corporate philantropy

Presenters:Uche Okereke P03185551William Stevenson P07273554

Corporate Philanthropy

Introduction

• History of the Social Responsibility of Corporations• An Overall Understanding of Corporate Philanthropy• Elaborate Practical Examples• Present Theoretical Findings• Analyse our Position on CP• Limitation• Conclusion

Social Responsibility of a Corporation

• History

• Principles– Charity and Stewardship

Framework of CSR historyCharity principle Stewardship principle

Definition Business should give voluntary aid to society’s needy persons and groups

Business, acting as a public trustee, should consider the interest of all who are affected by business decisions and policies

Modern Expression Corporate Philanthropy Voluntary actions to promote the

social good

Acknowledging business and society interdependence

Balancing the interest and needs of many diverse groups in society

Examples Corporate philanthropic

foundations (according to CECP survey, 85% of fortune 100 companies have them)

Private initiatives to solve social problems

Social partnerships with needy groups

Stakeholder approach to corporate strategic planning

Optimum long-run profits rather than maximum short-run profits

Enlightened self-interest attitude

(Adapted from Frederick et al, 1992, pg 36)

Social Responsibility of a Corporation

• History

• Principles– Rescue and Fairness

Principle of Fairness and Rescue

"The annual revenue of the five largest corporations is more than double the GDP

(gross domestic product) of the poorest 100 countries in the world."

Hsieh, (2008)

Corporate Philanthropy

‘Total corporate giving's for 2006 of 55 respondents in the fortune 100 were 38 billion dollars’ (CECP, 2006)

Matrix

‘A survey by the CECP in 2006 found that of the fortune 100 companies 42% of giving's were charitable, 49% were strategic and

9% were commercial’

“social responsibility of business is to increase its profits . . . the corporation is an instrument of the

stockholders who own it. If the corporation makes a contribution, it prevents the individual

stockholder himself deciding how he should dispose of his funds.”

Milton Friedman 1970

“There are indications that even today corporation managers not infrequently use corporate funds in ways which suggest a social responsibility rather than an exclusively profit-making viewpoint. Take, for example, the matter of gifts by business corporations to local charities”

Dodd, (1932)

“there is one and only one social responsibility of business–to use it resources and engage in

activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition

without deception or fraud”.

Milton Friedman 1970

“there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud”.

Milton Friedman 1970

Strategic Corporate Philanthropy

• Seifert et al (2003)– Strategic Linkages to giving

• Burke and Logsdon (1996)– Sustainability

• Porter and Kramer (2002)– Social value and Economic Value

• Shaw and Post (1993)– Moral Basis

“Strategic philanthropy is the label that has been used to describe corporate

philanthropy aimed at helping the bottom line. For years, scholars have documented the use of charitable donations as part of a strategic plan to gain a competitive edge”

Seifert et al (2003)

“A strategic reorientation of the firm's CSR philosophy can support its financial

interests as well as other stakeholders' interests in the firm”

Burke and Logsdon (1996)

Porter and Kramer (2002)

Adapted from Porter and Kramer 2002, pg 7

“Corporate Philanthropy is far too important as a social instrument for good to depend

on ethical egoism for its support”

Shaw and Post (1993)

Implications of Corporate Philanthropy

• Sustainability – Smith (1994)

• Globalisation – Simon (1995)

• Reputation

• Culture

• Profitability- Crowther (2002)

Stakeholder Analysis

• Who is Corporate Philanthropy conducted for, Dodd said is not just shareholders but all stakeholders.

• Ranking of stakeholders and satisficing the stakeholder with the most pressure.

WHY?

Aras and Crowther (2006)

Limitations

• Transparency – One water

• Ranking of activities – Exxon Mobile

• Measurement of Giving

• Level of Management involvement – strong or weak or top or bottom

Conclusions

“Companies are granted the license to operate in their communities, and need to respect that responsibility”

Leaders Magazine Inc., (2007) and Crowther (200)

“The annual revenue of the five largest corporations is more than double the GDP (gross domestic product) of the poorest 100 countries in the world, so it is very natural for people to ask, 'Why are MNCs not doing more to assist those people in need for they appear well placed to do so”

Hsieh, (2008)

References• Bansal P, Roth K. 2000. Why companies go green: A model of ecological

responsiveness.Academy of Management Journal 43(4): 717-736. • Burke L., and Logsdon J., 1996, “How corporate social responsibility pays

off”, Long Range Planning, 29(4), 495-502• Cannon T., 1994, “Corporate responsibility; A textbook on Business Ethics,

Governance, Environment: Roles and responsibilities”, Harlow, Pearson Education Limited

• Carroll A. and Buchholtz A., 2006, International Students Edition, “Business and Society: Ethics and Stakeholder Management, Ohio, Thomson South-Western

• Committee Encouraging Corporate Philanthropy (CECP), 2007, “Giving in Numbers, 2007 edition”, available at http://www.corporatephilanthropy.org/ accessed on 24/04/2008

• Crowther D. and Rayman-Bacchus L., 2004, “Perspectives on Corporate Social Responsibility”, Cornwall, MPG Books Ltd

• Dodd (1932) seen in Green S., 1990, “Corporate Philanthropy and the Business Benefit: The Need for Clarity, Pace University available from http://digitalcommons.pace.edu/lawfaculty/439/ accessed on 24/04/2008

References• Frederick W., Post J., Davis K., 1992, Seventh edition, “Business and

Society; Corporate strategy, public policy and ethics”, Singapore, McGraw-Hill Inc

• Friedman M., 1970, “The Social Responsibility of Business is to Increase its Profits”, New York Times Magazine, September 13

• Green S., 1990, “Corporate Philanthropy and the Business Benefit: The Need for Clarity, Pace University available from http://digitalcommons.pace.edu/lawfaculty/439/ accessed on 24/04/2008

• Hsieh N H 2005, “Do multinational corporations have an ethical obligation to assist those in need, Knowledge@Wharton, Feb 23, 2005 http://knowledge.wharton.upenn.edu/article.cfm?articleid=1140

• Leaders Magazine Inc., Jul-Sep 2007, “Investing in Society”, 30(3) available from http://www.leadersmag.com/issues/archive.html accessed on 30/04/08

• Mescon T. and Tilson D., 1987, “Corporate Philanthropy: A Strategic Approach to the Bottom Line”, California Management Review, 29(2), pg 49-61

• Mullins L., 2007, Eight Edition, “Management and Organisational Behaviour”, Harlow, Pearson Education Limited

References• Smith C N 1994, “The new corporate philanthropy” Havard Business

Review, May/June pp 105-115• Porter M E and Krammer M R, (2002) “The competitive advantage

of corporate philanthropy, Havard Business Review.• Sethi, S. Prakash 1981, Up against the corporate wall : modern

corporations and social issues of the eighties,4th edition, Prentice-Hall

• Shaw B. and Post F., 1993, “A Moral Basis for Corporate Philanthropy”, Journal of Business Ethics, 12(10), pg 745-751

• Siefurt B., Morris S. and Bartkus B., 2003, “Comparing Big Givers and Small Givers: Financial Correlates of Corporate Philanthropy”, Journal of Business Ethics, 45(3), pg 195-211

• Vogel D., Summer 2005, “Is There a Market for Virtue? The Business Case for Corporate Social Responsibility”, California Management Review, 47(4), pg 19-45

CP MatrixOrganisation Date Giving's ($) Actual activities Line of business Why give?

Wal-Mart 2006 270 million Cash to local communities

Retail ?

B.A.T 2006 50 million 144 youth smoking prevention programmes and 628 million trees planted

Tobacco ?

British Airways 2007 6.3 million pounds Education centre’s in Malawi

Air travel ?

One Water Foundation

2008 Donates all profit to fund charity activities

Providing water for South African Communities

Bottled water industry

?

BP 2006 106.7 million Humanitarian aid Oil and Gas ?

Exxon Mobil 2006 138.6 million Extensive Oil and Gas ?

Exxon Mobil's giving's

http://www.exxonmobil.com/Corporate/community_contributions_report.aspx