Is Corporate Philanthropy to Philanthropy What Military Music is to Music?

Is corporate philanthropy to philanthropy what military music is to music? This question arose when I participated in a meeting on corporate philanthropy, sponsored by The Economist and moderated by the journal's own Matthew Bishop, co-author of a new book, Philanthrocapitalism: How the Rich Can Save the World.

The answer to the question depends on how the corporation reconciles its legitimate business motive of improving its bottom line with its philanthropic goals.

Not just businesses, but also individuals, engage in philanthropy for many reasons. While some individual philanthropists seek recognition in their communities or beyond, corporations may wish to improve community relations or identify their brand with good causes. There are literally thousands of different ways of making the world a better place, and many of them--from addressing homelessness or promoting the arts in a local community to fostering global health--will be helpful to a company's bottom line.

What matters is what happens after a company chooses a philanthropic goal. If it is single-mindedly focused on pursuing that goal, that's pure philanthropy. If it is only concerned with whether its philanthropy improves the financial bottom line, that's pure marketing.

Most real-world decisions involve tradeoffs, and much corporate philanthropy lies somewhere between pure philanthropy and marketing. A company can genuinely pursue social goals, while keeping its eyes on the long-term effects on the bottom line. If a particular strategy doesn't seem to improve society over time, it's time to look for a better one. If it doesn't serve business interests over time, the company will shift goals or strategies. But unless its philanthropic goals are genuine and its strategies and grant-making have a real possibility of improving society, the very people a company is trying to impress--community leaders, consumers, or employees--will see the underlying cynicism and the effort is likely to backfire.

Comments

[LGoldzband]

Comparing corporate philanthropy to military music needlessly denigrates both John Phillips Sousa and nonprofit organizations.
What does it mean to say that a company’s philanthropic goals must be “genuine?” That it wouldn't exist if such spending were not tax deductible or if recognition were not afforded for it? Isn’t any philanthropist’s “genuine” intent debatable so long as federal tax laws provide incentives to practice philanthropy?
As a Bay Area corporate grantmaker, I can recite the thanks we receive from our grantees, especially during difficult economic times. Our grant recipients want to provide the company with what it wants (e.g., the recognition that federal tax laws allow), they want their clients to know that there is a solid corporate citizen in their community, and they want the credibility associated with receiving a grant from a major corporate philanthropist. We want the same thing. How is that different from receiving a grant from a private foundation?
Mr. Brest is on target by saying that philanthropists exist for many reasons. But questioning the motives of legal community-building activities of one donor group, whose gifts comprise less than 5% of total philanthropy, seems strange when (in our case) we share several grantees. Would community-based organizations be better off without corporate philanthropy, even if some grantmakers do not meet Mr. Brest’s “genuine" test? Let's ask the charitable groups who apply for funding -- July 4th certainly would be worse off without “The Stars and Stripes Forever” and “The Washington Post March!"

[quindy]

A big, well known pharmaceutical company was giving a non-profit I work for money for printing educational brochures. When the brochures arrived they asked for thousands of copies to distribute to their clients. They gave to charity, got their tax cut, and then took big portion of it back. Only in corporate America! Imagine donating clothes to a charity and then requesting free clothes from them. Some charity.

[tompoe]

We have Professor Yunus, Nobel Laureate, and Grameen Bank, his demonstration of social entrepreneurship, that creates a more realistic approach to philanthropy. An approach that benefits society, and doesn't require maximizing profits for shareholders at the expense of the public. Grameen Bank is doing just fine, today. Amazing, eh? In other words, the discussions about corporate philanthropy are no longer valid discussions.