Connect with us


Harnessing Strategic Corporate Philanthropy

girl friends hands piled together

Society’s expectations of good corporate citizenship have changed. As the wealth and power of businesses grow, so have society’s expectations of corporate responsibility. With the weakening of national governments and the strengthening of businesses, people now expect corporations to provide leadership and take more responsibility in solving pressing social and environmental challenges.

Almost half of societies polled in 28 countries expect businesses to support charities. Executives acknowledge the business significance of corporate philanthropy, but the perceived low return on investment (ROI) restricts their charitable spending. An effective corporate philanthropic strategy can boost your business’s competitive advantage and create greater social impact.

Below, we’ll discuss why current charitable practices are ineffective and offer a new approach to corporate philanthropy to create greater value for both businesses and societies.


Why Traditional Corporate Philanthropy Is Ineffective

Current corporate philanthropic practices are unsustainable and often ineffective in achieving their objectives because they don’t create business value.

Most businesses employ traditional philanthropic practices ⏤ such as cash grants and donations ⏤ to boost their image and support worthy causes. These traditional charitable activities, however, are only sustainable for short-term campaigns and fail to achieve any long-term social impact. As a result, most corporate contribution programs do not realize their full potential, creating very little value for the business.

Low-Value Business Activity

Corporate executives struggle to justify charitable spending to investors and stockholders in terms of business benefits. Consequently, corporate philanthropy has declined from 2.3 percent of pre-tax profit in 1986 to less than one percent today, as businesses sideline charitable expenditures in favor of activities that generate a higher return on their investment.

How can businesses harness the benefits of corporate philanthropy while creating meaningful social impact? A more focused and strategic corporate philanthropic program can maximize the value of charitable contributions for both businesses and beneficiaries.


What is Strategic Corporate Philanthropy?

man in black t-shirt holding tomato soup in can from a table full of donations

Strategic corporate philanthropy is when a company’s charitable activities benefit both the business and society. When philanthropy satisfies both shareholders and beneficiaries, businesses can develop more sustainable charitable programs and make long-term commitments to the effort. Strategic corporate philanthropies are more successful in achieving their goals, creating the social impact businesses need to boost their competitiveness.

A common misconception in corporate philanthropy is that charitable efforts should not be used for economic gain. However, this obsolete way of thinking is contributing to the ineffectiveness of current charitable programs. Research conducted by MIT’s Sloan School of Management found that creating true value for both businesses and beneficiaries is the only strategy to develop sustainable corporate philanthropy programs that make a lasting societal impact.

A Win-Win Situation

Many of the world’s leading companies are adopting a more strategic approach to their charitable efforts to create a greater social and economic impact. A good example of this is Trans Global Auto Logistics’ (TGAL) sponsorship of a world-record attempt to row across the Pacific Ocean. TGAL is sponsoring and facilitating the logistics of the event which will help St. Elizabeth’s Centre for people with profound disabilities. The proceeds from the world-record row will be used to build a new specialist healthcare facility.

TGAL’s charitable effort will not only make a long-lasting societal impact but also showcase its unique assets and expertise in ocean transport. With its international presence and specialty boat shipping services, few of TGAL’s business rivals can match the company’s capabilities. Sponsoring this event on May 25, 2021, will promote TGAL’s ocean freight services and improve the lives of people with special needs, creating a win-win opportunity for the business and beneficiaries.


Benefits of Strategic Corporate Philanthropy

An effective philanthropic strategy that aligns social and economic goals will not only create sustainable societal benefits but can help businesses improve reputation, enhance talent acquisition and retention, increase customer loyalty, boost growth, and generate a higher return on their social investment.

American clothing giant Levi Strauss’s Worker Rights program is a great example of strategic philanthropy’s benefits for both business and society. The Levi Strauss Foundation has invested $8 million to improve the health and education of more than one million factory workers in 16 countries. In addition to its long-lasting societal impact, Levi’s estimates that it has generated an ROI of $4 for every $1 invested in the program in the form of reduced worker absenteeism and turnover rates.


How To Develop An Effective Corporate Philanthropy Program

A strategic corporate philanthropic program can be the most cost-effective way to boost your business’s competitiveness in the marketplace. Many of the world’s top corporations have altered their philanthropic approach from one of charity to mutually beneficial projects. Some well known strategic corporate philanthropic programs that benefit both the business and society include:

An effective corporate charity program should integrate an internal and external perspective to maximize the value of philanthropy for the business and society. Use these three tips to develop a strategic philanthropic program for your business:

people repacking donations

Perceive Corporate Philanthropy As An Investment In Society

Many companies dole out cash impulsively to charities without measuring the act’s impact on society and their business. This approach marginalizes the value of charitable work and is the main reason why corporate philanthropy is in decline. Changing your philanthropic work’s narrative to one of investing in society will allow you to develop a long-term and more sustainable plan for tackling social issues, creating greater value for people and your business.

Ensure Philanthropic Activity Is Connected To Your Business

You’re an ardent supporter of marriage equality. Great! But how will donating company funds to LGBT non-profit organizations benefit your project management software business? It is unethical to spend shareholders’ funds on causes that executives and employees believe in. Business revenue must be used to maximize the value of shareholders’ assets.

When selecting a philanthropic project to undertake, make sure it aligns with your business activities and objectives. Campbell Soup’s support for the American Heart Association helps them sell more of their heart-healthy products. Dove’s Campaign for Real Beauty and support for organizations that work on women’s issues has returned $3 for every $1 spent on the project in the form of increased sales in personal care products. Aligning corporate interests with social issues can produce real value for both businesses and societies.

Professionalize Your Philanthropic Program

Due to its perception as a low-value activity, corporate philanthropic projects are often treated as peripheral work by businesses. With social consciousness becoming a focal point for many consumers, businesses must develop strategic and professional philanthropic programs to boost their competitiveness.

Corporate philanthropy should be executed with the same level of professionalism as other high ROI business functions if you want to reap its full benefits. Does your company have the right competencies to run a successful philanthropic program? Are your corporate philanthropy employees in need of some professional development training to boost their skills? Improving the professionalism of contribution programs will create greater value for beneficiaries and improve business performance.


Improve Business Competitiveness With Corporate Philanthropy

As societies become more socially, environmentally, and economically responsible, corporate philanthropy will become an increasingly influential factor in determining business success. Most corporate charitable activities, however, are ineffective at achieving long-lasting societal impact and often breed public cynicism rather than goodwill.

A strategic corporate philanthropic program eliminates the ineffectiveness of traditional charitable activities as it creates value for both businesses and societies. Corporate philanthropy is effective and sustainable only when it can help converge business and society’s interests. Develop a professional and strategic philanthropic program that satisfies both investor and consumer demands in order to improve your business’s competitive advantage.

Abdullah Raaj is the founder of Ventures Bite, a global digital marketing agency. He is a serial entrepreneur and an expert in the field of Development and Marketing, and is considered a “Marketing Specialist" by his peers.

Advertisement defi

Join Disrupt Magazine

Become A Disrupt Contributor

Most Disruptive

Real Estate Disruptors1 day ago

From Nothing To The Top 7% Percent In Real Estate With Joe And Lety Torres

What’s your backstory?    (Lety) We both have parents who immigrated to the US from Mexico. We were fortunate to...

Social Media1 week ago

Khaby Lame Becomes The Most Followed TikToker in The World

Khabane Lame was a machine operator but now trending and just became a star from an account he created on...

Tiger_Shroff Tiger_Shroff
Entertainment1 week ago

Meet Bollywood Star Tiger Shroff

Tiger Shroff has a long history in the film industry, starting before his birth. With prominent parents in the industry...

Amanda Bernardo Amanda Bernardo
Women Who Disrupt1 week ago

Meet “The Pizza Princess” Amanda Bernardo

If you live in or near New Haven, Connecticut, you may be familiar with the hidden gem that is “New...

Shirley_Setia Shirley_Setia
Women Who Disrupt1 week ago

Meet Upcoming Bollywood Star Shirley Setia

Shirley Setia is the little Kiwi that could. Coming out of seemingly nowhere with a hit cover on YouTube, she...

two people shaking hands two people shaking hands
Diversity in Tech2 weeks ago

How the Best Leaders Create and Build Trust in a Modern Workplace

Being a leader in any setting can be challenging but within professional settings, you really are juggling a lot at...

Jay Majors Jay Majors
Executive Voice3 weeks ago

How Jay Majors Is Disrupting The Barber Industry

When we see a successful figure in any industry, learning their story, where they came from, and how they’ve struggled...

Daymond JOhn Daymond JOhn
Executive Voice3 weeks ago

Daymond John Can’t be Stopped

Perhaps you know Daymond John from the wildly popular show Shark Tank. Or maybe you’re familiar with his revolutionary clothing...

Finance3 weeks ago

Ryan Carroll Establishes Wealth Assistants to Serve as a Launching Pad for Hopefuls Worldwide

Countless highly accomplished personalities and established authorities have proven that the pursuit of one’s passion can be a way to...

Business4 weeks ago

Social Media Star, TheBlondeJon’s Journey from Homelessness to Multimillionaire Status

A strong self-belief in oneself is a powerful enabler no matter the obstacles or challenges one faces on a journey....


Copyright © 2020 Disrupt ™ Magazine - Disrupt is a Minority Owned Privately Held Company

Disrupt ™ is the voice of Latino entrepreneurs around the world. We are part of a global movement to increase diversity in the technology industry and we are focused on using entrepreneurship to grow new economies in underserved communities around the world. We enable millennials to become what they want to become in life by learning new skills and leveraging the power of the digital economy. We are living proof that all you need to succeed in this new economy is a landing page and a dream. Disrupt tells the stories of the world top entrepreneurs, developers, creators, and digital marketers and help empower them to teach others the skills they used to grow their careers, chase their passions and create financial freedom for themselves, their families, and their lives, all while living out their true purpose. We recognize the fact that most young people are opting to skip college in exchange for entrepreneurship and real-life experience. This Podcast was designed to give them a taste of that.