Here’s the right way for companies to donate to charity

Taking philanthropy back to basics

 
Donation box overflowing with clothes
Old-fashioned philanthropy has fallen out of fashion, but it’s still powerful if you do it right. (Lisa Romerein/Image Bank/Getty)

Thirty years ago I listened to Ben Cohen — the “Ben” half of Ben and Jerry’s — speak to an audience about how corporations could stand for more than making money. At the end of his presentation, Ben distributed Peace Pops, a product the sales of which supported the non-profit organization “One Percent for Peace”.

The business of social change has come a long way since then. Today, virtually every large business understands the importance of social change and is acting accordingly. The principles of the United Nations Global Compact have been widely endorsed, companies such as Coca Cola are taking leadership on issues such as access to clean water and businesses are taking the social priorities of employees, customers and local communities into account.

Sadly, corporate philanthropy—companies donating money directly to charity—which was once the foundation of corporate social responsibility, is now seen as a use of capital with no discernable return on investment. However, although the social value of philanthropy may pale in comparison to other business activities (such as increasing employment, engaging more local suppliers and improving the direct social impact of products and services) traditional philanthropy shouldn’t be discarded. Instead, corporations need to re-think their approach by demonstrating leadership, creating opportunities for stakeholders to collaborate, turning over some decision-making to communities themselves and recognizing that non-profit organizations don’t have a monopoly on effective social change.

MORE: Good causes or not, charities use some of the worst marketing tactics

Tyson Foods is one of the world’s largest producers of meat and poultry and a leader in hunger and disaster relief. In light of recent findings that one in four Americans is worried about having enough money to put food on the table in the next year, Tyson Foods has a bold goal: ending hunger. Through its KNOW Hunger program, Tyson donates food to food banks and increases awareness of hunger issues on a large scale. At the end of 2010, Tyson had donated 78 million pounds of protein—enough to have served one meal to every American citizen. Corporate philanthropy needs to move beyond incrementalism—like Tyson Foods, more corporations need to declare a clear goal and mobilize their resources at a large enough scale.

Microsoft addresses global social challenges such as youth education and environmental sustainability with technology. In 2013, the company provided more than 70,000 nonprofits around the world with access to the technology they need to support their work and the knowledge to help them be more efficient, effective and innovative. In addition to donating $2 M in software to nonprofits every day, Microsoft’s network of governments, nonprofits and other organizations is effecting systemic change by implementing and allocating resources most efficiently. The scale of IBM’s philanthropic donations of software is clearly remarkable. However, the collaboration of IBM’s stakeholders is what’s making this investment really valuable.

Telus International engages the expertise and networks of community leaders to ensure funding goes where it is needed most. The company asks community leaders to serve on TELUS International Community Boards to decide how to allocate the corporation’s funds in the most impactful way. For instance, in 2014 the company’s Community Board in the Philippines contributed $100,00 in 2014 to fund 20 projects including helping the Kythe Foundation improve the delivery health services in the Philippine Children’s Medical Center. The Telus International program is an indication that perhaps the most effective corporate philanthropy decisions shouldn’t be made by corporations at all.

ALSO BY PAUL KLEIN:

AltaGas wanted to deepen its relationships with local communities and create positive social outcomes by increasing individual self-sufficiency. To do this, the company provided an interest-free $500,000 loan to the Indian Business Corporation (IBC) to help finance First Nations entrepreneurs in the Canadian province of Alberta. IBC has 28-year track record of helping First Nations communities address issues such as chronic poverty and low levels of education by providing the opportunity for members of the community to become entrepreneurs. The company’s approach illustrates that philanthropic investments don’t always have to involve a non-profit organization.

While corporate philanthropy will continue to be seen as archaic, these examples show that there is still value to its practice—especially when aligned with more measurable programs. Also, in the context of increasing emphasis on getting results, things that simply feel good are in short supply and can be a significant differentiator.

“We measured our success not just by how much money we made, but by how much we contributed to the community,” said Ben Cohen. “It was a two-part bottom line.” Peace Pops didn’t deliver much shared value but they made a very lasting impression, contributed to the success of a remarkable company and sure tasted great.

Paul Klein is the president and founder of Impakt, a global consultancy that helps corporations and civil society organizations become social purpose leaders.

Comments are closed.