I’ve never been a fan of the term “corporate philanthropy,” largely because it ascribes a decidedly human emotion (philanthropy means “love of humankind”) to an entity that is by definition unable of feeling emotions. That doesn’t mean I think corporations are inherently bad or good. Corporations play an important role in our society and employ millions of Canadians. But corporations aren’t living entities, which means they can’t feel things and they can’t be good or bad (but they can do both good and bad things).
Why do corporations give away millions of dollars? Why do some give away more and others give away less? Why do some provide their employees with opportunities to volunteer and others don’t? How do corporations develop cultures that behave more generously than others? These are tough questions for which there are no simple answers. But let’s say that the short answer resides in the corporation’s broader culture, which is reflected in how the company treats its employees, customers, and other stakeholders.
So why do companies give away lots of money? In short, giving corporate money away (a phenomenon known as community investment, community affairs, corporate giving, corporate social responsibility, corporate philanthropy, and other terms) is part of a social license to operate. In 2020, there’s an expectation that companies should dedicate some of their financial and non-financial resources (for example, products and services) to support the community. In many cases, this means making donations and grants directly to charities. Customers, employees, and even most shareholders expect corporations to support the communities in which they do business.
Yet some companies give away more than others. And some companies are far more strategic and thoughtful about their approach to giving and volunteerism than others. The companies that are most strategic about how they partner with charities recognize the potential competitive advantage that comes with doing so. Those that treat charitable partnerships like a cost centre that adds little or no value to the business will do the bare minimum, and simply treat charitable giving in the same way they treat office supplies, travel costs, and training — as costs that need to be managed when times are good and mitigated when times are bad.
There are many compelling reasons for companies to partner with charities (and vice versa), and all these reasons relate to adding value to the business. Charitable partnerships can strengthen the company’s brand by attaching a social value to it. Providing employees with volunteer activities creates a higher level of engagement, which makes them happy and more likely to stay. Some charitable partnerships, like cause marketing, can even lead to more product sales. At the end of the day, it’s a win-win for corporations, charities, and communities.
Brad Offman is Founder and Principal at Spire Philanthropy.