Social business, Part 2: Companies build giving into business strategy

By Todd Cohen

Corporate philanthropy has evolved over the last generation from supporting pet causes the CEO cared about and, later, targeting giving to causes generally in sync with the focus of the company’s business, to making strategic use of its philanthropy and other assets to address social or global problems that represent obstacles to its business.

Helping to drive that change has been a combination of forces, experts said, including the growing importance of intangible corporate assets such as customer perception; declining corporate control over a company’s reputation with the emergence of social media; the growing importance of social and environmental issues that need to be addressed; the emergence of “B corporations” that are required by law both to increase shareholder value and to serve community needs; and a growing body of evidence that good corporate citizenship can help improve business.

“There’s an increased realization by companies of the tremendous opportunities of non-cash giving,” said Margaret Coady, executive director of the New York City-based Committee Encouraging Corporate Philanthropy.

“That can be any asset under the company’s stewardship, whether the power of employee volunteers, or the goods and services that the company manufacturers, or the relationships the firm has, perhaps through their supply chain, or even the physical assets of the business, such as a fleet or trucks, or conference facilities, or an in-house printing press,” she explained.

“It makes sense for a company to choose societal issues and focus its philanthropy on causes that have a linkage to its products, services and expertise,” she said.

Internal and external “stakeholders” now expect companies to have “a deep level of engagement,” she said, and are “looking at larger corporations and asking, ‘What are your values and how are those values demonstrated through your philanthropy?'”

Companies have responded, she explained, by looking for “a tie between a social issue and the future of the company,” and asking what role they can play in helping to solve the social problems “because it will be good for the community and good for me, can I reorient my business around this societal issue, recognizing its relevance to my company’s future?”

Next: Philanthropy adds value for companies

The series:

Part 1: Companies team with causes to add value

Part 2: Companies build giving into business strategy

Part 3: Philanthropy adds value for companies

Part 4: Nonprofit builds corporate partnerships from ground up

Part 5: Company works with nonprofit to build markets

Part 6: Companies turn to nonprofits to help develop leaders

Part 7: Nonprofits tap corporate expertise

Part 8: Company teams with nonprofit to solve social problems

Part 9: Nonprofits work with companies to help find business solutions

Corporate giving and focus grow

Most corporations throughout the world gave more in 2011 than in 2010, with corporate giving at companies headed toward its levels from before the economy collapsed in 2008, a new survey says.

Corporate giving also has grown more focused over the past three years, companies placed a high priority programs to match employee gifts and engage employees in civic engagement, and international giving grew, spurred by big revenue growth abroad, says the annual Corporate Giving Standard survey by the Committee Encouraging Corporate Philanthropy in association with The Conference Board.

Median corporate giving totaled $24.4 million in 2011, compared to $24.6 million in 2010 and $22.6 million in 2009, says the survey, which uses inflation-adjusted data from 144 companies that provided information for three straight years and gave a total of $15.7 billion in cash and products in 2011.

Total giving since 2009 grew at 60 percent of companies, with 48 percent increasing their giving by over 10 percent.

Giving grew 25 percent each in the consumer-staples and health-care industries, which posted the biggest increases, with direct-cash giving growing a median 18 percent and marking the most widespread form of giving among companies that increased their giving fro 2009 to 2011.

“We are optimistic about the levels of commitment we see from companies,” Charles Moore, executive director of Committee Encouraging Corporate Philanthropy, says in a statement. “Not only are they continuing to give, but they also are doing so in more strategic and thoughtful ways in partnership with their employees and their communities.”

Companies surveyed generally focused their giving on a single program area, with many focused on education and on health and social services.

Only 4 percent targeted less than 20 percent of giving in any single program area, with over 31 percent of companies giving 50 percent of more of their giving to a single program area, and 81 percent of companies giving 20 percent or more to either education or to health and social services.

Companies in 2011 continued to target their giving to programs in sync with their business focus, with health-care firms continuing to give mainly to health and science, for example, information-technology companies continuing to give education from kindergarten through 12th grade, and financial companies continuing to give to community and economic development.

In those focused program areas, companies gave bigger grants to a smaller number of organizations than in 2009.

Companies increasingly got involved with causes outside their headquarter countries, mainly through employee-engagement programs and mainly in the for of employee volunteer awards.

And companies that increased their giving since 2009 were more focused on global giving than their counterparts.