Corporate Philanthropy

Corporate philanthropy is the practice by companies of giving charitable donations to a wide range of [Page 487]societal institutions, especially nonprofit or nongovernmental organizations (NGOs), including social service agencies, environmental groups, housing and poverty agencies, schools and universities, hospitals, and other organizations, whose goals are to benefit society in some way. Sometimes termed corporate social investment, corporate philanthropy can be considered part of companies' overall approach to corporate community relations and to the somewhat broader concept of corporate social responsibility (CSR). CSR is defined as the direct attempt by companies to contribute to the betterment of society. CSR with its elements of philanthropy is part of the larger picture of companies' corporate citizenship, which is defined as the ways in which a company's strategies and practices, that is, the business model, affect its stakeholders, society, and the natural environment.

Corporate philanthropy takes a number of forms including direct monetary donations and grants to notfor-profit organizations; in-kind donations, such as product and service donations; employee volunteer programs; technical support; and the deployment of skilled managers into social enterprises on a volunteer or advisory basis, including sometimes as members of boards of directors of nonprofit organizations. In the most progressive firms, managers and sometimes employees are evaluated partially on their contribution to the community, which is seen as an important element of a company's philanthropic endeavors. In addition, multisector or public-private collaborations are frequently considered to be part of a company's philanthropic program or CSR. These types of contribution will be discussed in more detail below.

Companies in the United States are estimated by associations such as the Conference Board and the American Association of Fundraising Counsel to give between 0.7% and 1.3% of pretax profits in philanthropic contributions, according to Business for Social Responsibility. The American Association of Fundraising Counsel estimates that about 5% or about $13.5 billion of the total amount of charitable gifts of nearly $251 billion in the United States in 2000 was donated by corporations. The use of corporate philanthropy is most prevalent in the United States, where the practice began, though multinational corporations from other nations are increasingly developing giving programs as well. Some NGOs are skeptical of strategic philanthropy programs because they believe that there should be an intrinsic value to philanthropy that is diminished when the company benefits and because only those interests that benefit the corporation will receive philanthropy; however, there is also evidence that strategic philanthropy approaches are becoming increasingly popular.