Term Paper on "Corporate Philanthropy & the Development of Business"

Term Paper 31 pages (8566 words) Sources: 1+

[EXCERPT] . . . .

Corporate Philanthropy on the Developjment of Business

The study conducted and reported in this work in writing is one that examines corporate philanthropy and that seeks to answer specific questions concerning the impact of corporate philanthropy on the development of a business. The methodology employed in this study is that of a case study which involves the review of available and pertinent literature in this area of study. Following an extensive review of literature this study states findings and conclusions.

AN INVESTIGATION of the IMPACT of CORPORATE PHILANTHROPY on the DEVELOPMENT of Business

Corporate philanthropy for the purpose of this study will be assumed to represent the actions that the organization takes to integrate the company into the community in which it is located through assisting community members with achieving their goals.

Aim & Objective

The aims and objectives of the present study is to examine the outcome or impact of corporate philanthropy on the development processes of a business.

Purpose of study

The purpose of this study is to investigate the impact of corporate philanthropy on the development of business and specifically to answer the research questions as they are stated in this study.

Research Questions

(1) in what aspect is the function of corporate philanthropy significant towards development of the corporation?

(2) to what extent does corporate philanthropy effect the development of the corporation?

(3) How can the corporation ensure that corporate philanthropy influences the development of the corporation?

(4) How and why does the corporate philanthropy contribute to the competitive advantage?

Background of the Study

The work of Cari Parsons (2005) states that the word philanthropy "…is derived from the Greek language, meaning 'love for mankind'. (p.1) Corporate philanthropy is stated to refer to "the giving by a for-profit company directly to charitable organizations from the corporation or to individuals in need with the intention of improving the quality of life." (Parson, 2005, p.1) Many benefits are claimed to result from corporate philanthropy. Benefits are stated in the work of Parsons to include the following stated benefits due to corporate philanthropy: (1) corporate reputation is enhanced; (2) relations with government, the community and key stakeholder groups is improved; (3) company's strategic business goals are supported; (4) brand recognition is enhanced; (5) better employees are attracted and retention increases; (6) health communities are created supporting business vitality; (7) sense of community and social obligation are enlarged; (8) appreciation for contributions from all organizational level are encouraged; and (9) pride and responsibility are increased. (2005, p.1)

Structure of the Research

Chapter two in this study will contain a review of literature as well as the rationale of the study and any theoretical bases upon which the study is conducted in this work in writing. Chapter three will contain the methodology and Chapter four will contain the study's findings with Chapter Five containing the study's conclusions.

AN INVESTIGATION of the IMPACT of CORPORATE PHILANTHROPY on the DEVELOPMENT of Business

CHAPTER TWO -- THEORETICAL FOUNDATION & LITERATURE REVIEW

According to a study reported by Farrar (2008) entitled: "McKinsey on Corporate Philanthropy: Mind Your Own Business" the highest ranking business goals are those of "brand and reputation enhancement (70%) and employee development (42%)" however it is stated that "when it comes to how such social investment decisions are really weighted it turns out the highest ranking goes to CEO interests at 45% with employee and local community interests joint second at 37%. (p.1) Farrar additionally reports that brand development weighed in at a mere 22% which demonstrates the "contradiction between the surveyed business goals and how investment decisions are really made." (Farrar, 2008, p.1) Farrar states that if the enterprise is able to achieve sustaining its goal then efforts have to be focused "…above the line rather than below. Any efforts more closely linked to the core business operations not only have greater opportunity for sustainable impact long-term but also enjoy greater social legitimacy given that corporations do not have unlimited democratic license to make decisions to prioritize social interventions. Below the line donations are often too tokenistic after thoughts." (Farrar, 2008, p.1) Stated to be a good example of philanthropic giving that is strategically focused is that of the NetSuite Giving programme. NetSuite is stated to be targeting "in kind technology support towards three beneficiary categories: (1) registered charities; (2) Fair Trade/Social Enterprises; and (3) Green Start Ups/Environment. (Farrar, 2008, p.1)

The work of Carolyn Ashley (2009) entitled: "Harnessing Core Business for Development Impact" states that the inclusive business concept is one that "contrasts with two previous ways of business thinking. One approach was that companies could deliver their social responsibilities through corporate philanthropy or isolated Corporate Social Responsibility (CSR) programmes alone. Core business delivered stakeholder value." (p.1) Previously the principle is stated to have been "do no harm and clean up the damage, rather than create new value." (Ashley, 2009, p.1) Ashley reports additionally that it is understood on a wide basis that "business can have a greater impact on development by adapting their core business practice, than through philanthropy alone." (Ashley, 2009, p.1)

The work of Burnell (2006) entitled: "Good Works, Good Business" states that charitable donations by corporations "grew by a record 22.5% in 2005, according to the Giving USA Foundation, which also found that 59.5% of corporations increased their contributions. Even after the large increases corporations still make only 5.3% of all charitable contributions in the U.S. compared to 76.5% for individuals, with foundations (11.5%) and bequests (6.7%) accounting for the rest." (Burnell, 2006) Burnell (2006) states the following concerning what corporate philanthropy means to business development: "With proper planning and forethought, philanthropy can have a direct impact on how you grow your business. It leads to improved standing in your community, improved stature with people you'd like to hire, and it provides many networking opportunities." (2006, p.1)

Recommendations stated by Burnell is the investment in interests that are company-related including employees, customers and others that the company desires to influence. Burnell states that philanthropy may begin with "an employee "volunteering for an organization, which could evolve into the employee gaining corporate sponsorship, and a long-term relationship between the employee's company and the organization they volunteered for." (2006, p.1) Two primary choices are stated to be available which are those of: (1) direct donations; or (2) corporate sponsorships. (2006) Managing the sponsorship enables more control over the investment and involvement of the company in the sponsorship which also serves to provide excellent opportunities for building relationships and also make a requirement of time and involvement by the company. According to Douglas R. Conant, President and CEO of Campbell Soup Company, in the work entitled: "CEO Perspective: Balancing Acts" companies who exercise caution in planning their philanthropy, and who tie the goals of the community into the business core operations will be likely to have "an easier time balancing some of the difficult decisions around corporate philanthropy." (2008, p.2) Conant additionally states that when the philanthropic activities of a company are tied to the mission of the company and the business success strategies of the company "then the corporate giving is as much an element of business health as any other business function and, therefore, requires the attention of the CEO." (2008, p.2) Conant relates as well that when the stakeholders have higher expectations the result is stakeholders not only demand that companies "be more forthcoming and transparent with corporate giving communications." (Conant, 2006, p.1)

It is related in the work of Damonti, McElvy, Powell, and Cone (2006) that successful partnerships between companies and the government are "key to sustainability, but require much more than the consultative approach. Incorporate mechanisms that draw in government engagement through the initiative such as technical advisory board membership, participation in co-planning, or speaking at significant milestone events." (p.3) Damonti, McElvy, Powell and Cone (2006) state the two following suggestions: (1) Invest in programs that have already been developed and are successful, determining which of these can be scaled up; and (2) Provide meaningful ways for people throughout the organization -- across all management levels, divisions, and regions -- to be engaged in the initiative to ensure success and sustainability. (2006, p.3)

According to Auguste and Bonini (2008) corporate philanthropy should begin and be led from the top beginning with the CEO, Board and Senior Executives of a company. The corporate philanthropy strategy should align with the business strategy of the company and corporate philanthropy should be managed in the same manner as any other business investment and specifically corporate philanthropy should be managed "with discipline." (2008, p.1)

The McKinsey & Company and CECP report entitled: "Business's Contract with Society: Roundtable Discussion" states that the company's philanthropy should be assessed through making a comparison of the company to "efficient philanthropists" and in a variety of areas to include involvement of the CEO. The CEO's role and level of participation are stated to vary "from company." (McKinsey & Company and CECP, 2008, p.3) it is additionally stated that the place of corporate… READ MORE

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