Welcome to class of Corporate Philanthropy in Emerging Markets Dr. Satyendra Singh University of...

Welcome to class of

Corporate Philanthropyin Emerging Markets

Dr. Satyendra SinghUniversity of Winnipeg

Canadawww.uwinnipeg.ca/~ssingh5

Corporate Social Responsibilities:in Developing Countries/Emerging Markets

Level of Philanthropy

• Philanthropy– Do good by giving…

• Individual philanthropy– Need to save (EM), lack of trust, unstable government

• Corporate philanthropy– …with the aim to develop

• Business opportunities, Public relations, Employee morale, Brand image, Cause-related marketing campaign

• Strategic philanthropy– …with the aim to combine social and economic benefits

to develop distinct competitiveness

Philanthropy: the Context• Philanthropy is in decline• Difficult to justify charitable (social) expenditure in

terms of bottom-line (economic) benefits• Corporate philanthropy is unnecessary

– No-win situation– Trade-off between the goals– Let employees donate themselves tax rebate– Individual donor or corporate same benefit

• We need strategic philanthropy– Win-win situation– Context-focus giving Where to focus; how to contribute

Top 5 Issues for Which Businesses Give

Types of Corporate Philanthropy

External vs. Internal

Use own productsToo littleNot significant

Grant25% cash75% R&DConsultancy

Unrelated↑ PR, ↑ demandLacks credibility

Worst of allConfusedBoard member wants itEg., Sponsor an event

Strategic Philanthropy: Social and Economic

The Logic of Giving

Without Giving

$30m Profit

-$9m 30% tax

$21m Net

With Giving

$30m Profit

-$2m Gave

$28m Profit After Giving

$5.6m (20% tax, ie ↓ tax bracket)

$22.4m Net

Even after giving $2m, firm saved 1.4m extra ↑ dividends, EPS

Where to Focus

• Where social and economic benefitsnot in conflict• Contribute to society

– E.g. trained educated and healthy labour, natural resources to produce high quality goods and services, preserving environment, waste management, pollution reduction, boosting social and economic conditions in EM

• While being different and ↑ business performance– E.g. Computer company trains students, population– Travel companies train restaurants, hotel, booking– Tour operator sponsors a heritage site, and thus has

preferential access to the site for its tourists

How to Contribute to Value Creation…

How to Contribute to Value Creation

• Selecting the best grantees– Urgent/overlooked problems, school dropout rates– Use the grantee’s performance to measure our performance

• Signalling other funders– Train other funders, offer matching grants…

• Improving the performance of grant recipients– Capital provider to engaged partner, learn from each other, ↑

effectiveness of organisations as well

• Advancing knowledge– Set a new research agenda for public or govt policies– New wheat, rice variety, GMO

The Chocolate company