Why do corporates give?

There is a very long tra­di­tion of busi­ness­es donat­ing mon­ey, goods or staff time to char­i­ta­ble caus­es, all of which falls under the umbrel­la of cor­po­rate phil­an­thropy. But unlike an individual’s deci­sion to make a dona­tion to a Chil­dren in Need appeal or sup­port the Ice Buck­et Chal­lenge to do their bit and have a warm inner glow, the moti­va­tion for a com­pa­ny to make a dona­tion in what­ev­er form it may take is con­sid­er­ably more com­plex.

In the past, many com­pa­nies have donat­ed to char­i­ties because they want­ed to give some­thing back and “do good”, says Klara Kozlov, head of cor­po­rate clients at the Char­i­ties Aid Foun­da­tion. How­ev­er, there is a now a grow­ing aware­ness that phil­an­thropy can be a pow­er­ful way of tack­ling issues that affect their busi­ness oper­a­tions, as well as soci­ety more broad­ly.

Philanthropy can be more than financial support

That has led to a grow­ing num­ber of part­ner­ships between cor­po­rates and char­i­ties or non-gov­ern­men­tal organ­i­sa­tions. Ms Kozlov explains: “Com­pa­nies are start­ing to take dif­fer­ent approach­es – there is still room for tra­di­tion­al phil­an­thropy because the char­i­ty sec­tor needs fund­ing, but there is also a grow­ing recog­ni­tion that com­pa­nies have a much more pow­er­ful role to play and have more to offer than just finan­cial sup­port. Their assets, both intel­lec­tu­al and phys­i­cal, if tapped into in the right way can real­ly help dri­ve change.”

A prime exam­ple of this trend can be found in the Voda­fone Foun­da­tion, which was set up in 1991 and spends about £45 mil­lion annu­al­ly across 27 coun­tries. Andrew Dun­nett, its direc­tor, says the phi­los­o­phy has changed from “we’ve done well, we should do some good” that it had at the start to “how to do good as part of doing well in busi­ness”.

“We’ve moved away from the cheque-book char­i­ty that has sym­bol­ised cor­po­rate giv­ing in the past. We’re giv­ing away the same amount of mon­ey, but there is much more that we can do with our peo­ple, our tech­nol­o­gy and com­bin­ing that with our char­i­ta­ble giv­ing to make a dif­fer­ence in the com­mu­ni­ties in which we oper­ate,” he says.

One result of its Mobile for Good strat­e­gy, under which there has been a greater focus on con­nect­ing with the company’s tech­nol­o­gy, was the devel­op­ment of a mobile phone net­work that could be trans­port­ed in just three suit­cas­es and quick­ly set up in dis­as­ter zones, most recent­ly the Philip­pines where a typhoon struck last Novem­ber. Mr Dun­nett says that 70 employ­ees world­wide have vol­un­teered to be trained so they can deploy a net­work when it is need­ed.

Increasing staff satisfaction

The foun­da­tion has a clear link with employ­ee sat­is­fac­tion, he says, with its work scor­ing very high­ly on staff sur­veys. “When peo­ple see the pow­er of con­nect­ing our tech­nol­o­gy to the giv­ing and using our skills, rather than just giv­ing, it makes a huge dif­fer­ence in people’s minds,” he adds.

Anoth­er firm believ­er in the val­ue of a company’s phil­an­thropic activ­i­ty to employ­ee reten­tion and sat­is­fac­tion is Lin­da Min­nis, chief exec­u­tive of the Char­i­ties Trust, which process­es dona­tions and runs the Pay­roll Giv­ing scheme.

She says that match­ing funds raised by employ­ees is often extreme­ly pop­u­lar and any attempt to change such a pol­i­cy can be met with strin­gent oppo­si­tion inter­nal­ly. “The good thing is that the employ­ee has to do some­thing to get that mon­ey – it’s not just a straight­for­ward gift – and that’s what makes them feel good about what they are doing,” she explains.

The phi­los­o­phy has changed to how to do good as part of doing well in busi­ness

Research into organ­i­sa­tion­al behav­iour has found the rela­tion­ship employ­ees have with their organ­i­sa­tion – how it makes them feel and what oppor­tu­ni­ties it offers for per­son­al growth – is becom­ing just as impor­tant as their remu­ner­a­tion, accord­ing to Ms Kozlov.

“There used to be a divide between who you are in your per­son­al life and your pro­fes­sion­al life, but that is chang­ing and peo­ple are apply­ing the same pro­file to their pro­fes­sion­al life as their per­son­al life. They need to feel authen­tic in the work­place and, there­fore, the val­ues of their organ­i­sa­tion become much more impor­tant,” she says.

Cre­at­ing a cor­po­rate envi­ron­ment where Mil­len­ni­als in par­tic­u­lar will want to work, and feel good about doing so, is the respon­si­bil­i­ty of the top lev­els of man­age­ment, Ms Kozlov argues. “Most busi­ness­es agree that giv­ing is good, but how you inte­grate phil­an­thropy and sus­tain­abil­i­ty over­all real­ly depends on the senior lead­er­ship and how they set the strate­gic direc­tion,” she says. “Then the chal­lenge is how does that per­co­late down to the rest of the organ­i­sa­tion – mid­dle man­age­ment need to be sup­port­ed to trans­late that strat­e­gy into oper­a­tional real­i­ty.”

Inter­est­ing­ly, the cor­po­rate sec­tor is less gen­er­ous than many may think, with com­pa­nies donat­ing about £1.6 bil­lion annu­al­ly to UK char­i­ties, accord­ing to the Cen­tre for Char­i­ta­ble Giv­ing and Phil­an­thropy (CGAP).

Indi­vid­u­als are respon­si­ble for donat­ing a far greater pro­por­tion of income for char­i­ties than com­pa­nies, says Jay Kennedy, pol­i­cy and research direc­tor at the Direc­to­ry of Social Change, which has been cam­paign­ing to encour­age busi­ness to give more. The organ­i­sa­tion says that com­pa­nies often claim their share­hold­ers will not tol­er­ate high­er lev­els of char­i­ta­ble activ­i­ty, but he ques­tions whether the issue is ever put to them. “Giv­en the wider trends and expec­ta­tions of busi­ness today, we won­der if that’s a bit of a red her­ring,” he says.

Improving public perception

It is dif­fi­cult to iden­ti­fy why some com­pa­nies engage in more phil­an­thropic activ­i­ty than oth­ers, although the Char­i­ties Aid Foun­da­tion find­ing that 51 per cent of British adults would be more like­ly to buy a prod­uct or use a ser­vice from a com­pa­ny that donates to char­i­ta­ble caus­es will not have escaped many. “For the big names, it is about pub­lic per­cep­tion and brand, but it can veer into spon­sor­ship and mar­ket­ing where the dis­tinc­tion between phil­an­thropy and them pro­mot­ing their own cor­po­rate social respon­si­bil­i­ty can be pret­ty fuzzy,” says Mr Kennedy.

The nature of giv­ing also varies wide­ly, with cash being far eas­i­er to iden­ti­fy than in-kind dona­tions. “There’s not a huge amount of rigour in how com­pa­nies val­ue in-kind sup­port and cal­cu­lat­ing how ‘gen­er­ous’ they are real­ly being,” he says.

Cash-giv­ing has remained large­ly sta­t­ic in recent years, but in-kind giv­ing has risen, says Cathy Pharoah, pro­fes­sor of char­i­ty fund­ing at the Cass Busi­ness School and co-direc­tor of CGAP. Such mea­sures can bring con­sid­er­able ben­e­fits to a busi­ness because “in-kind giv­ing can rein­force all kinds of oth­er rela­tion­ships a com­pa­ny might have with the com­mu­ni­ty – shar­ing its exper­tise might help build mar­kets for the company’s prod­ucts”, she says. An exam­ple is ener­gy providers help­ing to sup­port debt man­age­ment char­i­ties.

Some com­pa­nies are more will­ing to shout about their phil­an­thropic activ­i­ties than oth­ers, even going as far as fea­tur­ing it in adver­tis­ing or social media cam­paigns. No mat­ter how a com­pa­ny decides to go about its phil­an­thropy, Ms Kozlov believes the over­rid­ing fac­tor for an organ­i­sa­tion is being gen­uine. “The pub­lic very quick­ly detects when some­thing isn’t authen­tic… a com­pa­ny can demon­strate its social pur­pose as long as it feels gen­uine, and not being used as a sales and mar­ket­ing tool,” she says.

The cor­po­rate sec­tor should also take heed of the Char­i­ties Aid Foun­da­tion report, which warns that many con­sumers believe big busi­ness­es “bank” their phil­an­thropic activ­i­ty to cash in when hit by neg­a­tive pub­lic­i­ty, rather than build­ing pub­lic and employ­ee good­will through greater account­abil­i­ty, trans­paren­cy and con­sis­tent report­ing of their char­i­ta­ble activ­i­ties.

What it describes as the “pro­found dis­con­nect between pub­lic per­cep­tion of cor­po­rate giv­ing and real­i­ty” must be addressed if com­pa­nies want to main­tain cus­tomer trust and loy­al­ty in the years and decades ahead.