropic interests, and often had little to do with business strategy. Fueled by a CEO’s desire to give back, corporate giving typically addressed an issue of personal interest, or within a community of interest (often the community where the company was based). Economic prosperity in the United States led to increased corporate giving and CEOs from companies such as Chase Manhattan Bank, General Electric and Cummins created foundations and programs that institutionalized philanthropy as part of company mission. Companies also began to focus more intently on CSR in relationship with how business makes profit and how, through and alongside this process, they are serving society.
However, this era of giving came under criticism from economists who thought the role of a corporation in a free society was to make as much money as possible for its shareholders, and that philanthropic ideals undermined this goal. Those in favor of corporate giving believed that companies had a responsibility to be good corporate citizens, and that business should serve stakeholders such as customers, employees and the community; not just their shareholders.
This debate, as well as the changing landscape of the 1980s and 1990s, led to more strategic corporate giving. Issues such as globalization placed more stringent cost controls on businesses, and philanthropic giving that was not seen as advancing business objectives was often eliminated. Other influences such as the Earth Summit in 1992 and the rise of the anti-sweatshop movement in the 1990s highlighted a company’s impact on issues like the environment and human rights. People started paying more attention to business ethics (or lack thereof), which in turn influenced corporations to better align business strategy and corporate giving.
While philanthropy can help build a positive reputation for a company, philanthropy alone does not define a company’s integrity, trustworthiness and/or values. Today, companies often focus their giving where they can make the biggest impact among all stakeholders. Three current CSR trends include: conscious capitalism, a philosophy that a more complex form of capitalism is emerging that will enhance corporate performance and people’s quality of life; shared value, a management strategy focused on creating business value through solving social problems that intersect with their business; and social business, a non-dividend business that seeks to solve a social problem through business methods.
Corporate giving is often in the form of direct cash giving, foundation grants, stock donations, employee volunteer time, product donations and other in-kind gifts. Research has shown that companies that encourage employees to donate and volunteer have higher employee retention rates, which is a huge cost savings for the business. Two common programs for employees are matching gift and volunteer grant programs. Matching gift programs allow the company to match an employee donation made to the charity of his/her choice. Over 65 percent of Fortune 500 companies offer matching gift programs, and an estimated $2-3 billion is donated annually through these programs. Volunteer grant programs offer monetary grants to organizations where employees volunteer, usually within the community where a company’s employees live or work. Nearly 40 percent of Fortune 500 companies offer volunteer grant programs, and a majority of these programs donate anywhere from $8 to $15 per hour volunteered.
CECP (formerly known as the Committee Encouraging Corporate Philanthropy), a coalition of CEOs committed to philanthropy that was founded in 1999, tracks corporate giving. In 2014 as part of an annual survey, CECP surveyed 271 companies and found that companies surveyed gave $18.5 billion in cash and in-kind donations. Between 2012 and 2014, total corporate donations as a percentage of revenue remained stable at .13 percent, and according to a Giving USA 2015 report, corporate giving rose by 13.7 percent between 2013 and 2014. In 2014, religion, education and health and social services received the most charitable donations. Internationally, most corporate giving went to European-based charities, which received USD 410 million, followed by charities in Asia, which received USD 374 million. Charities in Africa received giving, but the overall philanthropic investment in the continent was the lowest regional investment, at USD 88 million.
CSR as part of company culture leads to creative, thoughtful and ongoing philanthropic giving that helps non-profits throughout the world and, in turn, helps the communities those non-profits serve. There are a number of corporations in Washington state that have established successful foundations and giving programs. Here are a handful of Global Washington members who are on the front lines of corporate giving.
Alaska Airlines – Alaska Airlines gives to a number of charitable organizations that focus on the issues affecting communities served by Alaska Airlines. Areas of giving include youth and education, medical (emergency/research) environmental and community outreach. The Alaska Airlines Foundation offers cash grants to non-profit organizations based in Alaska, Hawaii and Washington that focus on educational and workforce development.
Clark Nuber PS – Clark Nuber is dedicated to the success of its people, its clients and its community at large. Though Clark Nuber is strongly rooted in the Pacific Northwest, its charitable giving extends globally – supporting international businesses, industries and communities for over six decades. In 2015 alone, Clark Nuber made direct monetary contributions to over 100 organizations, was involved in nearly 70 charitable community organizations, served on over 50 boards, and was included in the Puget Sound Business Journal’s top 75 Corporate Philanthropists in Washington for the third time.
Emirates – The Emirates Airline Foundation is a non-profit which aims to improve the quality of life for children, regardless of geographical, political or religious boundaries, and to help them maintain or improve their human dignity. The foundation’s aim is to help disadvantaged children realize their full potential by providing them with the basics, which most of us take for granted such as food, medicine, housing and education. Emirates is also a supporter of United for Wildlife, helping to raise awareness about the threat that the illegal wildlife trade poses to the survival of some of the planet’s most endangered and iconic animals.
JPMorgan Chase & Co. – JPMorgan Chase believes it has a fundamental responsibility to its client and communities to meet economic and social challenges. JPMorgan Chase works with community partners on issues such as workforce development, financial capability, small business development and community development in regions where it does business. In 2015, the firm and its Foundation gave more than $200 million to thousands of non-profit organizations across 47 U.S. states, the District of Columbia and 43 countries. More than 47,000 employees provided 310,000 hours of volunteer service in local communities around the globe.
Microsoft – Microsoft’s mission is to empower every person and every organization on the planet to achieve more. With a foundation of more than 30 years of giving, Microsoft Philanthropies invests its strongest assets – technology, employees, and partnerships – to drive greater inclusion and empowerment of people who do not have access to technology and the opportunities it offers and enables.
PwC – PwC has been in the Pacific Northwest since 1907 and has seen the region and the world continuously transformed by the innovation of business. PwC is well-equipped to help organizations address issues that arise in this high growth business climate. They believe business can go beyond products and services to have a measurable impact. PwC is committed to building trust in society and solving important problems for their clients, their people, the marketplace, and society as a whole. Working collaboratively with all of their stakeholders, they aim to deliver positive social impact, with measurable and long-lasting results. PwC is proud of their local, national and global impact.
Tableau Foundation – The Tableau Foundation believes data can unlock innovation and drive collaboration to help solve global challenges. They are using data to make a difference in the world in various ways including: in human rights, where Tableau works with REDLAYMC utilizing data to advocate for children’s rights in Mexico and Latin America; in global health, whereby PATH uses Tableau software to better track and eliminate malaria in Zambia and South Africa; and in civil society development, helping the people of Myanmar learn to use data to bring about democracy in their country.