Sunday, June 29, 2008

what is corporate philanthropy?

The roots of the word “philanthropy” are “love” and “man”. A philanthropist, therefore, is a lover of mankind, someone who loves his fellow humans and exerts himself or herself for their wellbeing.

Philanthropy is defined by the Oxford English Dictionary as “practical benevolence towards men in general; the disposition to promote the well-being of one’s fellow-men.”

Thus, while philanthropy has taken on a general meaning of charity out of a compassionate disposition, its underlying meaning points to a much more strategic scope of endeavor.

Philanthropy in gross would encompass any action aimed at improving the well-being of humanity. Philanthropy would therefore include solving problems such as disease, lack of education, poverty, war, famine, global warming, excess consumption of natural resources, tyranny, and so on.

Corporate philanthropy would be the appropriate efforts of business to address these problems and challenges. It implies more than just making charitable donations in an effort to share wealth with the less fortunate.

Corporate philanthropy is then the responsibility of business to make our world better, even through the products and services offered for sale and the ways and means of bringing those products and services to market..

But given the primary social office of business to create wealth on a profitable and sustainable basis for the amelioration of social conditions, corporate philanthropy should have its proper role and function. Business should never seek to substitute for bad government; rather, bad governments should be changed and new, more responsible institutions of public power should take their place. Nor, on the other hand, should business assume responsibility for non-profit operations which seek to provide public or quasi-public goods that do not respond well to market incentives.

Corporate philanthropy can embrace strategic responses to the material concerns of a business’ stakeholders, bringing the demands of corporate social responsibility within its fold. The case can thus be made that corporate philanthropy is not merely optional volunteerism, unrelated to core business functions. No, corporate philanthropy is merely another way of framing the fundamental requirement of business to meet the terms of its contract with society. Under that contract, business must enhance the social capital, the human capital, and the reputational capital on which it depends for successful market performance in order to get back from society those necessary capital inputs.

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