Table of contents
- Business success and profits
- Improves social perception
- Community impact
- Why Philanthropy & Modes of Philanthropy
- Benefits to Philanthropic CSR
- Against Corporate Philanthropy
- Concluding Thoughts
The definition of Corporate Social Responsibility (CSR) carries a level of ambiguity within the public and private sectors. Although authors are influenced by popular definitions there is a clear expectation among literaries that businesses should uphold a set of moral values and/or actions (Garriga & Mele, 2004). One of the most popular approaches to CSR programming that businesses use as a guideline is an ethical framework (Lee, Kim, Lee, 2012). Ethics based CSR initiatives can be drivers of economic and financial business success. Moreover, it can improve public perception of the organization. Arguably most importantly, ethical CSR initiatives create long lasting impacts on the communities that they serve.
Business success and profits
First, CSR initiatives carry inherent business identity which can influence economic and financial outputs. According to Carroll’s 4 part framework to CSR, “the ethical responsibilities may be understood as those that a business may conscientiously take on above and beyond merely fulfilling the demands of the 'letter-of-the-law' (Anupam & Chhanda, 2014, p. 67). This means, that although ethics are not mandated to be integrated into the business model above governing legislature, organizations are socially expected to leverage their power for the social good. In making these critical CSR decisions, they inform and reinforce the values of their business and increase their profits. However, these decisions take time to refine. Businesses are most financially successful when they find the “sweet spot” between the needs of their business stakeholders and community members (Savitz & Weber, 2014, p 35). For example, In The Triple Bottom Line authors Savitz and Weber (2014), discuss GE’s “ecomagination” initiative in a social attempt to reduce carbon emissions. General Electric implemented new, clean-tech energy options, including installing 20,000 wind turbines in Latin America which generated 105 billion dollars in revenue by 2012 (ibid). Including this new philosophy in their organization integrated social sustainability ideals into their existing business model and also found profitability. This example illustrates how an organizations tacit ethical duties to society, are rewarded socially and financially.
Improves social perception
Second, ethical practices improve external stakeholder morale. Consumers expect organizations to provide exemplary services and products, but also to conduct their business ethically (Carroll, 2016, p.3). What society perceives as “ethical” or “moral” varies in different cultures and eras and is rarely articulated fully in policy or legislature. Therefore, it is up to the organization to accurately make decisions that mirror public expectations and remember that ethical responsibilities go beyond legal compliances (ibid). And Consumers notice when business fulfill this responsibility. According to a study by Berner (2006), in 1993 approximately 26% of the population could name a socially aware organization, and in 2004, the number had risen to 80%. Increasing members of the population are noticing how businesses conduct themselves outside of their traditional business model and therefore can be assumed that this trend will continue. Ethically based CSR programs do not just influence the public opinion of the overall organization, but also of the products. In a study by Brown and Dacin (1997), they studied how overall CSR may influence perception of individual products. The found that organizations that position themselves around “worthy causes and community involvement” have more positive customer interactions and these interactions influence how consumers perceive their products (Brown & Dacin, 1997, p. 79). These findings suggest that more ethically driven organizations influence consumers more positively and are seen to have a superior product.
Lastly, CSR initiatives leave a profound effect on the targeted and untargeted communities they impact. For example, TOMS is an organization that has ethical ideals integrated directly into their business model. With their “one for one” model, for every pair of shoes purchased they donate a pair to a child in poverty (TOMS, 2018). To date, they have donated 86 million new pairs of shoes to children in need (ibid). Another example would be Lego, who Forbes magazine ranked as one of the top organization for CSR responsibility using their Build the Change initiative (Forbes, 2017). This program employs staff members to find sustainable opportunities for Lego production in partnership with the World Wildlife Fund (WWF) (ibid). Both of these organizations have positively impacted their external communities towards a happier and more successful world. TOMS uses their business model for change whereas Lego uses their powerful position to build long lasting change.
Corporate Social Responsibility initiatives represent an important benchmark in redefining the role of businesses in our social and economic context. By doing this, businesses become more desirable and successful. Moreover, business success and profitability are linked to successful CSR initiatives. As a society, we rely on them to accurately and carefully incorporate nuanced social norms into their ethical best practices. However, when this is done correctly, the lasting impact that it can make on the communities is life changing.
Philanthropy refers to a charitable act carried out for the betterment of society. The defining characteristic of philanthropic acts is their voluntary nature (Balch, 2017). One cannot claim something is philanthropic if they are being forced to do so by law or regulatory bodies. In corporate practice, this means that philanthropic actions are taken out of a company’s desire to uphold principles of corporate social responsibility (or CSR for short). In this report I will briefly outline why and how a company may choose to engage in philanthropy as CSR, and examine the purported benefits and drawbacks of corporate acts of philanthropy.
Why Philanthropy & Modes of Philanthropy
There is a commonly held argument that corporations have a responsibility to the societies they are a part of. In this sense, philanthropy can be viewed as an act of giving back to a community which has thus far supported the corporation (von Schnurbein et al., 2016). In this sense, CSR is connected with the notion of corporate citizenship- that corporations can and do play a role in defining societal norms, conventions, and beliefs. Philanthropic acts are thus a way to expand a corporation’s brand or to actualize corporate values. For instance, TD Bank Group sponsoring a variety of arts and cultural events (such as the TD Community Arts Award) promotes the bank as a supporter of a diverse and artistic society. Their corporate values are thus reinforced and legitimized by this philanthropic sponsorship.
In terms of methods of philanthropy, Husted distinguishes between three different types: cheque-book, in-house, and collaborative (2003). Cheque-book CSR involves explicit contributions of cash or other materials to charities, but little action beyond that. In-house CSR allows for corporate control, but can then limit credibility. Of the three, he argues that the third approach is most effective, allowing the company some say over how resources and funding are used, while deferring to the expertise of non-corporate partners (Husted, 2003).
Benefits to Philanthropic CSR
Aside from the apparent public relations boost that successful acts of philanthropy bring- there are key strategic and financial benefits that come along with this. It has been shown that there is a significant association between philanthropic contributions and future revenue. Indeed, when corporations promote improvements in certain sectors of society, such as investing in employee health or technology, they can reap economic benefits down the line (Balch, 2017). Porter and Kramer identify this “strategic philanthropy” as highly effective, and that as much as possible, companies should work to align their social and economic goals (2002).
Against Corporate Philanthropy
While it may seem like there are no possible downsides to philanthropic activities undertaken by corporations and that they exist simply as a “win-win” phenomena, this is not entirely the case. von Scnurbein et al. point to an increasing obligation to participate in corporate philanthropy as a potential threat to business, suggesting that, “If companies were free of moral demands from outside, they could set their philanthropic engagement aside and invest in different, business-related fields” (2016).
Nick Lin-Hi emphasizes how these acts of CSR are, “...economically useful and not entirely problematic, as long as they are viewed as instruments of the classic marketing mix. However, good deeds become problematic when they are declared as CSR. In this respect, philanthropic activities should be seen for what they are: marketing instruments to foster corporate interests and therefore instruments to generate Profits” (2010, p. 79). Key to Lin-Hi’s argument is that these acts should not be interpreted as philanthropy, which in fact encourages the view that, “...making Profits is wicked and immoral” (2010, p. 79). His argument here is that corporations exist to make profits and that by attempting to obscure this fact, we are implicitly suggesting that this act is something to be ashamed of. Having said that, if the company is not supported by the broader society, it is hard to see how profits would be retained. Perhaps it is indeed in the best interest of corporations to at least feign interest (if not truly believe) in philanthropic CSR.
It is my opinion that the economic and social benefits derived from CSR outweigh the potentially negative implications of such an act. We live in a society and our ultimate obligation should be to them- philanthropic acts from corporations are one of the many ways in which we can further build and sustain a healthy society. If corporations have the means to provide, they should continue to support deserving charities, organizations, and programs that promote pro-social corporate and community values. In the long term, the research is clear, this leads to better outcomes for the corporation and society.
As the environment get more and pillaged by monolithic corporate entities, those of us with an penchant for such things are becoming interested in building more sustainable policy in the vain hope that it will make a difference and halt the inexorable deterioration of the natural environment that we have begat.
Environment Corporate Responsibility projects is a band aid, “easy-way-out” solution that serves only to buy hollow goodwill from the unquestioning public rather than actually help anything. Environmental Commitments, although a good idea in principle, is just a corporation’s name for throwing a mere percentage of its financial resources at a cause to say they did something.
Typical Environmental CSR includes policies, initiatives, or programs that corporations do to better the Environment, at least on paper, but in actuality the primary focus is often their business interests (Today, many businesses are combining the growing public concern for environmental sustainability into their PR spin campaigns. There are a bunch of different ways that business can do this:
Some corporations or enterprises report to have environmentally sustainable practices are programs that are integral to the operation and success of an organization's business model. These types of CSR’s proudly boasted about in the company’s mandate and are often masking their true interests. We should really all be doing more as a society to help, but the fact is that most of us are selfish, self interested, and unable to see the big picture even when that big picture is barreling down upon us like a global catastrophe.
Lots of orgs create eco - partnerships and policies. Some places create a sitting council that advises on sustainable practices or strategy - which universally go unlistened to. For example, lots of big corps like Nike, have created an environmental policy and framework or even separate no profit wings which deal with deflecting criticism for other aspects of the business. c
A bunch of, businesses can also donate or fundraise for an environmental cause. This is probably the most common and widespread as well as the easiest method - plus it comes with tax write offs. Its easy because any corporation, whether it cares about the planet or not, can give back to this cause regardless of their shady business dealings. However, corporations must be cautious in communicating their motives for environmentally conscious causes. Environmentally conscious initiatives are a CSR approach from that gets acknowledged by consumers and business partners. Regardless of the type of eco-CSR an organization implements, it is imperative that they do it in a good way.
- Anupam, G. and Chhanda, C. (2014). “Beyond Corporate Social Responsibility: Ethics in Action”. Global Virtue Ethics Review, 6(4), 60-99.
- Brown, T. J. and Dacin, P. A. (1997). “The Company and the Product: Corporate Associations and Consumer Product Responses”. Journal of Marketing, 61(1), 68-84. Retrieved from https://www.jstor.org/stable/1252190.
- Garriga, E. and Mele, D. (2004). “Corporate Social Responsibility Theories: Mapping the Territory. Journal of Business Ethics, 53(1-2), 51 - 71. Retreived from https://journals-scholarsportal-info.ez proxy.lib.ryerson.ca/pdf/01674544/v53i1-2/51_csrtmtt.xml
- Strauss, K.. (2017). “The 10 Companies With the Best CSR Reputations in 2017. Forbes. Retrieved from https://www.forbes.com/sites/karstenstrauss/2017/09/13/the-10-companies-with-the-best-csr-reputations-in-2017/#696b7b83546b
- Luo, X. and Bhattacharya, C.B. (2006). “Corporate Social Responsibility, Customer Satisfaction, and Market Value”. American Marketing Association, Journal of Marketing, 70(4), 1-18. Retrieved from https://www.jstor.org/stable/30162111.
- n.a. (2018). TOMS: Improving Lives. Retrieved from https://www.toms.ca/improving-lives
- Balch, O. (2017). Deconstructing CSR: Corporate philanthropy. Retrieved from http://www.ethicalcorp.com/deconstructing-csr-corporate-philanthropy
- Husted, B 2003. Governance choices for corporate social responsibility: to contribute, collaborate or internalize? Long Range Planning. 36 (5): 481-498.
- Lin-Hi, N. (2010). The problem with a narrow - minded interpretation of CSR: Why CSR has nothing to do with philanthropy. Ramon Llull Journal of Applied Ethics, 1(1), 79. Retrieved from http://link.galegroup.com.proxy.bib.uottawa.ca/apps/doc/A243046275/AONE?u=otta77973&sid=AONE&xid=eb50d251
- Porter, M E, & Kramer, M. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review. 80 (12): 5–16. von Schnurbein, G., Seele, P., & Lock, I. (2016). Exclusive corporate philanthropy: Rethinking the nexus of CSR and corporate philanthropy. Social Responsibility Journal, 12(2), 280-294.
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