The first step in corporate responsibility is often support for the non-profit sector. Even though it is only a small part of the whole CSR strategy, philanthropy must have clearly set rules and it is therefore vital to be understood correctly.
Philanthropy as a concept of CSR
For many people corporate philanthropy stands for financial support that business is willing to donate. However, there are more ways, in which companies can support public activities. Corporate philanthropy forms an especially important link between the company and the place where it operates.
There are many businesses that like to highlight their philanthropic activities. Their motivation is often interpreted as one benefiting primarily the business itself, as a good advertisement or a PR tool. But philanthropy should rather be based on a relationship with a strong feedback. One that returns the benefit of being part of the community, of giving and gaining new knowledge and experience, of helping to solve pressing social issues or of the possibility to learn about people and places the business impacts.
Philanthropy types
Corporate philanthropy can be divided into two groups. One is a reactive approach, when a company waits to be approached by organizations and based on their individual applications it decides, whether it will provide support or not. While the second approach is proactive, which assumes the company operates with an already established donor strategy supporting chosen activities in one or more defined fields (e.g. education, health, children…). The most effective philanthropy relies on a partnership with selected organizations, which are thematically close to them, based on long-term support. Businesses can also involve their employees in corporate philanthropy, for example in the form of volunteering or by establishing a matching fund that allows their employees to donate specific amounts of money from their salary for a charity purpose, and which is then multiplied by their employer.
Where to find inspiration?
An example of effective corporate philanthropy is represented by Accenture and their global cooperation with the organization Save the Children. Accenture not only provides financial help, but also assists the youth from Philippines, Egypt, Indonesia or Vietnam with obtaining relevant knowledge and skills to get their desired job position or to build their own business. Offering its expert knowledge, Accenture can deeply impact their lives and helps to end the vicious circle of poverty.
One of the companies taking corporate philanthropy beyond simple donations is Patagonia, a manufacturer of outdoor clothing and equipment. As a company that uses resources and produces waste, it recognizes its impact on the environment and feels responsible to give back. For Patagonia, it is not traditional philanthropy. It’s part of the cost of doing business. They call it their Earth Tax. Patagonia’s donations go to small community-based organizations or grassroots environmental groups, usually with no more than five members. that create positive change for the planet by taking down dams, restoring forests and rivers, protecting threatened plants and animals or supporting local, organic and sustainable agriculture. In 2016, Patagonia donated over 7 million dollars, supported more than 824 environmental initiatives in 22 countries and prevented, among others, construction of five giant dams.
Companies should keep in mind that effective philanthropy should reflect the responsibility of a company as a whole, not only its one-off or short-term interests. It is vital to consider sustainability of these activities, introduction of the long-term donation strategy, transparency, and clear conditions under which the company provides support.