Corporate philanthropy faces challenges

By Bradley K. Googins

These are risky times for corporate philanthropy.

The days of philanthropy as a “nice to-do” and a gesture of “giving back to the community” are fast becoming a relic of the past.

Several reasons are driving this, most notably the competitive value of linking philanthropy to business strategy.

Another key driver is the reality of our times: This is the era of transparency.

Companies that allow philanthropy to be managed as a stand-alone function associated with the interests of a handful of executives or departments are extremely vulnerable.

Certainly many of the principles of transparency — disclosure, candor, honesty — have been trademarks of virtuous companies since the beginning of time.

But the Internet has changed the game. It only takes a few keystrokes to access information about charitable giving, partnerships and other community-based corporate activities.

Add a few more keystrokes and delve into the intricacies of a company’s business operations, legal complaints and code violations.

A simple comparison of the data can reveal contradictions and what may be perceived as hypocrisy — or at least fodder for the blogosphere.

While philanthropy was once a very local transaction — fund the YMCA, city opera, little league and library and receive the goodwill of the local population — it now has a global dimension, even if contributions stay local.

Even a contribution to a local soccer team for 10-year-olds, while it may look like a benign gesture, can spark a maelstrom: What if the donation comes from a sporting goods maker who sources soccer balls from factories that use child labor?

Activists from any point on the planet can easily use this to advance an advocacy campaign against the company.

Or take the complexities facing the pharmaceutical industry.

Access to information about activities such as research and development, marketing and drug trials has driven non-governmental organizations and others to evaluate the business activities against its philanthropy.

For many activists, it’s no longer good enough for a drug company to support the arts or perhaps a local hospital or clinic; they are demanding that companies examine pricing structures and rethink issues about access to drugs in the developing world.

As a result, we are now witnessing the creation of remarkably innovative and sophisticated philanthropy programs with significant presence in some of the poorest countries in the world.

Obviously, these are very complex issues, but in the age of transparency, companies have little control over the public debate and ultimately how the public will respond.

They need to be more effective in using what they do control — setting their business strategy and requiring rigor in integrating philanthropy across the company.

The hard reality of these risky times — good deeds and donations, once a reliable reputation booster — simply no longer inoculate a company.

Bradley K. Googins is executive director of the Boston College Center for Corporate Citizenship.

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