Study: Corporate Philanthropy Is Falling Short

For-profit companies have a deficit when dealing with nonprofits, even though the firms have the ability to make a real difference in their communities.

A new Council on Foundations (CoF) report, “Increasing impact, Enhancing Value: A Practitioner’s Guide to Leading Corporate Philanthropy,” details some of corporate philanthropy’s shortcomings and outlines five initiatives to help it become a more powerful tool for societal change, interspersed with philanthropy examples from companies such as Levi Strauss, Cisco, Dove and Starbucks.

The first item is creating “a new narrative for corporate philanthropy as an investment in society.” Most companies believe corporate philanthropy to be merely donation dollars. A new definition of philanthropy is needed: “The independent, innovative investment in building our communities,” according to the report. Too many companies focus too much on how much they give, when they should be focusing on the results of the programs to which they give.

Stemming from this, the second item purports that companies need to “develop an inclusive operating system for philanthropic investment.” The report uses the metaphor of a diversified investment portfolio, and outlines a three-tier breakdown of social investment. Responsive investment is what is most commonly thought of in regards to corporate philanthropy, and it is grants and donations to short-term causes like disaster relief and specific, local initiatives.

Strategic investment supports goals and causes that align with a company’s business. The guide cited Campbell’s Soup’s partnership with Go Red for Women and its line of heart-healthy soups and recipes. Catalytic investment ignites broad social change, such as the partnership between Starbucks and Conservation International, which helped small farming co-ops around the world become part of Starbucks’ sustainable supply chain.

Third, the report recommends professionalizing the field. Too often, roles in corporate philanthropy are limited to managing contributions, and many corporate philanthropy professionals feel marginalized in their own companies. Philanthropy leaders should have the same authority as a vice president, philanthropy should be tied into a larger corporate citizenship strategy, and collaboration between the philanthropy arm of a company and its other departments is essential.

Improving collaboration and communication is the fourth item on the list. Philanthropy offers need to disseminate their operations’ impact better, and corporate philanthropy operations must share knowledge internally more than they. “By sharing knowledge with one another intentionally and effectively, practitioners can learn what makes some programs succeed and others fail,” according to the report.

The report’s final recommendation is to “mobilize the ‘field level’ leadership behind this agenda.” In order to effect lasting corporate cultural change, philanthropy leaders must embrace the first four items in the guide. “Transforming the field means adopting a new approach and mindset among leaders and practitioners within corporate foundations and giving programs, corporate executives and the organizations that lead and service the field,” it said.

With economic hardships affecting countries around the world, society increasingly looks to corporations to fulfill needs for social change previously fulfilled by governments and NGOs. The CoF, in Arlington, Va., developed the guide in response to “the growing imperative that corporate philanthropy address both business impact and societal demand,” said Jeff Clarke, CoF’s interim president and CEO.