- 1. The state of corporate philanthropy:A McKinsey Global Survey
Jean-Franois MartinCorporate philanthropy can help companies meet
consumers rising expectations of businesss role in society,say
respondents to a McKinsey global survey.However, only about a fifth
of all respondents say that philanthropic programs at their
companies are meetingsocial goals and stakeholder expectations.At
these companies, philanthropy programs are more likely to address
social and political issues relevant to thebusiness, to be
collaborative, and to meet any business goals companies have for
them.Another small group of respondents say they intend their
philanthropic programs to go beyond enhancingcompany reputation by
addressing concrete business goals, such as learning about
potential new markets.
2. 2The state of corporate philanthropy: A McKinsey Global
SurveyConsumers growing expectations of companies make corporate
philanthropy moreimportant than ever. But many respondents to this
survey say their companiesarent meeting social goals or stakeholder
expectations very effectively. Companiesthat are doing well are
taking a more strategic approach.Corporate philanthropy can be
analready more likely to involve collaborationeffective tool for
companies that are tryingwith other companies. Finally, these
companiesto meet consumers rising expectations of are much likelier
than others to say they arethe role businesses should play in
society, say achieving any business goals they have set
forrespondents to a McKinsey global survey.1 their philanthropy
programs in addition toThe survey also suggests, however, that
social goals.companies arent using that tool as well as theycould.
Executives doubt that their philan-A small group of respondents say
their com-thropy programs fully meet their social goals panies are
reaching beyond traditional corporateor stakeholders expectations
for them. goals for philanthropy programssuch asenhancing the
companys reputation or brandAbout a fifth of the respondents say
theirto pursue more concrete business goals, suchcorporate
philanthropy programs are very or as gaining information on
potential markets.extremely effective at meeting social goals Their
approach to focusing the programs alsoand stakeholder expectations.
Their companies differs from the approach at other companies.take a
somewhat different approach thanothers do: their programs are more
likely toaddress social and political trends relevantto the
business and to be influenced bycommunity and business needs.
Executivesat these companies expect their programsto become more
global and say that efforts are1The McKinsey Quarterly conducted
the survey in January 2007 and received responses from 721
executives around the world74 percent of them CEO s or other
C-level executives. The data are weighted to reflect the
proportional representation of segments in the total population.Jan
2007 McKinsey Quarterly survey on corporate philanthropy 3. 3 Why
give?Companies and consumers have long seen offshoring, obesity,
excessive consumer debt,corporate philanthropy as a way for
companiesenvironmental sustainability, and the governanceto benefit
the communities where they areof resource-rich, low-income nations.
Althoughlocateddonating funds to local schools, hos-todays
expectations are wide-ranging, three-pitals, and orchestras, for
example. In recent quarters of the executives who responded to
thisyears, however, as societys expectationssurvey say corporate
philanthropy is at leastof companies have risen2 and as many
somewhat effective in meeting the expectations.companies have begun
operating in more far-flung locations, they are expected to address
In addition to social goals, the vast majoritya growing list of
needs. Companies that of companiesnearly 90 percentnow seek20 years
ago were held accountable only for business benefits from their
philanthropydirect, contractually specified, or regulated programs
as well. When respondents were askedconsequences of their actions
today findwhat business goals they try to reach throughthemselves
held accountable for the consequencesphilanthropy, they most often
say their goalsof their actions in areas as disparate as include
enhancing the corporate reputation2See Assessing the impact of
societal issues: A McKinsey Global Survey, November 2007; and CEO s
as public leaders: A McKinsey Survey, January 2007, both available
on mckinseyquarterly.com. Jan 2007 McKinsey Quarterly survey on
corporate philanthropy 4. 4or brand (Exhibit 1). And some 80
percent goals, such as building knowledge aboutof respondents say
finding new business potential new markets and informing
areasopportunities should have at least some role in of innovation.
Respondents from com-determining which philanthropic programspanies
with these goals are likelier than othersto fund, compared with
only 14 percent whoto say business concerns should play a rolesay
finding new business opportunities should in determining funding
for philanthropic pro-have no weight. grams. Also, their
philanthropic programsare much more likely to address at least
someIt is notable, however, that some 30 percentof the social and
political issues relevantof the responses to the question asking to
their businesses; nearly two-thirds say theyabout business goals
indicate that some com-currently do, compared with just under
halfpanies are trying to reach very concreteof all respondents.
Survey 2008 Corporate philanthropy Exhibit 1 of 8 Glance: Exhibit
title: Business goalsExhibit 1Business goals In addition to the
social benefits of your companys corporate philanthropy programs,
which, if any, of the following business goals does your company
try to reach with How successful have you been at those programs?
achieving these goals? % of respondents,1 n = 721% of respondents,
n = 638 Enhance corporate reputation 70 and/or corporate brand
Extremely, very Build employee and/or leadershipsuccessful44
capabilities and skills 14 Improve employee recruitment42 and/or
retentionA little, not at 29 57 Differentiate itself from all
successful Somewhat38successful competitors Manage current or
future risk 19 Build knowledge about potential 16 new markets or
products Inform areas of innovation for 15 existing products,
services Meet industry norms12 We do not try to reach any business
goals with our corporate12 philanthropy programs1Respondents could
select more than 1 answer; those who answered other are not
shown.Jan 2007 McKinsey Quarterly survey on corporate philanthropy
5. 5What matters, who matters, and where companies are giving
insteadExecutives overall say their companies are muchSurvey
2008they expect will affect shareholder value thelikelier to
address a broad mix ofphilanthropyCorporate local issues most
(Exhibit 2). The mix of issues addressedwith their corporate
philanthropy 8, part 1Exhibit 2 of programs than varies across
industries and regions, but theto address the social and Glance:
political issues that overall difference remains.Exhibit title: Top
issuesExhibit 2, part 1Top issues% of respondents,1 n = 721 Of the
following social and political issues, which are likely to have the
most impact, positive or negative, on shareholder value for
companies in your industry over the next 5 years? DevelopingTop 3
issues Total Asia-PacicEurope marketsNorth America Environmental
issues, including4659 534736 climate change Health care, other
benets 279 1517 48 for employees Privacy, data security2421 22 1531
Political inuence and/or political 1918 182218 involvement of
companies Demand for healthier or17 21 142218 safer products
Workplace conditions, safety 172420229 Job losses from offshoring
1414 161015 Affordable cost of products for14 22 11 1914 poor
consumers Demand for more ethically14 181518 10 produced products
Pension, retirement benets135 18 713 Ethical standards for1316 1511
10 advertising, marketing Demand for more investment 11 1610 18 8
in developing countries Opposition to foreign 1010 910 10Survey
2008 freer trade investment and High level of
senior-executiveCorporate philanthropy 10 6 10 10 10 pay, other
compensationExhibit 2 ofstandards 2 Human-rights8, part 87 7
146Glance:Exhibit title: Top issues 1Respondents could select more
than 1 answer; those who answered other or dont know are not
shown.Exhibit 2, part 2Top issues% of respondents,1 n = 721 Which,
if any, of the following issues are you currently addressing with
your corporate philanthropy programs? Top 3 issues Education75 75
66 75 83 Community 58 61 53 56 63 Economic development524948 61 54
Environment 52 59556641 Civic, public affairs 51 52 47 5952 Health,
social services48 4247 5249 Culture, arts47 4246 5446
1Respondentscould select more than 1 answer; those who answered
other or dont know are not shown.Jan 2007 McKinsey Quarterly survey
on corporate philanthropy 6. 6 One explanation may involve the
interests ofimproving employee recruitment and retention employees.
Respondents most often cite this are the ones most related to
employees and stakeholder group as important in the way their to
local communities (ranked second among companies think about their
roles in societythe stakeholder groups addressed most often). and
as the group companies most often address In addition, interviews
conducted as part with corporate philanthropy programsof our
research into philanthropy3 suggest that (Exhibit 3). Further,
companies may be meetingcompanies see addressing local community
other business needs with the programsneeds as an indirect way to
highlight a com- they fund. The business goals most often cited
panys good intentions to groups such as board enhancing the
companys reputation or members, shareholders, and regulators.
brand, building employee capabilities, andSurvey 2008Corporate
philanthropyExhibit 3 of 8Glance:Exhibit title: Employee-driven
philanthropy Exhibit 3 Employee-driven % of respondents who
selected stakeholder for given category,1 n = 721 philanthropy
50Employees45 Local communities4035 Stakeholders addressed
30Organized labor by companys corporate25 Nongovernmental
philanthropy programsConsumers Shareholders/investors organizations
(NGOs)20Media and opinion leaders15Governments/regulators Board
members/ board of10 directors No particular stakeholder5
Suppliers005101520 2530354045 50 Stakeholders with greatest impact
on way company thinks about its role in society 1Respondents could
select more than 1 answer; those who answered other or dont know
are not shown.3Interviews were conducted with 21 CEO s from around
the world between December 2007 and February 2008. The interviews
and this survey are both parts of a research collaboration between
McKinsey and the Committee Encouraging Corporate Philanthropy. Jan
2007 McKinsey Quarterly survey on corporate philanthropy 7.
7Similarly, addressing social and political the importance of
branding as a business goal,trends and other business needs is not
notably that only 22 percent of respondents say thatimportant when
companies consider whichvisibility leading to brand strength plays
a roleprograms to fund. Respondents are far less in determining the
focus of their programs.likely to cite factors such as alignment
withRespondents at companies whose philanthropybusiness needs,
stakeholder interests, and evenprograms include concrete business
goals,the ability to leverage the companies exist-in contrast, are
nearly twice as likely as the fulling capabilities or assets than
they are to saygroup of respondents to say they considerthey base
choices on employee interests and thealignment with business needs
when focusingpersonal interests of CEOs and board mem-their
programs.bers (Exhibit 4). It is particularly notable, given Survey
2008 Corporate philanthropy Exhibit 4 of 8 Glance: Exhibit title:
Dening factorsExhibit 4Defining factors % of respondents,1 n = 721
Which 3 of the following considerations, if any, have the most
weight in determining the focus of In what areas of corporate
philanthropy is your corporate philanthropy programs?the CEO
involved? Personal interests of CEO/ Setting overall direction5845
board members Employee interest 37 Making specic funding
decisions49Serving as public face; engaging Local community needs
3747in external communications Alignment with business needs 23
Communicating internally 41 High visibility contributing toActing
as role model3822 brand strengthFacilitating and making sure
Stakeholder interest 2037resources are in place Highest potential
for social impact19Executing individual programs17CEO is not
involved in Corporate tradition19 6corporate philanthropy Option to
leverage existing 11 corporate capabilities or assets
Natural-disaster response 10 Global giving trends4 Shareholder
pressure4 Competitors giving 21Respondentscould select more than 1
answer; those who answered other or dont know are not shown.Jan
2007 McKinsey Quarterly survey on corporate philanthropy 8. 8What
effective companies do differentlyWhatever the business goals of
their philan- Still, roughly one-fifth of respondents say
theirthropy programs, more than 80 percentcompanies are very or
extremely effectiveof respondents say they are at best only some-
at meeting social goals, addressing stakeholderwhat successful at
meeting them. Respon- interests, or both. These executives are
alsodents are slightly more positive about how wellmuch likelier to
say stakeholders are giving theirtheir philanthropy efforts meet
social goals companies the credit they deserve (some three-or
stakeholder expectations (Exhibit 5). Further,quarters say so). Yet
these companies arentwhile just over half of the respondents
sayaddressing a different mix of issues than others,their
stakeholders give their companies the credit and they, too, are
more likely to addressthey deserve for their philanthropic pro-the
local community with their philanthropicgrams, one out of four dont
know the answer efforts than the communitys importance asto that
question.a stakeholder would seem to warrant. Survey 2008 Corporate
philanthropy Exhibit 5 of 8 Glance: Exhibit title: Dubious about
effectivenessExhibit 5Dubious about% of respondents, n = 721
Slightly,effectivenessTo what extent . . .Extremely, very
Somewhatnot at all Dont effective effective effectiveknow . . . are
your corporate philanthropy programs effective overall in
meeting204723 10 their social goals? . . . are your corporate
philanthropy programs effective overall at 48 1925 8 addressing the
concerns of your preferred stakeholders?Jan 2007 McKinsey Quarterly
survey on corporate philanthropy 9. 9Where these companies differ
is in how much community needs (47 percent compared withmore they
align their philanthropic programs38 percent) and alignment with
businesswith the social and political trends that are objectives
(31 percent compared with 23 per-most relevant to their businesses:
71 percent cent) when they decide how to focus theirsay their
companies are addressing some corporate philanthropy programs. And
theyor all of the relevant trends, compared withare much more
likely to collaborate with53 percent of respondents who rate
theirother companies on philanthropic programsprograms as less
effective. These effective com-and to believe that their programs
will becomepanies are also likelier to consider localincreasingly
global (Exhibit 6).Survey 2008Corporate philanthropyExhibit 6 of 8,
part 1Glance:Exhibit title: Somewhat relevantExhibit 6, part
1Somewhat relevant % of respondents1 Overall, n = 721 Respondents
who consider their corporate philanthropy programs very/extremely
effective at addressing stakeholder concerns, meetingDo your
companys corporate philanthropy programs social goals, n =
100address the global social and political issues that are
mostrelevant to the companys business? Programs address some or all
of most54 relevant social, political issues71 Programs address some
social, political21 issues, but not most relevant ones12 Programs
do not address most relevant 13 social, political issues8
1Respondentswho answered dont know are not shown.Jan 2007 McKinsey
Quarterly survey on corporate philanthropy 10. 10 Survey 2008
Corporate philanthropy Exhibit 6 of 8, part 2 Glance: Exhibit
title: Somewhat relevantExhibit 6, part 2Somewhat relevant% of
respondents Do you expect your companys corporate philanthropy
programs to become increasingly global, either by trying to affect
global issues or by operating in a larger number of countries, over
the next 5 years?Respondents who consider their companys
philanthropyprograms very/extremely effective at addressing
stakeholder Overall, n = 721 concerns, meeting social goals, n =
100 Dont know1 Dont know 9 No3451 No 40 65 Yes
YesOverallRespondents who consider their corporate
philanthropyprograms very/extremely effective at
addressingstakeholder concerns, meeting social goals If no, why?1
If yes, why? Our corporate philanthropy programsOur corporate
philanthropy programs 54 77 do not need to operate globallywill try
to affect more global issues52 Our corporate philanthropy
programsCompany expects to have business already operate globally
or in as many9operations in more countries;54philanthropy programs
will follow70 geographies as we want them to
Other12Other9161Respondentswho consider their companys corporate
philanthropy programs very/extremely effective at addressing
stakeholder concerns, meeting social goals are not shown, because
base is too small to be statistically significant. Q Contributors
to the development and analysis of this survey include Sheila
Bonini, a consultant in McKinseys Silicon Valley office; and
Stphanie Chnevert, a consultant in the Seattle office. Copyright
2008 McKinsey & Company. All rights reserved.Jan 2007 McKinsey
Quarterly survey on corporate philanthropy
