Magazine article New Zealand Management

Corporate Philanthropy: Getting It Right: Corporate Philanthropists Engage Both Their Head and Their Heart When Donating to Wider Causes. Here's How

Magazine article New Zealand Management

Corporate Philanthropy: Getting It Right: Corporate Philanthropists Engage Both Their Head and Their Heart When Donating to Wider Causes. Here's How

Article excerpt

At a time when attacks on humanity both human and natural--are so evident in the daily media, it is natural for us to consider how we may be able to prevent, or at least try to alleviate, social concerns. Such thought characterises our philanthropic nature. Like many developed countries--even more so for developing and less-developed countries--social issues besiege our quality of life. Failure of the education system, the lack of appropriate health services and deficient support for families, all present themselves as threats to our collective social wellbeing. Such issues escalate when government fails to act, forcing the community and voluntary sector to react.

Michael Porter and Mark Kramer, co-founders of US-based non-profit organisation FSG, have suggested that Milton Friedman's view that corporations provide no greater benefit to society than is provided by individual donors, is only true when corporate contributions are unfocused. This, they claim, is because corporations can leverage capabilities and relationships in support of charitable causes, which exceed individual effort.

What's more, with the human and material resources at their disposal, corporations can have the greatest impact on society by supporting those individuals and community organisations around them that have something positive to offer society. Frank Koch, author of a number of texts on corporate philanthropy, suggests this may include the ability to encourage and assist non-profit organisations to be more effectively managed.

Leading researchers in the United States and the United Kingdom suggest that corporations make contributions for a large number of reasons. These include an active attempt to influence society; to seek public acceptance and applause; to increase their name recognition among consumers; to develop a better public image; to achieve greater consumer loyalty; and to improve community relations.

It has also been suggested that good corporate reputation is the result of contributing to society and the natural environment and that charitable giving can, to some extent, even reclaim a corporation's self-diminished reputation.

Problems arise when contributions are seen as beneficial to a corporation and harmful to society. In these cases, organisations are likely to be seen as manipulating and cynical, which in turn can damage reputation. This is especially the case if stakeholders expect more to compensate for acts of wrong-doing than what has been contributed. It has been suggested that some companies have moved away from making contributions in order to avoid societal charges of hypocrisy. This may further explain why expectations have been placed on corporations to become involved in the society in which they live, and to align their interests with those of society in general.

Corporate philanthropy also plays a role where large corporations build power to secure their place in society. Further, as the health of the community system improves, so does the performance of the firm within the system. Researchers have claimed that managers may be able to justify contributions through their effort to preserve free society, by strengthening the private sector, limiting state control and by maintaining societal conditions to ensure the viability of the corporation and corporate capitalism in general. This is based on the notion that the welfare of the company is significantly tied to the welfare of the society in which it operates.

But giving is not this straightforward and 'social benefit' is based purely on perception. …

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