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Paul Brest

Paul Brest

Posted January 27, 2009 | 09:07 PM (EST)

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.