Corporate philanthropy: A higher level of social responsibility?
Updated: Jun 8, 2020
There are many corporate social responsibility initiatives that draw on the internal pillars of a company that encourages collaboration, volunteering and affinity between causes and corporate values. However, there tends to be a lack of information on the impact these activities have and how they are measured. Measuring impact has become increasingly relevant in line with conversations and discussions on the performance of efforts and strategies to invest socially. The corporate environment requires depth of data and measurable activities to gauge return on investment and socially responsible activities should be no different. Hence, agreements on criteria must be reached to support decisions on where to better invest money and resources aligned with the corporation’s priorities, responsibilities and values.
But what is corporate social responsibility (CSR)? A definition might seem obvious, but Harvard Business School Publishing recently brought together three experts to their IdeaCast program for a discussion on the subject. Mark Kramer, Cathy Olofson and Michael Porter agreed that CSR reflects a company’s capacity to manage its business responsibly before society or interest groups. Also, that CSR activities respond to laws or regulations, intrinsic initiatives, or a combination of both. However, beyond legal and compliance aspects, the panel agreed that CSR addresses social, economic and environmental issues which are removed from day to day operations but impact a company’s sustainability and generate empathy and goodwill with customers, interest groups and investors.
Hence, some companies have sought to maintain basic information on their CSR outputs: number of people and regions impacted, Topics addressed, number of events, number of grants, scholarships, or sponsorships granted, number of volunteers and volunteer activities, and metrics on the dissemination of information through social networks and traditional media. The company that invests in managing CSR data ensures that it can account for results transparently to support compliance reports. However, does this information translate into socio-economic impact results or outcomes showing responsible management?
Companies could be making meaningful contributions if they were to measure how CSR activities improve social welfare in general. But this information could be segmented and quantified by sector as it is currently done in the nonprofit sector through the tax-exempt classification system. That is, if the activities are related to community impacts or environmental issues, CSR programs could include metrics that help us understand how their support, for example cleaning beaches or recycling batteries, translates into specific measurable improvements such as an increase in species diversity in marine ecosystems or the recovery of polluted soils.
If these data gathering activities were included in CSR programs consistently, we could start building a barometer or index for CSR. These measurements could help take corporate social responsibility to its next level of growth: turning CSR activities into philanthropic ventures, which are outcome oriented, seek large scale impact and focus on replicable models for change. Studying the topic in depth, one finds the article “The Keys to Rethinking Corporate Philanthropy” (H Bruch & F Walter, 2005) published in MIT Sloan Management Review still very useful. While fifteen years have passed since the research was conducted, it continues to be relevant because it helps us understand that corporate philanthropy can add value to a business if it is taken seriously and treated as other internal ventures are. The authors emphasize the existence of four types of corporate philanthropy, which can be defined as oriented to the market, towards the competition, a combination of both, or as a dispersed approach in a broader spectrum.
If your company has metrics on its corporate social responsibility activities and you want to take it to a level of corporate philanthropy, what do you need to do? Here are ten steps to start achieving this:
Conduct a descriptive analysis of the data being collected on CSR activities to better understand where the company is at.
Explore your employee’s interests and the causes they care about to improve engagement.
Study your client’s empathy with these causes to measure alignment and identify concerns.
Find ways to discover your investors’ knowledge and interest around corporate philanthropy issues.
Analyze whether your company’s values are reflected in CSR activities or through cause your company supports.
Invest in impact reports that show transparency and use them to educate employees, clients and investors about the scope and achievements of the activities.
Build common ground with your industry’s stakeholders based on social responsibility, ethical behavior, and accountability.
Commit funding and resources to conduct philanthropic work that can meet the standards and professional practices used in today’s vibrant philanthropic ecosystem.
Develop a financing model for the creation of a trust, endowment or donor advised fund that help sustain these activities in the long-term.
Assess impact through output and outcomes measurements and analyze how to improve alignment with sustainability objectives.
Achieving a higher level of performance in CSR makes a corporate philanthropy model more attainable. Approaches that integrate company values, employees’ priorities and preferences, contributions from external groups and local and regional community needs can be combined to give way to an emerging philanthropy effort at your corporation. But at a larger scale, achieving greater social impact is not the responsibility of any one company. We need collaborators fulfilling different roles. Is your corporation willing to be part of that broader change? If you answer yes, let's continue the conversation in the next article.