Business used to be all about making money for oneself or, at most, doing enough to enrich one’s employees and stakeholders. But the times are changing. Now, more than ever, the clamor from climate change and humanitarian situations has become so great that corporate philanthropy is much needed and well cherished. 

A new corporate-social relationship is brewing. This is primarily driven by the growing social and economic challenges worldwide, increased expectations of human societies from businesses, and the positive perception that customers have towards socially responsible businesses. Concepts like sociopreneurship and the United Nations social development goals (SDGs) are also helping to redirect the business narrative and improve entrepreneur perspectives. 

As expected, big companies are already catching the drift. In 2015 alone, a Fortune article disclosed that Gilead Sciences, Walmart, and Wells Fargo topped the charts of the 20 most generous companies. Guess what? Each of these three companies made cash donations of $446.7 million, $301 million, and $281.3 million respectively, and the remaining seventeen companies made similar cash donations totaling $2.49 billion - all to different causes and within the same year period. 

Corporate Philanthropy

What accurately summarises corporate philanthropy is the meaningful engagement of a company or business in philanthropic activities for a specific cause. For example, funding a cancer patient’s treatment or offering scholarships to underprivileged children.  

It is not unusual to see that people, including high-up executives, readily think about large sum cash donations when this topic is raised. However, corporate philanthropy extends to include in-kind donations and charitable actions, allowing businesses that do not have enough revenue to participate. 

Pay attention to the fact that corporate philanthropy is slightly different from corporate social responsibility (CSR). The latter is more popular among businesses, especially those that are large and have well-established revenue and community relations. It talks about the natural responsibility of businesses towards to social and economic development of the society in which they exist or operate. 

Corporate philanthropy, on the other hand, involves the same donations or in-kind functions of corporate responsibility, with the addition that such efforts go beyond a business’ immediate society. 

Giving Through Your Business

“Giving can be easy, and all you need is the mindset for it.” In this section, we itemize different avenues through which corporate philanthropy can take place. It is your responsibility to analyze the size and capacity of your team, alongside the parameters of the project you will be contributing to, to determine what options work best for you. 

Cash Donations:

Cash transfers to a person or organization as part of a company’s contribution to their cause are the basis of corporate philanthropy. This is the most frequently explored method of donating and it is easy to see why. Recipients can quickly access and transfer or withdraw donated funds, to purchase the goods or services they need. 

In addition, the cash donation option is easy to measure. This gives corporate entities the power to make impact assessments, especially using the output metric which looks at the quantity of a donated item.

Several options for donating cash exist, including bank transfers, online payments, cheques, or money orders. Facilities like peer-to-peer fundraising and text-to-give are also designed for this type of donation. 

Monetary Investments:

A less frequently explored corporate philanthropy option is monetary investments. This points to the purchase and control of economic resources such as stocks, bonds, and real estate, with the expectation of future financial benefits. 

Nonprofit organizations can, indeed, issue bonds or engage in real estate initiatives that corporate entities can support. The action of corporate philanthropic entities, in such cases, will be to:

• transact with the issuing organization by purchasing these bonds or real estate, 
• help increase the number of available assets for investments either by directly donating assets to the project or cash for the purchase of these assets, or
• help advertise the monetary investment opportunity to potential investors,

Returns realized through these monetary investments are used by the issuing nonprofit organization to run charitable causes. 

What To Note:

Expertise is required when creating/organizing monetary investment opportunities and when investing in one. That being said, corporate philanthropic entities must be sure of the capacity of the investment opportunity to produce positive returns before expressing their support. 

Donations of Products or Services:

Businesses that have unique products or services can offer them for use in a charitable cause. This is another creative way to engage in corporate philanthropy. 

The use of a product or service might produce costs for the issuing company - for example, in the case where the product or service operation involves a partner or third-party business. Corporate philanthropic entities, therefore, have to determine:

• if such costs exist for the product or service to which they intend to donate,
• what the cost will be during, and at the end of the donation, and also
• how this cost will be covered and by whom. 

The option of donating products or services allows a business to make an impact without necessarily having to go outside its typical work process. 

For instance, employees will simply be performing their everyday roles to ensure that the donated product or service works the way it should, as opposed to learning and undertaking suitable monetary investments or playing the role of field agents in an outreach or donation campaign. 

What To Note:

Donation of products or services might work best for small or newly started companies as they may likely lack the manpower for employee volunteering, and are not buoyant enough to donate financially. Companies may also employ this method of giving when they have a new product or service to test out. However, huge reputational damage may occur if such a product or service fails.

In-kind Donations:

Money is not the only thing that can be donated. In-kind donations of tangible and intangible goods can also be made to a cause. For example, office furniture, cars, computers, and equipment can be offered for social and economic training or activities. Intangible assets like financial securities, patents, and royalties can equally be donated to promote specific social-economic impacts. 

Employee Volunteer:

Talking about product or service donations, we made mention of how it tends to keep business employees in their roles rather than getting them to engage in extracurricular activities such as assisting field agents during a social campaign. 

Employee volunteering does the exact opposite. This way of giving urges employees to make physical and often tasking contributions to a social or economic cause - on behalf of the company. You can think of it as a form of voluntary community service made by the employees of a corporate philanthropic entity.

Fostering employee volunteering will often require a company to train and allocate resources to its employees. This further depicts the huge commitment that must be made both by the organization and its employees. 

What To Note:

In particular, the employee volunteer approach is suitable for large companies that have a decent number of staff - to ensure that business activities are not abandoned during the time of volunteering. The approach also requires training and resource allocation, meaning that the philanthropic organization will spend money to prepare its employees and enable the successful delivery of the volunteer service. 

How Corporate Philanthropy Impacts a Business

Corporate philanthropy has a way of positively impacting a business. Knowing about this might help to boost your interest as an entrepreneur and also even guide you on introducing the idea to your fellow business executives or company staff. 

Tax Relief Benefits:

Companies that engage in corporate philanthropy are liable to receive tax relief benefits, reducing their tax liability. It is important to note that tax benefits may be made to match the degree of philanthropic activities or donations made by a corporate entity. Also, businesses need to check that their philanthropic activities fall within the requirements of addressing a worthy purpose and having public benefit. 

Fosters Innovation and Creativity Towards Giving:

Employees and entire philanthropic organizations usually encounter one challenge or the other in the process of giving to a particular cause. This could be a generic or specific problem. Whatever the case, the existence of a challenge is enough to inspire the development of radical, innovative solutions that will improve donation or philanthropic processes, results, and impact assessment for good.

Fosters Employee Engagement  

The employee volunteering idea, for example, brings everyone on the team together. The participation of every employee in this manner helps to build a more resilient team and gives individuals a better feel of themselves and their contributions to the organization. 

Promotes Community Relations and Support: 

Corporate philanthropy is closely similar to Corporate Social Responsibility (CSR), but the results of both actions are completely identical. It always trickles down to creating positive community relations.

Business community relations involve nurturing mutual wholesome interactions, goodwill, and benefits between a company and its immediate community. Most often, getting this right will foster good support from the community towards the business’s employees, the organization itself, and the corporate activities.

It could amount to the safety of employees when they are out within the community and reduce the occurrence of vandalization of company properties. 

Drives Customer Patronage and Positive Public Outlook: 

Some of the other thrilling impacts of corporate philanthropy on a business are increased brand awareness, organic lead generation, and a long-term positive public outlook. A PricewaterhouseCoopers 2022 report was quoted as saying that 

65% of people want to work for a company with a powerful social conscience. Furthermore, 73% of customers want companies to help society and the environment. 

This drives home the point that employees and customers are highly attracted to companies that engage in corporate philanthropic activities. +234 903 045 9558

Conclusion

In conclusion, we will say that corporate philanthropy aligns a business to provide some succor to the overwhelming socio-economic challenges we face today. However, there are two major points we want to highlight.

First, there is a direct relationship between a business’s revenue and its philanthropic capacity. According to the Harvard Business Review, Friedman’s arguments on corporate philanthropy are based on two assumptions. “The first is that social and economic objectives are separate and distinct so that a corporation’s social spending comes at the expense of its economic results. 

As explained further in the same reference, the revenue-philanthropy relationship is complicated by the fact that entrepreneurs find it difficult to measure the exact benefit of their donations and that investors consistently push for short-term profit. 

Businesses can only avoid the death trap posed by this situation by accurately measuring donation impacts and weighing their revenue against the strain of proposed philanthropic activities. 

Our second concluding point is that the reasons for engaging in corporate philanthropy should always be the same as the Economic Theory rationale for preferential tax treatment of philanthropy. This will either be that there is underprovision of a public good or there are positive externalities associated with the philanthropic activity.

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