History of Corporate Charitable Activities Part 1

Orgins of Giving

Kent (Oz) C. Nelson, formerly the chairman and CEO of United Parcel Service (UPS), believed that all giving – even corporate giving - should come "from the heart". Then president of the General Mills Foundation Reatha Clark King stated that the problem is FINDING a corporation's heart, meaning that the question is: what, exactly, makes up the corporation's heart? After it's found, then the "heart" needs to be articulated in such a way that it makes business sense for the company.

The heart, while a necessary component for corporate philanthropy managers, is not a sufficient element for corporate philanthropy and social responsibility as the heart's emotional impulses must be paired with the brain's logic to have a great corporate philanthropy program, in this highly competitive, unforgiving world.

The Four Phases of Corporate Philanthropy

The first phase, "pre-corporate philanthropy," consisted of men and women who created companies, invented products, and held strong beliefs about helping society in the US. The next phase of corporate philanthropy consisted of chief executive officers and formal programs designed to "give back" to communities. These often take the form of corporate foundations. The third phase, "strategic philanthropy," resulted from the combination of business interests and the needs of communities via institutionalized programs. The fourth and newest phase utilizes the concept of "corporate social responsibility," or a holistic view of how companies operate and whom they serve, as well as the overall fit of corporate philanthropy into the company's overall structure and philosophy.

Pre-Corporate Philanthropy

The founders of corporate philanthropy include notables such as Henry Ford, Alexander Graham Bell, John Pierpoint Morgan, Myra Bradwell, Maggie Lena Walker, and Lane Bryant. These business leaders took their personal interests and developed businesses around them, or undertook philanthropic activities based on personal interests to the public.

For example, Ford's interest in inventions and machinery which helped bridge the gap between previous inventions and advances in his time, led to the creation of the Edison Institute, now called the Henry Ford Museum & Greenfield Village. Ford wanted to share with the public his idea of "how far and how fast we have come." Bell, founder of the Bell Telephone Company (now AT&T), started his career as a teacher for the hearing impaired. This evolved into a lifetime commitment to teach the deaf lip-reading and speech through experiments with sound waves and their transmission. This work led directly to the invention of the telephone. Bell's work signaled the start of AT&T's philanthropic tradition. JP Morgan, founder of present day JP Morgan Chase, amassed a collection of art and books which would later go to the Metropolitan Museum of Art and the Morgan Library. Morgan valued character, measuring his friends and colleagues against the standards of trust and integrity, and he also ran his business in that way.

Bradwell published the first major legal journal in the Western US after the Illinois Bar Association denied her entry. This journal included articles on women's issues and promoted legal reforms for women, such as the right to vote and equal access for women to all occupations on merit. Walker, the first female bank president in the US, held the belief that African Americans should reinvest in their own communities. Bryant designed the first maternity clothing for women to wear in public. She got her start as a poor Jewish immigrant in the lingerie factory and leveraged her success to contribute to Jewish philanthropies.

While the late 1800's and the early 1900's had corporate leaders who considered social responsibility and "giving back" as part of corporate culture, such attitudes represented the exception, not the rule. Many excesses of other organizations led directly to the creation and proliferation of labor unions, child labor laws, minimum wage, public health systems, and the establishment of the Securities and Exchange Commission (SEC) in 1934.

CEO and Corporate Giving Program

Many blue-chip companies can trace their corporate philanthropic programs to the mid-twentieth century and the financial strains of two world wars. The Great Depression also influenced the progress of corporate citizenship.

In the post-WWII era, the economic resurgence in the US made possible the establishment or continuation of giving, seen in the examples of the Ford Motor Company Fund in 1949, AT&T's Western Electric Fund (later renamed the AT&T Foundation) in 1953, and Philip Morris's (later Altria's ) initial grantmaking to nonprofit organizations.

Some consider this period the "golden age of corporate philanthropy" as CEOs established corporate giving programs and foundations that institutionalized corporate philanthropy in their companies. "The right thing to do" was one of the motivations, as an article of faith, as opposed to a pragmatic business tool.

The grants often went to nonprofits with close ties to the CEO or other senior level executives. In some cases, the giving took the form of many organizations receiving grants in small amounts, often for unrestricted operating support. For the most part, the companies did not do this for recognition, they simply wanted to give back to the communities in which their employees and customers lived and worked.

Such actions contradicted the views posited by economist Milton Friedman, who thought that corporate philanthropy was the wrong thing to do. Friedman wrote:

Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their shareholders as possible.

Today, Friedman believes that for the most part, companies have followed his advice and those that give money, products, and other help to local organizations do not do so for wholly altruistic reasons. "Many enterprises are in a local community, and it's in their self-interest to have the good will of the community," Friedman states.