October 14, 2003
Many of us feel that we have a responsibility to help create
opportunities for those with the potential to excel but lacking
the resources, and to use the fruits of our success to help
build a better world for future generations. We do this
in our personal lives, and we do it in through the corporations
with which we are involved. We do it not simply out of altruism,
but because we know that we and our children will benefit, and
because only our collective goodwill can solve problems that
might affect our lives and the lives of those we care about.
But according to Community Wealth Ventures, Inc., "United States
corporations annually give away over $11 billion dollars to
nonprofits, or 1.3% of pre-tax income. Many corporations, however,
do not give their money strategically. Philanthropic donations
provide a useful, though seldom fully leveraged, channel for
improving outcomes for both the community and the corporation."
While corporate philanthropy provides a mechanism whereby businesses
and organizations can contribute to and help the communities which
have made them successful, and can also provide a powerful mechanism
for fostering social change, a great deal of corporate money that is
contributed to charity brings little societal value or value to the
contributing business. Often, rather than being strategically driven,
it simply becomes an unstructured outlet for giving money to a pet
project. Further, with increasing globalization and the rising
number of multinational corporations, corporate community
involvement programs become increasingly complex, often needing to
transcend geographic and cultural boundaries. The reality is that
the value that corporate philanthropy brings an organization can
be magnified considerably if it is done in a planned, strategic and
considered manner.
HP Chairman and CEO Carly Fiorina articulated this philosophy well
in a speech she gave in Houston on September 25, 2003 at the
Houston Technology Forum:
"HP in all of our legacies has always believed that giving
back to the community is part of our responsibility. It
is part of who we are... I think that giving back to
communities, making a positive difference in communities,
and reaching out and engaging those that are underprivileged
or underserved or underaccessed is not just the right thing
to do, is not just a good thing to do, it is not just
something that makes our hearts feel better. It is a smart
business thing to do. We are a technology company. Innovation
is our life's blood.
"And today when we look out into the world we see that only
10% of the world can buy our products. We see that unless we
educate and excite more minorities and more women about the
possibilities of technology, and get them engaged in science
and engineering, then we will not have enough qualified
engineers to do the work that we need to do here to help our
company grow. In other words, giving back to the community,
and reaching out and creating opportunities through the power
and possibility of technology for those who are underprivileged
or underaccessed or underserved is a smart business thing to do
because those same people someday will be our customers, our
partners, our employees."
But in order for an organization to truly realize the full potential
of being a good corporate citizen, it must first develop a
strategy that will align charitable giving activities with
long-term corporate objectives and a vision of the desirable
society of the future.
There are a wide variety of options that an organization can use
in pursuit of its philanthropic objectives. These include:
- Direct financial support of non-profit organizations through the
donation of cash and the issuance of grants.
- Employer matching of individual contributions to encourage
individual philanthropy and increase the magnitude of
donations beyond corporate resources.
- Coordination of employee volunteer efforts to provide time
and labor in support of charitable causes.
- Donation of products and services, along with pro bono management
expertise.
The corporation should start in a proactive manner by attempting to
identify which charitable causes might help shape a future that will
benefit the company, and by determining the appropriate mix of
each of the above four options to be used in each instance. More
progressive organizations (such as HP) go beyond merely identifying
which causes to support among those which already exist -- they
actually go out and create the philanthropic activities and
foundations that offer the potential to return the greatest value.
This process begins by working with company managers and other key
stakeholders to understand what the company stands for; what its
core values are; how the company wants to participate in and care
about the community; and how the company wants to make a difference
in the world in which its employees live, work and do business.
Interviews, surveys, and focus group may be a part of this process.
A framework is then created for strategic review. This would
involve defining a set of questions that should be asked
about each philanthropy approach that is contemplated.
Examples might include:
- Will this approach help the company improve its financial
performance?
- How can an activity help sustain employee loyalty and improve
morale, and enhance employee recruiting strategies?
- What should the organization do to encourage a society with
greater need for the company's products and services?
- Can philanthropic actions improve society's perception of the
company and its products and services?
- Is increased visibility and loyalty to the company along with
its products and brand a result of this activity?
- Does the activity increase the reach of the company to new
customers?
- Are long term relationships, partnerships and alliances created
within the communities in which the company works and lives?
The next step is to conduct research and analysis of issues,
corporate and community needs, and promising approaches based on
the above framework. Among the large number of options available,
a process can then be put in place to prioritize which causes and
communities the business should create or support in order to
maximize the value of the organization's philanthropic activities.
This should result in the design and development of a strategic
philanthropic mechanism for the organization.
Such a mechanism would necessarily include a structure for
governing and managing the philanthropic activities. In some
cases, this might involve establishing a corporate foundation.
A communications and community relations strategy then needs
to be crafted and implemented in order to achieve the greatest
impact on both community needs and business goals. The plan
should also monitor and evaluate the results, and periodically
revisit and refine strategies.
The bottom line is that by planning and strategizing your
corporate philanthropic activities, you will find an opportunity
for your organization to maximize its opportunities, increase
its value, and shape the best possible future. Please don't
hesitate to contact us if you would like to discuss your options
in greater detail.
Additional Reading (these references provide additional online
resources on corporate philanthropy, however, the approaches
they take are not necessarily endorsed by ADASTRO):
The Corporate Giving Standard:
A Measurement Model for Corporate Philanthropy
http://www.givingstandard.com/
Committee to Encourage Corporate Philanthropy
http://www.corphilanthropy.org/
onPhilanthropy: A Global Resource for Non-Profit Professionals
http://www.onphilanthropy.com/
