Developing a strategic process for corporate philanthropy decision-making can boost a company’s social impact and competitive edge.
Reading Time: 10 min
Corporate philanthropy spending reached new heights in 2021, exceeding $21 billion in the U.S. alone and marking a 24% increase over the previous year.1 These contributions, which traditionally focused on supporting galleries, museums, and shiny new buildings, have gained a higher profile in corporate decision-making. While management scholars have long pointed out the importance of corporate philanthropy, businesses’ approaches to it vary widely, and few have fully integrated it into their corporate strategy.2 This article examines the shifting landscape of corporate giving and the potential implications for businesses and their stakeholders.
As companies face growing pressures to incorporate purposeful social missions into their core businesses, leaders have gained experience managing initiatives aimed at social impact in addition to profit. While corporate social responsibility (CSR) is part of most companies’ business strategies, philanthropy often remains disconnected from core business objectives. This makes it challenging for leaders to discern what types of philanthropic engagement should be prioritized and why.
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We define strategic corporate philanthropy as voluntary giving that builds on the company’s core competencies to achieve social impact while improving its competitive edge — resulting in a win-win situation.3 The scope of corporate philanthropic engagement is vast. (See “Main Types of Corporate Philanthropy Engagement.”) Even though gift matching has led the way for many years in the U.S., Coca-Cola, Google, and Walt Disney are just a few of the many multinationals that now engage in more than one type of corporate philanthropy. IBM’s Open Source Community Grant program (with annual contributions of $200,000), the Danone Ecosystem (an impact investment fund with over $200 million committed since 2009), and the Ikea Foundation (with unrestricted funding for selected nonprofits working on emergency relief) are examples of the great diversity of corporate philanthropic engagement.
References
1. “Giving USA 2022: The Annual Report on Philanthropy for the Year 2021” (McLean, Virginia: Giving USA, 2022).
2. M.E. Porter and M.R. Kramer, “The Competitive Advantage of Corporate Philanthropy,” Harvard Business Review 80, no. 12 (December 2002): 57-68; and H. Bruch and F. Walter, “The Keys to Rethinking Corporate Philanthropy,” MIT Sloan Management Review 47, no. 1 (fall 2005): 49-55.
3. K. Maas and K. Liket, “Talk the Walk: Measuring the Impact of Strategic Philanthropy,” Journal of Business Ethics 100, no. 3 (May 2011): 445-464; and D.H. Saiia, A.B. Carroll, and A.K. Buchholtz, “Philanthropy as Strategy: When Corporate Charity ‘Begins at Home,’” Business and Society 42, no. 2 (June 2003): 169-201. For an overview, see A. Gautier and A.-C. Pache, “Research on Corporate Philanthropy: A Review and Assessment,” Journal of Business Ethics 126, no. 3 (February 2015): 343-369.
4. This article is based on research on strategic corporate philanthropy at the University of Geneva to understand the relationship between corporations and their foundations, the strategic challenges that arise running a corporate foundation, and the portfolio management of philanthropic projects. For more information, visit the Center for Innovation and Partnerships’ website.
5. A. Casajús-Burutaran and T.C. Ambos, “Philanthropy at the Adecco Group: Shaping the Strategy of a Global Corporate Foundation,” Geneva School of Economics and Management case study (Geneva: University of Geneva, 2023).
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