This post was featured on Forbes.com.
With all the discussion of corporate social responsibility nowadays, it’s easy to confuse CSR with corporate philanthropy. But these two business imperatives are, indeed, distinct, with strategies that operate differently within companies and within the communities they impact.
Corporate philanthropy is just one form of corporate social responsibility. As with all forms of CSR, corporate philanthropy can provide a company with a “halo effect” and an uptick in employee engagement, but the long-term strategies of CSR are more likely to affect a company’s global community impact and bottom-line.
Whereas CSR is usually a company-wide strategic business effort that involves every department, corporate philanthropy is often confined to the executive suite, with senior management frequently making decisions about how and where to delegate funds or grants, or guiding corporate fundraising ideas that involve employees. While corporate philanthropy is usually confined to a narrow range of nonprofits, CSR is typically more broadly focused and can have wide reverberations on a company’s employees, customers and supply chain.
Corporate philanthropy is typically played out on a grander scale than individual philanthropy, simply because companies can provide assets beyond the capacity of most individuals, including in-kind donations. Any civic-minded individual can donate time and cash to good causes. But most individuals can’t donate thousands of blankets; a company involved with textiles can. Most folks can’t give away thousands of pounds of food; a large food manufacturing corporation can. Further, an individual’s philanthropic work typically can’t command the kind of exposure that draws widespread attention to a particular cause; a corporation’s philanthropy can, particularly when it’s paired with cause marketing.
Traditional corporate philanthropy – often called checkbook philanthropy – is unstructured. But companies are increasingly developing more formal and progressive programs around their corporate philanthropy efforts, including such initiatives as:
Matching gifts: A donation made to a non-profit which is tied to a separate contribution by another donor. Since the prospect of a matching gift encourages donations, many companies offer a matching gift program to motivate employee contributions to non-profits. The matching gift could be dollar for dollar or a partial match for each dollar, and sometimes the matching gifts can be multiples of the original donation. Companies can match up to a certain total amount per year or perhaps provide unlimited matching, but the best corporate giving programs can change the matching on an individual campaign basis. For example if your company supports a disaster recovery effort, the company may increase the maximum contribution, or match at a higher rate for the duration of the campaign.
Employee directed grants: Directed grants are funds contributed by a corporation but with the guidance of its employees, thus empowering the workforce to help benefit the causes they care about.
Volunteer grants (aka Dollars for Doers): A type of program offered by businesses to match employee volunteerism with corporate donations. Think of it like this: an employee puts in time working at a charity and a wage gets paid – but to the charity. It’s a win-win for worthy causes, caring workers and companies interested in employee engagement.
According to statistics compiled for the 2012 Corporate Philanthropy Summit, corporate giving fell slightly last year, but it has still surged back since the low point during the recent recession. That’s because corporate philanthropy has become an important – and expected – business function, ushering money, materials and corporate volunteering into the non-profit ecosystem, all while enhancing a company’s brand image. The goodwill which businesses generate through the corporate philanthropy aspect of their corporate social responsibility has become so critical to a company’s reputation that its absence is now noticed and negatively judged. While corporate philanthropy is just one aspect of CSR, it’s a vital one that companies ignore at their own peril.