What Is Corporate Philanthropy And What Is Its Purpose [2022 GUIDE]

In this article, you will learn what corporate philanthropy is and its purpose. Discover why it is important to use philanthropy in a company.

Definition of corporate philanthropy

Corporate philanthropy and its purpose are being taken into account by the business world, as is the case with CSR or sustainability.

As defined by the Council on Foundations:

“Corporate Philanthropy refers to the investments and activities a company voluntarily undertakes to manage and account for its impact on society responsibly.

It includes investments of money, donations of products, in-kind services and technical assistance, employee volunteerism, and other business transactions to advance a social cause, issue, or the work of a non-profit organization”.

Although charitable donations and NGO contributions are now widespread, it is not a new concept.

The history of philanthropy began in Roman times and evolved over the centuries, adding different aspects.

What is a corporate philanthropist?

Over the years, different philanthropic figures and corporate founders have emerged.

Cambridge Dictionary defines a philanthropist as:

“A person who helps the poor, especially by giving them money.”

Throughout history, great philanthropists have emerged.

Grantmakers in the Arts (GIARTS) lists some examples of corporate historical figures and their works:

• Henry Ford created the Ford Motor Company in 1903.

He collected American inventions and machinery, thanks to which he generated a change between previous designs and the advances of his time.

He founded the Edison Institute, now called the Henry Ford Museum & Greenfield Village;

• Alexander Graham Bell founded the Bell Telephone Company (later to become AT&T) in 1877.

He began his career teaching the hearing impaired, including his wife.

He taught the deaf to read lips and speak through sound waves and their transmission experiments.

This was what led to the invention of the telephone;

• John Pierpont Morgan founded J.P. Morgan & Co. in 1895.

He was an art and book collector and valued character above all else.

Confidence and integrity, not wealth and power, were how he measured his friends and conducted his business.

Currently, a wide range of philanthropists and foundations contribute to charitable causes.

An example of a non-profit organization is the Nahím Isaías Foundation.

What are the characteristics of corporate philanthropy?

Corporate philanthropy has certain characteristic investments and activities, such as:

• Money;
• Donation of products;
• Payment in kind;
• Technical assistance;
• Volunteering.

The San Diego Foundation details the seven most common forms of corporate philanthropy:

• Matching gift: companies financially match the contributions that their employees make to non-profit organizations;
• Volunteer Grants: Companies provide monetary grants to associations in which employees regularly volunteer;
• Employee and Board Grant Stipends: Corporations provide grants to employees and public boards to donate to the non-profit organization of their choice;
• Community Grants: Business Partnership programs reward non-profit organizations that apply for grants based on defined criteria;
• Voluntary Support Initiatives: Companies partner their employees with non-profit organizations to provide specialized support;
• Corporate Sponsorships: Companies provide financial support to a non-profit organization that, in return, acknowledges that the company has supported its activities, programs, or events;
• Corporate Scholarships: Corporations provide scholarships to colleges for students seeking further education, furthering college education and career development.

Philanthropy in United States is closely tied to its culture and society.

It can be said that American society has adopted corporate philanthropy as part of its tradition since most companies carry it out.

How is corporate philanthropy organized?

Corporate philanthropy helps companies achieve a better image, creating value in the medium and long term, and an excellent corporate reputation.

That’s because they build trust and encourage cooperation.

The Edward Lowe Foundation explains some of the reasons why companies choose to contribute to charitable causes:

“Entrepreneurs develop philanthropic programs for a variety of reasons. Some want to share their successes with those who are less fortunate. Some give for religious or cultural reasons, while others incorporate giving into their strategic marketing plans.

You don’t have to […] donate millions of dollars to start a philanthropic program. Even small gifts add up, such as food or clothing drives.

Getting started is your most important step.”

Corporate Philanthropy Strategy

Many companies use philanthropy as a strategy.

Candid lists some of the benefits companies get:

• Take advantage of tax deductions;
• Advance your business goals;
• Increase corporate visibility;
• Be good corporate citizens.

Philanthropy helps many companies improve their image in society.

At the same time, they can get tax benefits.

Is corporate philanthropy the same as corporate social responsibility?

The terms corporate social responsibility (CSR) and corporate philanthropy are often confused, although they are different terms.

The CSR strategies of any company can include philanthropy, but corporate social responsibility (CSR) is much more than just philanthropic projects.

CSR describes the company’s behavior towards society.

There is also often confusion between the terms strategic philanthropy and CSR.

Examples of corporate philanthropy

The Dorothy A. Johnson Center for Philanthropy lists several examples of companies that have engaged in corporate philanthropy:

• ExxonMobil: Offers a matching gift program in which they match their employees’ donations to higher education institutions.

Contribute $500 to a non-profit organization if an employee has volunteered at least 20 hours in a year.

Exxon’s philanthropic program focuses on education, while allowing employees to involve their loved ones in charitable giving;

• Microsoft: As a technology company, it is dedicated to pursuing technical developments to benefit customers.

This aligns with the company’s philanthropic initiatives to help bridge the digital divide.

It has organized its exercise around four initiatives: becoming carbon negative, closing the broadband gap, facilitating employee transfers, and combating malware;

• Verizon: The Individual Charitable Giving Program matches employee gifts of up to $5,000 to educational institutions and $1,000 to non-profit organizations.

In the team program, employees can form groups of 10 or more to raise funds together for educational or non-profit causes.

Verizon matches funds raised by each team up to $10,000 per team per event.

This philanthropic program model helps build team camaraderie and develop personal relationships among employees.

Philanthropy projects help improve relationships between the company’s workers while contributing to a charitable cause or philanthropic foundation.

What is the purpose of corporate philanthropy?

Salesforce.org explains that the vast majority of companies have a strong understanding of the benefits of corporate philanthropy:

“Of the medium and large companies, 64% already have some form of philanthropic outreach in place.”.

If you offer a charity program, employees are more likely to recommend your company as a great place to work.

That’s because 77% of companies are aware of this particular benefit.

Why is it important to use philanthropy in a company?

Using philanthropy in a company can be the most profitable way to improve the competitive environment.

As the Harvard Business Review puts it:

“It is only where corporate expenditures produce simultaneous social and economic gains that corporate philanthropy and shareholder interests converge.”

Conclusions

Today companies take into account philanthropy and its benefits.

Based on the above, the following conclusions can be drawn:

• CSR should not be confused with corporate philanthropy;
• Philanthropy has a significant influence on the social and competitive environment of companies;
• It has been carried out for hundreds of years;
• Some of the characteristics of corporate philanthropy are money, product donation, and volunteering.

Helping associations and charitable causes can help your company achieve a better reputation.