Corporate Philanthropy and CSR: Private Initiative for the Public Good

Part Two of Two

The TakeAway: Attitudes toward corporate philanthropy reflect continued ambivalence about consolidated wealth and how best to foster accountability and sustainable prosperity.

Public suspicion – even scorn – of excess wealth and power is a sturdy American tradition that continues to this day.  Current ambivalence about the intent and impact of corporate philanthropy draws succor from late 19^th century disputes over threats posed by large-scale benevolence – referred to as “tainted money” – to pluralism and democracy.  There are striking parallels to that era and now, where concerns about the social purpose of concentrated wealth drive the social responsibility / sustainability movement.

The tainted money debate goes back to Washington Gladden, a liberal Congregational preacher from Columbus, Ohio, who in 1895 railed against the beneficence of America’s first millionaire class.  Gladden, a leader in the Social Gospel movement, didn’t mention any multimillionaire by name, but did attack those “robber barons”, “Roman plunderers”, “pirates of industry”, and “spoilers of the state”.

Gladden’s “tainted money” sermon is a classic.  In American Philanthropy, historian Robert H. Bremner, describes its essence: Should a church or university take offerings of money made in morally reprehensible ways without condoning the methods and accepting the standards of the donor?  “Is this clean money?” Gladden asked.  “Can any man, can any institution, knowing its origin, touch it without being defiled?”

Gladden’s target: the Rockefeller philanthropies.  At that time, John D. Rockefeller and Andrew Carnegie were creating the field of organized, or “wholesale”, philanthropy—a departure from scattershot giving.  Nowadays, the trend is toward “strategic” or “impact” philanthropy—reflecting a desire to justify what’s perceived as an arbitrary process, during a period of vast wealth disparities.

The advent of foundations in the early 1900s coincided with trustbusting and muckracking, growing militancy amongst labor, and a leftward (rather than Tea Party) tilt in politics.  From then to the 1930s, philanthropy and foundations remained in bad repute. “Philanthropic and business interests are not merely complementary, they are identical,” observed one 1938 critic.  Foundations, and by extension all large scale grantmaking, might reflect donor social responsibility, but often were seen as anti-democratic attempts to control social thought and expression.  Nowadays, the multistakeholder sustainability movement serves as a corrective.

Yet similar suspicions exist regarding the charitable impulse of the super-rich, both individual and institutional.  Recently 58 moguls – including Warren Buffett, Bill Gates, Carl Icahn, George Lucas, and recently Facebook founder (and Time magazine’s 2010 Person of the Year) Mark Zuckerberg – have signed the “Giving Pledge”, a commitment to donate most of their wealth to charitable causes.  While laudable, some experts say we should curb our enthusiasm, including National Committee for Responsive Philanthropy (NCRP) Executive Director Aaron Dorfman.  Writing in The Huffington Post, Dorfman says the Giving Pledge represents a small part of total giving, is unlikely to serve the neediest populations, and that “billionaire philanthropy” has dangerous implications for democracy because it can dilute government’s role while distorting the social policy agenda.

As an antidote, in March 2009, NCRP released Criteria for Philanthropy at Its Best: Benchmarks to Assess and Enhance Grantmaker Impact, a first-ever set of measurable guidelines for grantmakers and other institutions.  In a nutshell: metrics for values, effectiveness, ethics, and commitment.  NCRP’s contribution – one of several “strategic” and “high impact” philanthropy initiatives – resembles late 19^th / early 20^th century efforts to apply scientific methods  to advance the common good.  The Committee Encouraging Corporate Philanthropy (CECP) considers strategic giving and peer benchmarking as critical to success.

But recently, former Ford Foundation President Susan Berresford worried publicly that efficiency pressures might sap philanthropy of its social and moral efficacy.  In The Chronicle of Philanthropy, she wrote, “Overreliance on measures and statistics can become a crutch to compensate for a lack of confidence and intuitive and experiential knowledge.”

As with corporate social responsibility, corporate philanthropy continues to evolve, part of a larger – albeit bumpy – transformation in the purpose and role of capitalism and its civic moral obligations.  Its roots are wide and deep and its tensions many, but, as the late American icon John Gardner wrote in 1964’s “Private Initiative for the Public Good”, “we must treasure any institutions designed to function flexibly and creatively in a period of rapid change—[especially if] it contributes to an even greater and more fruitful pluralism.”

Gardner was talking about organized philanthropy, but he could well have been talking about sustainability and the business corporation, too.

(Disclosure: Marcy Murninghan advised NCRP on the shareholder activism dimension of philanthropy’s power.)