Evolution of corporate philanthropy over time
Part 2 in a series, Targeting Impact: Trends and opportunities in corporate philanthropy
The character of corporate philanthropy has continued to evolve since the 19th Century along with changes in industry, society and the economy. From public service-minded business owners giving to church charities and pet projects, corporate philanthropy today takes on many forms, even as a broadly encompassing corporate social responsibility strategy.
Early Days
During the days of Andrew Carnegie and other titans of industry, charitable giving targeted some of the human suffering at the time but also produced many public libraries, parks and performing arts centers that we still enjoy today. Carnegie published his “Gospel of Wealth” in 1889, which laid out his view that those who accumulate great wealth see themselves as trustees for administering it in such ways that best benefit society. [1] Especially for rags-to-riches tales like Carnegie’s, acts of charity contributed to improving an entrepreneur’s social standing and opening doors to new social networks.[2]
The rise of formal corporate philanthropic programs picked up steam following the Second World War in the United States and Europe.[3] In the US, the economic expansion fueled the establishment of major corporate foundations such as Ford Motor Company Fund in 1949, AT&T’s Western Electric Fund (later the AT&T Foundation) in 1953, and Philip Morris’s (later Altria’s) in 1956, and then Chase Manhattan Bank, General Electric and Cummins Engine followed suit.[4]
The Golden Age of Corporate Philanthropy
Some describe this mid-century period as the golden age of corporate philanthropy, because it was driven by a sense of altruism. For the CEOs at the time, giving back to communities where their employees lived was the “right thing to do.”[5] There was also a respect between the three sectors of business, government and nonprofits that each should be left alone to do what it does best, and most companies gave to united funds, like the United Way, as they were seen as objective with the appropriate expertise for informed giving.[6]
“Strategic Philanthropy”
The heightened level of global competition in the 1980s and related corporate restructuring gave rise to what is called strategic philanthropy which ties philanthropy with business strategy and marketing.[7] A 1994 Harvard Business Review article authored by a researcher at INSEAD, described this new form of corporate philanthropy:
“philanthropic and business units have joined forces to develop giving strategies that increase their name recognition among consumers, boost employee productivity, reduce R&D costs, overcome regulatory obstacles, and foster synergy among business units. In short, the strategic use of philanthropy has begun to give companies a powerful competitive edge.”[8]
For example, this played out well for AT&T. AT&T’s foundation president advocated strongly that linking its philanthropic initiatives and business units would heighten the company’s responsiveness to its social environment and help executives make decisions that would draw on the experience of the nonprofit world.[9] While AT&T targeted higher-end consumers through sponsorships of the arts, their executives developed a fluency in some of the top social challenges of the day, which then opened doors to political leaders at the highest levels. The foundation’s work on children’s issues put AT&T’s CEO on stage with President Clinton, who then invited him to speak about the information highway, which gave AT&T the spotlight to make its case that is should be a private, rather than a public initiative.[10] In hindsight, many would argue that this approach has not been in the public’s best interest as lower-income places are left unconnected.
Raising Consciousness in the 1990s
Environmental and human rights issues attracted new attention and support in the 1990s that led people to make new demands of corporations. Concerns increased about the ozone layer, acid rain and climate change, and the United Nations Earth Summit in Rio de Janeiro in 1992, attracted global attention. During this time, it was revealed that top clothing brands were producing their merchandise in sweatshops in the developing world. People started calling companies out on their business ethics, and companies looked to better align their business and philanthropic strategies.[11]
While philanthropy can help build a positive reputation for a company, it is not enough for developing a company’s integrity, trustworthiness and values. Companies today are looking for where they can make a significant impact across many different stakeholders. Corporate social responsibility (CSR) is gaining ground. CSR is a business approach that aims consider the broader social, environmental, and economic impacts of the company’s business.
Global Washington, an organization that links nonprofit organizations, academic institutions and the business community around global issues, observes how CSR continues to evolve:
“Three current CSR trends include: conscious capitalism, a philosophy that a more complex form of capitalism is emerging that will enhance corporate performance and people’s quality of life; shared value, a management strategy focused on creating business value through solving social problems that intersect with their business; and social business, a non-dividend business that seeks to solve a social problem through business methods.”[12]
Today, the needs in the world are growing beyond the traditional reaches of governmental jurisdictions and public budgets. There is a strong need for those with the means, to give generously for the common good. Antoine Vaccaro, Président du CerPhi (Centre d’étude et de recherche sur la philanthropie), a research institute focused on philanthropy, recognizes the need to appeal to new generations of philanthropists.
“We are reasonably optimistic about the prospects of enlisting new generations of great philanthropists. The problems facing the world are enormous and growing, while the capacity of governments to address them is declining. There is therefore a need to better guide philanthropy on a much larger scale than it is now and to create the cultural and regulatory changes necessary to make philanthropy easier, more natural and more rewarding, and as a result convincing, appealing to the new generation.”[13]
For Consideration
Today, there are many different models for companies to give back to society in an impactful way. A well-developed corporate philanthropy strategy will reflect the company’s own values and objectives. See Part 3 of this series for concrete examples of different strategies from three large companies.
How will your company’s values and objectives shape your corporate philanthropy strategy?
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Note on the Series: The purpose of this series is to provide an overview of corporate philanthropy today, diverse examples of company activities, and concrete steps for developing a strategy for impact philanthropy. The assumption in this report is that given the inherent finite nature of financial and other resources, a strategy for philanthropy will help yield the greatest impact.
Part 1 lays out the need today for corporate philanthropy and its multiple benefits. Part 2 provides an overview of the development of corporate philanthropy historically. Part 3 presents recent trends and examples of 3 large companies and their social impact. Part 4 offers different models for managing and scaling a corporate giving strategy. Part 5 lays out some of the initial concrete steps for the development of a strategy for impact philanthropy, whether for a company or an individual.
Note on the Author: Tracey Grose helps leaders optimize an ever-changing context. As familiar landscapes shift, Tracey can help teams develop strategic partnerships, manage the cultural integration process related to an M&A deal, meaningfully engage with the community, and develop strategies for anticipating uncertainties around the next curve.
[1] Carnegie, Andrew. “Wealth.” North American Review. No. CCCXCI, JUNE, 1889. Prepared in HTML by Robert Bannister, 1995. www.swarthmore.edu/SocSci/rbannis1/AIH19th/Carnegie.html
[2] Harvey, Charles, Mairi Maclean, Jillian Gordon & Eleanor Shaw. 2011. “Andrew Carnegie and the foundations of contemporary entrepreneurial philanthropy,” Business History, 53:3, 425–450,DOI: 10.1080/00076791.2011.565516
[3] For experience in post-war Britain, see: Marinetto, M. 1999. “The Historical Development of Business Philanthropy: Social Responsibility in the New Corporate Economy,” Business History, 41:4, 1–20, DOI: 10.1080/00076799900000342
[4] McClimon, Timothy J. 2004 “The Shape of Corporate Philanthropy Yesterday and Today” GIA Reader, Vol 15, No 3 (Fall 2004). https://www.giarts.org/article/shape-corporate-philanthropy-yesterday-and-today
[5] Levy, Reynold. 1999. Give and Take A Candid Account of Corporate Philanthropy (Boston, MA: Harvard Business School Press, 1999), p. 109. Cited in McClimon 2004.
[6] Smith, N. Craig. 1994. “The New Corporate Philanthropy.” Harvard Business Review. May-June 1994. Page 3. https://hbr.org/1994/05/the-new-corporate-philanthropy
[7] McClimon, Timothy J. 2004 “The Shape of Corporate Philanthropy Yesterday and Today” GIA Reader, Vol 15, No 3 (Fall 2004). https://www.giarts.org/article/shape-corporate-philanthropy-yesterday-and-today
[8] Smith, N. Craig. 1994. “The New Corporate Philanthropy.” Harvard Business Review. May-June 1994. Page 1. https://hbr.org/1994/05/the-new-corporate-philanthropy.
[9] Smith, N. Craig. 1994. “The New Corporate Philanthropy.” Harvard Business Review. May-June 1994. Page 5. https://hbr.org/1994/05/the-new-corporate-philanthropy.
[10] Smith, N. Craig. 1994. “The New Corporate Philanthropy.” Harvard Business Review. May-June 1994. Page 6. https://hbr.org/1994/05/the-new-corporate-philanthropy
[11] “Beyond Profit: Corporate Philanthropy and the Evolving Culture of Giving.” Global Washington, Global Washington, June 2016, globalwa.org/issue-brief/corporate-philanthropy/.
[12] “Beyond Profit: Corporate Philanthropy and the Evolving Culture of Giving.” Global Washington, Global Washington, June 2016, globalwa.org/issue-brief/corporate-philanthropy/.
“2019 Home Page.” Conscious Capitalism, Conscious Capitalism, 2019, www.consciouscapitalism.org/.
“Homepage.” Shared Value Initiative, FSG, 2019, www.sharedvalue.org/.
Yunus, Muhammad. Social Business, Yunus Centre, 2007, www.muhammadyunus.org/index.php/social-business/social-business.
[13] Vaccaro, Antoine. « LE RENOUVEAU DE LA PHILANTHROPIE » Association des amis de l’Ecole de Paris | « Le journal de l’école de Paris du management » 2012/4 N° 96 | pages 31 à 37 ISSN 1253–2711 https://www.cairn.info/revue-le-journal-de-l-ecole-de-paris-dumanagement-2012-4-page-31.htm
