Corporate Philanthropy: Greenwash or Sustainable Solution?

Part One of Two

The TakeAway: Corporate philanthropy, often criticized as mere PR or greenwash, has evolved strategically in ways that advance sustainable value creation.

December, the “Big Ask” month for nonprofits, inundates individual and organizational inboxes alike – including those of corporate grantmakers.  And companies interested in high-impact giving ask themselves the same questions you and I do: How can we use our finite resources to support work that aligns with – and advances – our values?  However, the term “corporate philanthropy” still gets quickly dismissed as vapid public relations or, worse yet, “greenwash”.  Better for companies to pursue a more embedded approach, where their good works extend core business strategy, instead of marginal efforts that contradict other business operations in an attempt to curry public favor.

While I agree with this preference, I also know that corporate philanthropy has come a long way, its evolution a result of changing regulations and expectations of the firm.  In the late 1980s, when I first began teaching philanthropy at Babson College, few understood organized philanthropy.  Corporate philanthropy – in the form of corporate giving programs or separate, company-sponsored foundations or public charities – was a work in progress.  The reverberations of the reform-oriented, blue chip Filer Commission and its counterpart, the Donee Group – later to become the National Committee for Responsive Philanthropy (NCRP) – gave notice that all foundations needed to serve public needs through transparent philanthropic action.

For corporations not accustomed to transparency, it was the latest in a decades-long discussion of whether corporate philanthropy should provide “direct benefit” to shareholders – a form of self-interest that justifies giving and avoids shareholder lawsuits – or operate under a doctrine of public responsibility.  As the late U-Chicago historian Barry Karl, an expert on corporate philanthropy, once wrote, “Direct benefit may be selfish, but it’s safe”.

A watershed moment occurred in March 1981 when the Business Roundtable issued its “Position on Corporate Philanthropy”, subsequently endorsed by the US Chamber of Commerce and the National Association of Manufacturers.   The statement officially endorsed the principle that “all business entities should recognize philanthropy both as good business and as an obligation if they are to be considered responsible corporate citizens of the national and local communities in which they operate”.

Corporate grantmaking began in earnest to “safe” programs:  Education.  Culture.  Health care.  Job training.  Conservation and the environment.  But many corporate foundation executives – I interviewed a number of them for a 1989 study I did on moral values, philanthropy, and public life for the Council on Foundations – felt marginalized, their domain at arm’s length from core business decision making.  Many expressed a desire to tackle social problems from a reform perspective, but were discouraged from doing so.

The fusion of business strategy, sustainability, and philanthropy would enact the ideal for corporate giving that many have argued for years: that wealth creation carries profound civic moral obligations that must be honored.  That journey is still ongoing.  Tomorrow, we’ll take a look at where corporate philanthropy is on this path, and where it’s heading.