New Face of Strategic Corporate Philanthropy–Social Impact, Business Benefits, Investor Returns: Integral Business Model…

Strategic corporate philanthropy: The word philanthropy gets thrown around a lot these days. Philanthropy etymologically means ‘love of humanity’ in the sense of– caring for, nourishing, developing, and enhancing ‘what it is to be human’… Philanthropy is an interesting word because it encompasses so much passion and emotion.

Philanthropy is very different from charity; however, many people use the words interchangeably. Charity involves the act of– giving away time, money, or other resources to those in need… Also, corporate philanthropy is mistaken by many for ‘corporate social responsibility’, which is the responsibility of an organization for the impacts of its decisions and activities on society, environment and its own prosperity…

Companies that embrace philanthropy as a core business practice have found that they reap rewards far beyond what they thought was possible. This has turned philanthropy– corporate volunteering and employee giving– into corporate imperatives that can’t be ignored and an essential part of doing business… However, for corporate philanthropy to succeed it must be more than just an afterthought or something to do because it’s ‘nice’. It must be an integral part of the core mission to– grow the business, engage employees, connect with customers, and serve the community.

Philanthropy gives a greater meaning to the company. However, according to Milton Friedman others argue that a corporation’s purpose is to maximize shareholder’s return and it’s not responsible to society as a whole… According to Stanley Litow, corporate philanthropy programs not only enhance employee morale but also pave way to opening new markets… philanthropic activities should be deeply connected to core values… companies should think of corporate philanthropy as extension of their business strategy and corporate policies, rather than only writing checks.

However, according to Peter Buffett; those in nonprofit sectors would do well to consider whether their role in the ‘charitable-industrial complex’ is making world a better place or merely perpetuating ‘conscience laundering’… According to Antonio Neves; any company can create a culture of philanthropy– it means creating a filter that says; I’m doing the best thing for my employees, for my shareholders and for the community… If you put all of your behaviors through that filter, you’ll make different choices and they won’t necessarily be harder choices.

According to Destiny Bennett; in genuine, unpretentious ways, more businesses are folding philanthropy into the business model in order to use their brand for social good. Implementing philanthropic efforts into business is a great way to boost revenues because it humanizes the business and thus it can better connect with target audiences…

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In the article Strategic Philanthropy To Boost Profits by Paul Lemberg writes: Strategic philanthropy is a unique and powerful way to combine the company’s marketing goals with desire to increase the well-being of society and give back to the community: It’s strategic philanthropy, also referred to as– ‘cause-related marketing’ or ‘community partnering’…

No matter what you call it, strategic philanthropy is a strategic partnership that connects the company with a not-for-profit organization or cause. It’s a mutual beneficial arrangement, whereby the business is working for the common good in the community and the business receives parallel benefits, as well. Some of these benefits might include; public exposure, lead generation, employee retention… and it can be a differentiator– distinguishing the business from competitors; most of which are probably stuck in old ‘business as usual’ paradigms…

In contrast, to traditional ‘normal’ business, authentic strategic philanthropy is based upon the advantages of a more empowering and abundance-filled set of beliefs… For example, businesses can be an important influence-model for the community at large, since they are able to demonstrate the value of such things as– innovation, dedication and responsiveness to customers, risk-taking, process and systems innovations, financial practicalities, and teamwork… Strategic philanthropy can be at the very core of how the business is operated. Engaging in strategic philanthropy can help the business refine its values and purpose, which not only distinguishes it from the competition but also contributes to the bottom line…

In the article Targeted Giving Help Companies Lay Groundwork for Future Success by Doug Conant writes: We often measure the impact of corporate philanthropy by counting the number of individuals who are helped by a particular program. However, philanthropy can also help companies reduce business risk, open new markets, engage employees, build brand, reduce costs, advance technology, and deliver competitive returns…

Corporate philanthropy is usually defined in various ‘shared’ or ‘blended’ approaches to corporate social responsibility, in which companies seek– ‘to do well by doing good’. However, corporate philanthropy can also be defined as a ‘discovery phase’ prior to an investment in social issues. For example; companies can view philanthropic investments as incubators for promising business ideas and a mechanism for understanding both community and corporate needs.

Much like R&D, philanthropy allows companies to make thoughtful investments in sectors where the return profile is typically more speculative. Of course, philanthropy is not the only strategy for business to engage in meaningful corporate-community roles… Business leaders should use every tool in their portfolio to help create economic value that can help address relevant societal issues. From my vantage point, this is clearly the new normal; the new lens through which all corporate activity will be viewed.

As strongly as I advocate the more complete adoption of this approach by the business community, I also challenge companies to take a second look at the opportunity to more fully leverage philanthropic initiatives that can pave the way for future market-based innovations. It’s a great way to learn about communities and their needs, and test new business strategies. The key is bringing good business insight-discipline to the process…

Survey–How U.S.’s Biggest Companies Give--2013 Corporate-Giving: U.S.’s biggest companies expect a third-straight year of modest increases in cash gifts to charities in 2013… Donations grew by 2.7% in 2012, to $5.3 Billion, for 106 companies that provided two years’ worth of data… More than three-quarters of corporate leaders said their giving budgets would be about the same in 2013. About 16% said they will give more and 6% will donate less.

Businesses awarded a median of 0.8% of their 2011 pretax profits to charity in 2012. That’s lower than in any of the previous six years, when the percentage of profits going to charities varied from 1% to 1.4%. Among other findings: Wells Fargo gave the most cash at $315.8 Million, Walmart ranked second in 2012 at $311.6 Million. Fourteen companies gave more than $100 Million. The median cash amount given in 2012 was $25 Million. Donations of products continue to grow much faster than gifts of cash.

Overall corporate giving, when both cash and products are counted, rose by 20.2% in 2012, to $18.6-billion. Pfizer held the top spot for the fourth year in a row, giving $3.1 Billion in cash and products… According to ‘Giving USA’; giving by corporations of all sizes jumped 9.9% after inflation in 2012, to $18.15 Billion. Total cash giving in 2012 was $315.8 Million a change from 2011 by 47.9%; Total U.S. corporations’ pretax profits in 2011 was $23.7 Billion; Total cash giving as percentage of pretax profits was 1.3%…

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In the article Blending Business and Philanthropy by Case Foundation writes: The world of philanthropy and the world around philanthropy are changing. According to Steve Case; to thrive, foundations must reinvigorate their approaches by being more visionary, collaborative, and innovative… Many of those changes are already coming, including a new crop of philanthropists with fresh ideas and approaches…

Connecting with businesses is essential for foundations to function in the changing climate, and to overcome traditional barriers between making money and serving society. The world is increasingly networked, interlinked, and interdependent, where old divides of boundary and belonging are getting blurred… Likewise, we need to expand perceptions of how to engage in philanthropy– to bring in new actors and forge new alliances that leverage our collective abilities…

There’s no logical reason why the private sector and the social sector should operate on separate levels, where one is about making money and the other is about serving society… Today’s executives understand that in order for their enterprises to thrive and grow and attract the very best talent, they need to be able to draw on a healthy, well-educated workforce; offer safe, clean neighborhoods to prospective employees; sell to consumers with high enough levels of income to buy their products; and conduct themselves in a way that is attractive in shareholders’ eyes.

And that means, the business of business– is social engagement… we must create new patterns that reshape the entire system– combining the innovation of the business world, passion and humanity of non-profit world, and inclusive networked culture of the digital world to generate transformative change…

Corporate philanthropy is serious business, which can help establish-enhance critical business-community partnerships and become a very cost-effective way for recognizing opportunities that can benefit both the corporation and community… Expectations for corporate philanthropy are rapidly evolving and officers and directors can no longer treat corporate philanthropy as a peripheral activity or an after-the-fact distribution of profits.

According Matteo Tonello; to make a business case in support of corporate philanthropy, executives should integrate giving with other business activities, institute controls to limit managerial opportunism, and develop procedures to measure-evaluate financial and social outcomes. It’s no longer sufficient for corporate philanthropy to simply ‘do good’. If corporate philanthropy is to succeed in the long run, it must provide a financial return.

Acknowledging the economic benefits of corporate philanthropy does not negate its power to alleviate social problems and enhance communities… According to Paul Brest; strategic philanthropy is ‘the setting of clear goals, developing sound evidence-based strategies for achieving them, measuring progress along the way to achieving them, and determining whether you were actually successful in reaching the goals’... According to Terence Lim; measuring the value-results-effectiveness of corporate philanthropy is one of the great challenges. Social and business benefits are often long-term or intangible, which make systematic measurement complex…

Yet: Corporate strategic philanthropy faces increasing pressures to show that its programs are strategic, cost-effective, and value-enhancing as possible. Corporate philanthropy is vital to business and society, but faces steep pressures to demonstrate that it’s also cost-effective and aligned with corporate needs. Indeed, many corporations cite measurement as primary management challenge. However, according to William Schambra; most approaches for measurement lead to expensive-exhaustive evaluations that are often meaningless. Instead, foundations should listen more to community groups and constituencies they serve to figure out where money is most needed…

In a challenging economic period, when organizations seek to reduce expenses of any kind, it’s particularly important to distinguish good from bad investments and to maintain funding dedicated to ongoing improvement of the most effective philanthropy initiatives… And that requires; giving and getting the best– bang for the buck…