By Ret Boney
The way Sid Espinosa sees it, there are two sides to being a good corporate citizen in today’s world.
Corporate philanthropy looks outward to provide support to the organizations addressing critical societal needs, he says, while corporate social responsibility looks inward to ensure the company has the right practices in place.
“We’re trying to meld the two,” says Espinosa, director of philanthropy programs for technology provider HP. “There are goals we have as a company and there are needs socially. Let’s look at how we can combine those two to make an impact.”
Increasingly, companies are thinking like HP, looking for ways to align their philanthropic and community efforts with their business objectives, an approach that can benefit society as well as corporations, experts say.
For HP, which manufactures computer hardware and other technology components, that means its philanthropy centers around products, Espinosa says.
Couple that with the desire to minimize the effects of climate change, which is one of the company’s corporate-citizenship goals, and you have a partnership with the World Wildlife Fund that has included a $2 million investment of cash and products.
With those funds and new technologies, the nonprofit is setting up three state-of-the art research centers around the world to study the causes and consequences of climate change.
At the same time, the company has pledged to cut its energy use 20 percent by 2010 while tripling its use of renewable energy during 2007 alone.
“Technology is part of our business, and minimizing the effects of climate change is the goal from a corporate social responsibility perspective,” says Espinosa.
But this evolution in corporate philanthropy is changing the way businesses operate, most often for the better, says Dwight Burlingame, associate executive director of the Center on Philanthropy at Indiana University.
“This calls for a much more collaborative working, not only within a single company, but with other companies and other players in society,” he says.
It requires more engagement by rank-and-file employees, who increasingly are helping direct where the funds go, says Burlingame, and departments within companies are working together more to establish goals and priorities.
That requires folks up and down the line to understand how philanthropy strategically affects the company’s overall performance, he says.
“I see it as an elevation of importance and greater influence,” Burlingame says of the increased engagement throughout companies. “Ultimately, accountability is going to be greater than before.”
At HP, which has an annual philanthropy budget of about $45 million and about 20 philanthropy employees around the world, the integration of philanthropy and business goals has led to just such a cross-pollination.
The philanthropy department is “fairly independent,” says Espinosa, but its staffers reach out to other departments as a matter of course in an effort to have a significant social as well as business impact.
“We have constant conversations with the business divisions to find out what work they’re doing and how our work aligns with their business goals,” he says.
To measure the effectiveness of philanthropic programs, Espinosa uses a matrix that looks at social impacts, like student improvement or teacher engagement.
But he also looks at the impact on the business, whether on the company’s brand, market or overall product usage.
Many American corporations are headed in a similar direction, says Bradley Googins, executive director of the Boston College Center for Corporate Citizenship.
“Overall, companies are trying to think about corporate philanthropy in a broader framework,” he says. “There’s some new space emerging around innovation, where companies are realizing the social issues they are facing.”
That’s generally a good thing, says Googins, because it creates more linkages among corporate departments, as well as with external organizations.
“It’s opening up beyond the private little office of corporate philanthropy,” he says.
Globalization is another factor pushing corporate philanthropy across departmental lines, and Googins predicts companies will be looking for more and more assistance from their their corporate giving departments.
Operating in foreign country presents tactical and strategic challenges, he says, and philanthropy likely will become a major business strategy.
“Philanthropy is one of the more essential pieces of their global strategies because of the concrete relationships they have on the ground,” says Googins. “Philanthropy can play a critical role in helping the business ground itself in the particular culture and climate of a country.”
And with the cultural expectations in both business and philanthropy differing from country to country, HP’s Espinosa says understanding those differences is critical.
That’s why he has philanthropy employees stationed around the world.
“How you think of yourself as a global citizen and think about your philanthropy and corporate social responsibility is a critical part of this conversation,” he says.
This evolution toward a more integrated corporate philanthropy is here to stay, says Googins.
Globalization and competition are increasing, and societal problems are becoming more complex and entrenched.
So companies will have to adjust, he says.
“Corporations can’t stay in the status they are now,” he says. “They’ll have to be more integrated or else they’ll be left bobbing in the wake.”