Corporate Philanthropy, Social Gain
A new definition of investment.
By Edward Wertheim
"Corporate Social Investing," by Curt Weeden (Berrett-Koehler
Publishers, San Francisco, 1998, 250 pages, $29.95)
The view that corporate officials . . . have a "social responsibility"
that goes beyond serving the interests of their stockholders . . . shows
a fundamental misconception of the character and nature of a free economy.
Milton Friedman,
Capitalism and Freedom, 1962
Healthy businesses need healthy communities to thrive . . . Through
financial contributions and the active volunteer participation of employees,
DuPont provides support to programs and non-profit organizations . . .
DuPont's corporate statement on Philanthropy, Mission, and
Philosophy, 1999
It would be tempting to conclude that the century-long debate between
these two very differing views of corporate social responsibility, known
respectively as the shareholder model and the stakeholder model, has largely
been won by the latter. Corporate philanthropy totals billions and is growing.
Yet as Curt Weeden, LA'65, states, despite these increases and the prevalence
of well-meaning statements such as DuPont's, the rate of corporate giving
as a percentage of profits is steadily declining (from 2.3 percent in 1986
to 1.3 percent in 1996).
Our large corporations by and large accept the importance of being good
corporate citizens. They certainly devote substantial resources to this
end. Yet Weeden, who is president of the Corporate Contributions Management
Academy in Palm Coast, Florida, and a former vice president for giving
at Johnson and Johnson, makes a strong case that these resources are not
used effectively, that the public has not been swayed by the billions spent
on "external relations," and that our nonprofit institutions
are not being served nearly as effectively as they should be. These failures
have serious consequences. Corporate support has always been critical for
many nonprofit institutions, and with other forms of traditional philanthropy
declining-with erratic personal and foundation support and with government
funding in many social service areas drying up-the need for effective corporate
leadership is critical.
Why are companies failing to achieve what they acknowledge are very
important objectives? This is due in part to their scattered and disorganized
efforts in philanthropy, public relations, and community affairs. Add to
these reasons CEO disinterest, a fear of taking controversial stands, and
a tendency towards making external relations one of the first cuts when
conditions deteriorate.
Weeden's answer to these problems should please both stakeholder and
shareholder camps. He provides a clear, ten-step road map for companies
to use in reforming their philanthropic efforts. At bottom he pushes for
a changed mind-set, symbolized by a shift away from the term corporate
philanthropy (which implies altruism) toward a broader and more strategic
notion of corporate social investing (CSI). The philosophy underpinning
CSI is that there should be a significant business reason for every investment
in this area. Traditional philanthropy falls under CSI, but Weeden's model
puts greater emphasis on more strategic mechanisms such as sponsorships,
cause-related marketing (for example, the profits from Newman's Own go
to charity), high-impact grants (the American Dental Association's Seal
of Approval), conditional grants (matching employee contributions), and
leveraged business investments (university-corporate partnerships).
Critical to the success of such an approach is an internal organizational
structure and process that supports an integrated and strategic effort.
Weeden urges that there be a centralized corporate CSI team whose planning
and decisions would be subject to the same rigor as other important corporate
decisions. This team must be visible, report to the CEO, and have clout-as
opposed to most companies' efforts, which are often based somewhere in
public relations and led by a manager far removed from the CEO. The CEO
needs to be a very visible and committed supporter.
One can certainly sympathize with Weeden's support for a strong, centralized,
integrated approach to social investing. Yet, there is also a potential
downside to this centralization-at least for the nonprofit recipients.
Given the tendency of companies to consider their social investments dispensable
in downturns, a centralized effort would make it easier to systematically
cut those investments.
Perhaps a move to centralize social investing might be balanced by an
emphasis on encouraging individual employee volunteer activity. Decentralized
individual volunteer activities are less subject to economic cycles. Weeden
touches briefly on employee volunteerism, which he considers a kind of
corporate social investing. Interestingly, though, Peter Lynch, in his
brief introduction to the book, goes into this topic in greater depth.
Lynch cites research showing a multitude of business-related benefits that
result when companies actively encourage or participate in volunteer programs.
These include increased employee morale and commitment, improved customer
relations and corporate image, and the opportunity to develop critical
managerial skills such as group leadership, communication, and motivational
skills. The corporate role in these efforts can include paid time for volunteer
work, but more often involves actions such as providing unpaid time off,
putting up a list of volunteer openings, hosting annual volunteer fairs,
setting up clearinghouses, and recognizing special efforts through articles,
awards, and letters of commendation.
This book's subtitle is "the breakthrough strategy for giving and
getting corporate contributions." The "getting" part is
quite important. While a handful of large nonprofits have forged highly
successful arrangements with corporations, thousands of nonprofits-which
in the future will depend increasingly on creating alliances with corporations-remain
ignorant of the process by which corporations make social investing decisions
and are ineffective in creating new and innovative alliances. This is not
a zero-sum game. More money for one nonprofit doesn't necessarily mean
less for another. Weeden calculates that the approach suggested in his
book could yield $3 billion more for causes and organizations that could
improve the quality of life in the U.S. and the world. Given the growing
trends towards leaner organizations and restricted government programs,
and the well-documented growing gap between rich and poor, the need for
corporate social investing is more critical than ever.
Edward Wertheim is an associate professor of human resources
management in the College of Business Administration.
The Agile Manager's Guide to Coaching to Maximize Performance
By Jack Cullen and Len D'Innocenzo
Velocity Business Publishing, 1999
D'Innocenzo, BA'70, and Cullen, his partner in a training consultancy,
impart the secrets of coaching and leadership they learned in their business
careers. It's not hard to get more out of
employees, they write. Like the best coaches in sports, managers can turn
laggards into acceptable performers and good performers into stars. How?
By tailoring coaching to personality styles, creating a productive motivational
environment, setting goals and communicating expectations clearly, developing
people to make them more valuable, and confronting poor performers constructively.
Coaching to Maximize Performance is the latest in Velocity's fourteen-volume
Agile Manager series.
Bridging Mental Boundaries in a Postcolonial Microcosm: Identity
and Development in Vanuatu
By William F. S. Miles
University of Hawaii Press, 1998
The South Pacific archipelago of Vanuatu simultaneously experienced
the two major types of colonialism of the modern era, British and French-the
only instan
ce in which these colonial powers
jointly ruled the same people in the same territory over an extended period.
This, in addition to its small size and recent independence (1980), makes
Vanuatu an ideal case study of the clash of contemporary colonialism and
its enduring legacies. Miles, the Stotsky Professor of Jewish and Historical
Studies in the Department of Political Science, makes comparisons among
Vanuatu and other colonized societies in which he has conducted original
research, including Niger, Nigeria, Martinique, and Pondicherry.
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