History of Corporate Charitable Activities Part 2

Strategic Philanthropy

During the 1980's, the idea of linking a corporation's philanthropy with its business interests, or strategic philanthropy, took hold. Due to the growing competition resulting from globalization, U.S. businesses adopted more stringent quality and cost controls. This level of scrutiny extended to corporate philanthropic programs as well.

Reynold Levy, the first president of the AT&T Foundation and a supporter of strategic philanthropy, wrote:

The best way to keep philanthropy vibrant, well regarded, and well funded in a corporation is to demonstrate its regular contributions to business success. The means that good corporate philanthropy incorporates both business interest and social need. To find those areas of confluence requires knowing a company's businesses, as well as its customers, competitors, markets, and driving forces. And one must understand the charitable institutions and causes seeking a share of corporate wherewithal.

Strategic philanthropy is the predominant form of corporate philanthropy practiced today. The organizations engaging in strategic philanthropy do so in the various ways: (1) focus of support on one type of organization in one issue area; (2) focus on a small number of communities where the organization has a major business presence or large numbers of employees; (3) expansion to other countries with the global expansion of the business.

Corporate Social Responsibility

Many organizations view corporate philanthropy as only one part of their overall corporate social responsibility, thus enhancing a company's reputation. Corporate responsibility does not serve as a substitute for trustworthiness and integrity.

Corporate social responsibility means that the company operates so that it meets or exceeds the ethical, legal, commercial, and public expectations that society has of business, bypassing statements of law or regulations, but goes to the expectations of its stakeholders: shareholders, customers, employees, and communities. Companies that lead this field view social responsibility as (1) a comprehensive set of policies, practices, and programs integrated throughout its business operations; (2) decision-making processes supported and rewarded by top management. Many organizations have summarized their corporate social responsibility practices into policy statements. In practice, these have little or no meaning if the organization's values and operating procedures do not consider how its activities affect those other than customers, employees, and shareholders.

As the desire to quantify the business benefits of such practices increased, companies needed to (1) enhance brand image and reputation; (2) increase sales and customer loyalty; (3) increase ability to attract and retain employees; (4) improve financial performance; (5) establish access to capital; (6) reduce operating costs; (7) increase productivity/quality; and (8)reduce regulatory oversight. Numerous studies support the proposition that social responsibility does result in financial gains, particularly through a positive impact on customer loyalty, employee recruitment and retention, and a positive regulatory environment. However, not all organizations realize financial gains from such practices. Indeed, some can see losses from "taking one's eye off the ball."

Good corporate social responsibility depends on the organization's success in integrating good corporate citizenship into its core business strategy, instead of treating it like "ad hoc window dressing."

Corporate Philanthropy Today

Most companies, particularly publicly traded ones, are serious, committed, intelligent, and responsible members of their communities. Not only do they follow the rules of society, they also set an example of how to be socially responsible. To succeed, these companies' values inform their interactions with their employees, customers, shareholders, and communities.

Corporate philanthropy managers play an important role in ensuring their organization participates as a good corporate citizen. Such a task requires constant vigilance and the ability to voice constructive criticism when a company, especially their own, veers off the path of good corporate citizenship.