Research on Corporate Philanthropy: A Review and Assessment

Arthur Gautier • Anne-Claire Pache

Received: 6 June 2013 / Accepted: 5 November 2013

� Springer Science+Business Media Dordrecht 2013

Abstract We review some 30 years of academic research

on corporate philanthropy, taking stock of the current state

of research about this rising practice and identifying gaps

and puzzles that deserve further investigation. To do so, we

examine a total of 162 academic papers in the fields of

management, economics, sociology, and public policy, and

analyze their content in a systematic fashion. We distin-

guish four main lines of inquiry within the literature: the

essence of corporate philanthropy, its different drivers, the

way it is organized, and its likely outcomes. After

reviewing the main findings of the literature, we build on

several research gaps to highlight directions for future

research on corporate philanthropy with an interest in

strengthening our understanding of this fascinating phe-

nomenon at the crossroads of business and society.

Keywords Corporate philanthropy � Corporate

social responsibility � Corporate giving � Corporate

contributions � Literature review � Meta-analysis

Abbreviations

CEO Chief Executive Officer

CSR Corporate Social Responsibility

NGO Non-Governmental Organization

SME Small and Medium-sized Enterprise

UK United Kingdom

US United States

Despite the global financial crisis, corporate philanthropy

has remarkably kept its momentum as a growing phe-

nomenon of global importance. Recent surveys conducted

by various professional organizations in the United States

and Europe (ADMICAL 2012; CECP 2012; Chronicle of

Philanthropy 2012) indicate an increase in the total amount

of gifts made by corporations both in 2010 and 2011, after

a sharp decrease in 2009. Widely held as an illegitimate

practice a few decades ago (Davis 1973; Friedman 1970),

corporate philanthropy is now widespread in large multi-

nationals as well as in small- and medium-sized enterprises

across the globe. Corporations make gifts to charitable

organizations or set up their own foundations, as they

struggle for new ways of gaining a competitive advantage

(Porter and Kramer 2002) and are expected to do so by

their various stakeholders (Logsdon et al. 1990; Wang and

Qian 2011). Today, what is considered illegitimate is for

corporations not to engage in philanthropic activities (Se-

ghers 2007).

Despite this striking diffusion, corporate philanthropy,

defined as voluntary and unconditional transfers of cash or

other assets by private firms for public purposes (FASB

1993), remains an intriguing phenomenon which is yet to

be properly understood. The field is rife with conceptual

and empirical debates, reflecting the complexity of the

practice and the difficulties for both practitioners and

observers to get a solid grasp of it. Is corporate philan-

thropy a charitable or a self-interested gesture? Is it a

source of costs or profits for the company? Should it be

aligned with or set apart from the core business? How does

it differ from corporate social responsibility and other

adjacent concepts?

A few exceptions aside (Baumol 1970; Johnson 1966), it

is not until the 1980s that academics have started to pay

attention to corporate philanthropy. Initially produced in

A. Gautier (&) � A.-C. Pache

ESSEC Business School, Avenue Bernard Hirsch,

95021 Cergy-Pontoise, France

e-mail: gautierart@essec.edu

A.-C. Pache

e-mail: pache@essec.edu

123

J Bus Ethics

DOI 10.1007/s10551-013-1969-7

the United States—where philanthropy is a building block

of the American civilization (Zunz 2011), this literature has

since developed in other contexts and started to generate a

rich body of knowledge about the motives, the practice and

the outcomes of corporate philanthropy. However, this

literature remains deeply scattered between different aca-

demic disciplines: management, economics, sociology, and

public policy scholars have all conducted interesting

research on a broad range of aspects, but the big picture of

what we know about corporate philanthropy and what we

do not know is still missing.

The purpose of this paper is to review the existing

academic literature on corporate philanthropy, to synthe-

size and assess its main findings, and to identify gaps that

could lead scholars of various backgrounds to new and

exciting research avenues. We therefore conduct what is, to

our knowledge, the first comprehensive and broad-ranging

review on corporate philanthropy. While there are thorough

literature reviews dealing with individual giving (Andreoni

2001; Bekkers and Wiepking 2011; Woodliffe and Sar-

geant 2007), no comparable work exists for corporate

giving. We only found working papers (Buchholtz and

Brown 2012; Vaidyanathan 2008), articles with a narrow

focus on a specific aspect of the phenomenon, like pro-

social behavior of managers (Valor 2006), and reviews

with a wider focus on CSR literature (Orlitzky et al. 2003;

Peloza and Shang 2011).

To do so, we examine a total of 162 academic papers in

the fields of management, economics, sociology, and

public policy, and analyze their content in a systematic

fashion. We distinguish four main lines of inquiry within

the literature: the essence corporate philanthropy, its dif-

ferent drivers, the way it is organized, and its likely out-

comes. Building upon the gaps identified, we then highlight

directions for future research and conclude with a discus-

sion on the role of corporate philanthropy in strengthening

our understanding of the relations between business and

society.

Methods

The first important methodological step of our inquiry was

to delineate its scope in order to reduce the ambiguities

often associated with the study of philanthropy (Sulek

2010). There are indeed many ways to define philanthropy,

which to this day remains a contested concept (Daly 2011).

For the sake of clarity, we define corporate philanthropy as

voluntary donations of corporate resources to charitable

causes. More precisely, we limit our definition to financial

contributions, either in the form of direct grants or through

vehicles like corporate foundations. While in-kind dona-

tions and volunteering are often included in definitions of

corporate philanthropy, these practices markedly differ in

nature from financial gifts. Besides, they have received

scant academic attention so far, despite burgeoning interest

for corporate volunteers (Gilder et al. 2005; Muthuri et al.

2009; Rodell 2013).

Data Collection

A second important methodological step was to delineate

the boundaries of our literature review. For the sake of

rigor and coherence, we decided to limit our research to the

fields of management (including marketing), economics,

sociology, and public policy. With rare exceptions, we left

out philosophy, history, and other academic disciplines

beyond our competencies. We also decided to review

academic publications only, leaving out practitioner-ori-

ented or general publications, however informative. Our

inquiry was thus limited to articles in peer-reviewed jour-

nals, academic books, and book chapters. Other items such

as book reviews, conference proceedings, or working

papers were not included.

We searched major scholarly databases (EBSCO Host,

JSTOR, SpringerLink, Emerald, ScienceDirect, Wiley,

SAGE Publications, and Google Scholar) for entries con-

taining the following keywords in the title, abstract, and

author-supplied keywords fields: philanthropy, philan-

thropic, philanthropist, giving. We also used Google Books

when appropriate. Unsurprisingly, as these databases are

owned and managed by North American and Western

European academic publishers, and as we used English

language only, there is an important selection bias. Yet

they publish the most read and respected academic outlets

worldwide, so we inevitably had to do with this bias.

Overall, about 250 items were found.

We then proceeded to read the abstracts of all items in

order to eliminate off-topic entries, either dealing with

individual philanthropy or not fitting our abovementioned

definition of corporate philanthropy. Only 80 out of 250

items remained. A thorough review of the reference lists of

all 80 items subsequently led us to discover new articles—

featuring alternative keywords like contributions and

donations—and to add them to our selection. These new

entries were in turn processed through the same steps,

which means a third wave of entries was identified and

added, and so on, until we reached data saturation, all

relevant items referenced being already in our selection.

This iterative process yielded 82 additional articles, books,

and chapters. In total, 162 items were identified.

Data Analysis

The next step involved a rigorous analysis of all 162 items.

To do so, we developed an ad hoc coding scheme and

A. Gautier, A.-C. Pache

123

proceeded to code all articles, books, or chapters for the

following information: author(s) name(s), year of publi-

cation, publication name, author(s) country of affiliation,

academic discipline, research method(s), empirical setting

(if applicable), research question, broad research theme,

and main findings. At an early stage of the coding process,

we found recurrences in the last two categories. In other

words, we began to view the literature as an orderly set of

answers to a limited number of basic questions. The ‘‘broad

research theme’’ category was subsequently broken down

in four sub-categories: essence, drivers, organization, and

outcomes. Main findings were then spread over in each of

these sub-categories. In the end, we had a good overview of

the academic literature on corporate philanthropy.

Data Characteristics

Before presenting our findings, it is noteworthy to offer a

brief presentation of the collected data. First, put aside a

few isolated contributions, it is not until the 1980s that

corporate philanthropy emerged as a specific research topic

for management and social sciences scholars. The ‘10-

entries-a-year’ mark was first reached in 2008. In between,

there is uneven but observable growth in the number of

publications (Fig. 1).

Second, most peer-reviewed articles were published in

business ethics journals, with 20 % of all items found in the

Journal of Business Ethics, followed by Business & Soci-

ety (6 %), and Business ethics: a European review (4 %).

Very few articles were published in journals affiliated with

a single academic discipline, which seems to indicate that

philanthropy is either a complex phenomenon best under-

stood with multiple theoretical lenses, or a fringe subject in

more mainstream academic outlets (Fig. 2).

Third, American studies are predictably and by far the

largest geographical group, with 120 entries from authors

affiliated in the US (74 % of total). The second largest

0123456789

10

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Fig. 1 Number of entries

published on corporate

philanthropy per year since

1960

20%

6%

4%

3%

3%

3%

2%

2%

2%

2%

Journal of Business Ethics

Business & Society

Business ethics: a European review

Nonprofit and Voluntary Sector Quarterly

Harvard Business Review

California Management Review

Business Horizons

Administrative Science Quarterly

Academy of Management Journal

Academy of Management Review

Fig. 2 Journals with most entries on corporate philanthropy

74%

13%

3%

2%

2%

1%

1%

1%

USA

UK

Canada

Hong Kong

Netherlands

Switzerland

Spain

Australia

Fig. 3 Country of affiliation of authors

33%

49%

9%

Theory

Quantitative

Qualitative

Fig. 4 Proportion of entries classified by research method

Research on Corporate Philanthropy

123

contingent comes from the United Kingdom (UK) (13 % of

total). Only five other countries are represented by at least

two entries (Fig. 3).

Fourth, about 50 % of the literature reviewed use

quantitative methods, whereas only 9 % feature qualitative

methods. A third of all items can be labeled ‘‘theoretical

papers’’, without any empirical inquiry (Fig. 4).

Going back and forth between the literature and the

coding scheme, we identified the main findings of each

entry and regrouped them to form broader categories.

Ultimately, four wide-ranging research questions emerged

as common denominators of the literature surveyed: What

is the essence of corporate philanthropy (17 % of total

entries)? What are its main drivers (44 %)? How is it

organized (33 %)? And what are its outcomes (31 %)?

(Fig. 5)

The following four sections propose an analysis along

these lines and offer an extensive review of the academic

literature on corporate philanthropy.

The Essence of Corporate Philanthropy

What is corporate philanthropy? This first broad question

was addressed in only 17 % of surveyed articles. While the

very notion of philanthropy is complex and ought to be

clearly defined, the literature is rarely expressive. When the

term is not left undefined, authors employ brief and tech-

nical descriptions, such as the one offered by the Financial

Accounting Standards Board which defines corporate phi-

lanthropy as ‘‘an unconditional transfer of cash or other

assets to an entity or a settlement or cancellation of its

liabilities in a voluntary nonreciprocal transfer by another

entity acting other than as an owner’’ (FASB 1993, p. 6).

Only half a dozen articles of all 162 offer definitions of

corporate giving (Table 1).

This lack of explicit efforts to define it reveals disquiet

toward the notion of corporate philanthropy. At first sight,

it seems to be an oxymoron because giving money away

contradicts the commercial, profit-making purpose of a

company. A person can be altruistic and give, but corpo-

rations are not expected to behave like generous people

(Manne 1973). This enigma permeates most early works

and still causes discussions in more recent studies: is cor-

porate philanthropy altruistic or for-profit (Fry et al. 1982)?

While very few papers offer clear-cut answers, the litera-

ture features different rationales that revolve around this

question. Altruistic and for-profit represent two ends of a

continuum along which it is possible to sort different

variations of corporate philanthropy.

In the reviewed articles, we identified three rationales

that can be placed on this continuum, from most altruistic

to most profit-oriented. First, we review papers analyzing

17 %

44%

33%

31%

What is corporate philanthropy?

What are the drivers of corporate philanthropy?

How is corporate philanthropy organized?

What are the outcomes of corporatephilanthropy?

Fig. 5 Proportion of entries classified by broad research question

Table 1 Definitions of corporate philanthropy found in the literature

Reference Term defined Definition

Johnson

(1966)

Corporate

contributions

The dollar value of donations

deducted in corporate income tax

return (489)

Schwartz

(1968)

Corporate

philanthropy

A one way flow of resources from a

donor to a donee, a flow

voluntarily generated by the

donor though based upon no

expectation that a return flow, or

economic quid pro quo, will

reward the act (480)

Fry et al.

(1982)

Corporate

philanthropy

A transfer, of a charitable nature, of

corporate resources to recipients

at below market prices (95)

Mescon and

Tilson

(1987)

Corporate

contributions

The oldest form of corporate social

behavior (49)

Stroup and

Neubert

(1987)

Philanthropy Voluntary reductions in corporate

income, […] competing for

dividends (22)

Carroll

(1991)

Philanthropy Those corporate actions that are in

response to society’s expectation

that businesses be good corporate

citizens. This includes actively

engaging in acts or programs to

promote human welfare or

goodwill. […] philanthropy is

highly desired and prized but

actually less important than the

other three categories of social

responsibility (42)

Godfrey

(2005)

(Corporate)

philanthropy

An unconditional transfer of cash or

other assets to an entity or a

settlement or cancellation of its

liabilities in a voluntary

nonreciprocal transfer by another

entity acting other than as an

owner’ (Financial Accounting

Standards Board [FASB] 1993,

p. 2) (778)

A discretionary manifestation of

CSR that differs in kind (not

merely in degree) from the

obligatory conformance with

economic, legal, or moral/ethical

dimensions of CSR (778)

A. Gautier, A.-C. Pache

123

corporate philanthropy as a voluntary expression of the

firm’s commitment to the common good. Second, we

examine those papers which regard it as a long-term,

community-oriented investment through which firms ensure

their competitiveness while fostering their business envi-

ronment. Third, we review articles with a marketing

approach to corporate philanthropy, where giving is used as

a commercial tool. This typology is echoed by the US-

based Committee Encouraging Corporate Philanthropy

which identifies three forms of corporate philanthropy:

charitable, community investment, and commercial (CECP

2012).

Corporate Philanthropy as Commitment

to the Common Good

Giving and volunteering puzzle economists because such

individual behaviors do not seem to fit basic assumptions

regarding rational, narrowly self-interested homo econom-

icus (Becker 1976; Rose-Ackerman 1996). Notable efforts

have been made to integrate altruistic behaviors such as

philanthropy to economic theory (Andreoni 1990, 2001;

Fontaine 2007; Kolm et al. 2006), while sociologists have

analyzed altruism as a part of human nature (Piliavin and

Charng 1990) and giving as a pillar of both primitive and

modern societies (Godbout 2007; Mauss 2007).

These insights about individual philanthropy do not

apply as such to corporate philanthropy, not only since

corporations are organizations and not human beings, but

also because their primary goal is to sell goods and services

in order to generate profits which can be appropriated by

shareholders. However, some scholars recognize that there

are at least some elements of selflessness in corporate

philanthropy. First, philanthropic firms do not expect a

direct return for their gifts, which distinguishes philan-

thropy from sponsorship. In fact, as one scholars puts it,

‘‘the non-reciprocity condition [is] the acid test of philan-

thropic activity’’ (Godfrey 2005, p. 778). Second, as will be

shown later, the hypothetical pay-off for giving firms is

both uncertain and very difficult to quantify (Stendardi

1992), and many firms do not evaluate the impact of their

gifts (Maas and Liket 2011). Third, corporate philanthropy

usually is an expression of the firm’s responsibility toward

a wide array of stakeholders (Freeman 1984), beyond

consumers and shareholders. As such, corporate philan-

thropy is viewed as an expression of a firm’s care for the

society that surrounds it.

Following Carroll’s (1979) influential propositions,

corporate philanthropy is generally understood as the most

discretionary type of corporate responsibilities. Carroll

proposes a four-part conceptualization that he refers to as

‘‘the pyramid of corporate social responsibility’’. The

economic responsibility (i.e., being profitable) is the most

fundamental for a corporation on which the other dimen-

sions rest. Then come legal requirements (i.e., obeying the

law), ethical requirements (i.e., doing what is right), with

philanthropy as the purely voluntary element (Carroll

1991). Simply put, there is a sense of social expectation

that businesses practice philanthropy, but not in an ethical

or moral sense: it is not considered wrong if they do not.

Corporate philanthropy goes ‘‘beyond the call of duty’’

(Collins 1993) of economic, legal, and ethical obligations.

It is the ‘‘icing on the cake’’ (Carroll 1991).

The link between corporate philanthropy and CSR is not

always as clear as Carroll suggested. American business

history studies suggest that the former is the latter’s pre-

cursor, and has not always been a legitimate, let alone a

legal practice (Peloza and Shang 2011; Sharfman 1994). As

the oldest form of social responsibility (Mescon and Tilson

1987), corporate giving was for long considered as ‘‘vol-

untary reductions in corporate income’’ (Stroup and Neu-

bert 1987, p. 22), competing with profitable returns to

shareholders.

Corporate Philanthropy as Community Investment

There is a broad consensus in the literature that corporate

philanthropy serves the company’s interests, albeit indi-

rectly. Broadly speaking, the idea of enlightened self-

interest recognizes that corporations may well have a short-

term interest in favoring profit-making activities over

contributions, but in the long run, they would ultimately

benefit from their philanthropic efforts (Baumol 1970;

Davis 1973; Galaskiewicz 1985a).

How is it so? By serving critical needs of the community

it is part of, a firm ultimately benefits in the form of social

cohesion, safety, an educated workforce and functioning

infrastructure. Under these conditions, businesses can

flourish together with their communities. Put differently,

‘‘a better society produces a better environment for busi-

ness’’ (Davis 1973, p. 313), and the quality of business

environment is key to a corporation’s competitive advan-

tage (Porter and Kramer 2002). Besides, not taking such

expectations into account could undermine the general trust

society grants to corporations to operate rather freely

(Stroup and Neubert 1987). Even famous detractor of CSR,

Nobel-prize winner economist Milton Friedman (1970),

acknowledges that ‘‘it may well be in the long-run interest

of a corporation that is a major employer in a small com-

munity to devote resources to providing amenities to that

community or to improving its government.’’

A key feature of this stream of research is to compare

corporate philanthropy to an investment instead of a simple

gift or a mandatory cost (Stroup and Neubert 1987). Con-

trary to the literature on individual philanthropy, where

altruism is a prevalent concept, most scholars agree that

Research on Corporate Philanthropy

123

corporations expect returns on their good deeds, and

rightfully so (Shaw and Post 1993; Stendardi 1992). The

returns emphasized are not financial but intangible like

reputation, prestige, or employee pride. The investment

metaphor also signals that companies are faced with

increased pressure to plan and rationalize their philan-

thropy. In a context of global competition and high public

scrutiny, firms tend to be more demanding and serious with

their gifts, applying sound business principles to their

philanthropic endeavors (Mullen 1997; Smith 1994).

Corporate Philanthropy as Marketing

In the past decades, a marketing-oriented philanthropy has

surfaced both in practice and in theory (Collins 1993).

From a theoretical perspective, it all started when the

concept of societal marketing emerged in the 1970s to

suggest corporations ought to serve not only consumers but

also society’s well-being as a whole (Kotler 1972).

Scholars have since discovered that corporate philanthropy

could be framed as a marketing activity by itself, and

offered as a product to firm constituents (Murray and

Montanari 1986). As part of a wisely-conceived marketing

plan, with solid research on the moral expectations of

target publics, philanthropic contributions have the poten-

tial to create goodwill and to improve the company’s

image. This idea sharply contrasts with traditional

approaches to giving, where donations stayed ‘‘under the

corporate bushel basket’’ (Mescon and Tilson 1987, p. 59):

firms are now more eager to communicate and to seek

public support for their gifts.

In particular, a practice has garnered remarkable atten-

tion from corporations and business scholars alike: cause-

related marketing. Coined in 1983 by the American

Express Company for an operation aimed at renovating the

Statue of Liberty, the expression designates a marketing

program which links fundraising for a charitable cause to

the purchase of the firm’s products or services. The funds

are usually raised as a small percentage of each business

transaction (Varadarajan and Menon 1988). It is thus not a

‘gift’ insofar the amount of money transferred to the cause

is not donated by the firm, but ‘‘directly tied to consumers’

purchase behavior’’ (Burlingame 2001). Whether or not it

is considered as a sponsorship activity (Polonsky and

Speed 2001) or ‘‘the new face of corporate philanthropy’’

(Caesar 1986), cause-related marketing has become a full

part of the marketing mix of both public and privately held

businesses (File and Prince 1998; Simon 1995).

As a consequence of this marketing orientation, the

danger of backfire has increased: though they seek to

publicize their gifts, corporations walk a tightrope between

obscurity and public rejection. Too much bragging yields

accusations of commercialism or hypocrisy (La Cour and

Kromann 2011; Spence and Thomson 2009). The public is

even more suspicious when corporations pretend there are

no pay-backs to their gifts. And some issues are just too

sensitive or too divisive to appeal to all stakeholders

(Carrigan 1997). This evolution toward ‘‘consumption

philanthropy’’ has been criticized by scholars who link it to

their worries about the ‘‘marketization’’ of the nonprofit

sector in general (Nickel and Eikenberry 2009). They argue

that such trends as revenue-generating activities, contract

competition, investment mentality of new donors, and

social entrepreneurship bring several benefits to nonprofit

organizations, but do so ‘‘at the expense of the nonprofit

sector’s role in creating and maintaining a strong civil

society’’ (Eikenberry and Kluver 2004, p. 135).

When corporate philanthropy becomes a marketing

strategy, is it still philanthropy (Galaskiewicz 1989; Moir

and Taffler 2004)? This is a legitimate question since the

absence of commercial returns (the non-reciprocity condi-

tion) is the cornerstone of philanthropy. In fact, sponsor-

ship differs from philanthropy particularly because there is

a direct counterpart to the investment, namely ‘‘access to

exploitable commercial potential’’ derived from the spon-

sored activity (Meenaghan 1991). Other differences

between the two concepts are the level of publicity and the

strength of the link between the expense and the firm’s

target audience (Collins 1993), but these are differences of

degree, not of kind. Corporate philanthropy and sponsor-

ship do not usually target the same causes—except in some

fields like the arts, nor do they compete for the same

funding sources within firms. It is nevertheless clear that

the shift toward marketing-oriented philanthropy creates

confusion among well-established and formerly hermetic

categories.

The Drivers of Corporate Philanthropy

Understanding what influences for-profit organizations to

make voluntary contributions to serve public purposes is

the major area of inquiry of the literature on corporate

philanthropy. It represents the main focus of 44 % of all

articles reviewed. We infer that such a proportion partly

stems from the rather counterintuitive nature of corporate

philanthropy. Why would corporations curb their objective

of increasing profits to give money away to nice causes?

What would have them fund causes and organizations

seemingly peripheral to their core business? What inside or

outside pressures incite them to do so?

Such questions echo those raised by research on indi-

vidual philanthropy. ‘‘Why do people give?’’ and ‘‘Who

gives and how much?’’ are the most commonly researched

questions (Bekkers and Wiepking 2007, 2011) in this lit-

erature. The former examines the complex and intriguing

A. Gautier, A.-C. Pache

123

area of donor motivations; the latter proposes to determine

the relationships between individual characteristics (age,

gender, income, education, religious faith) and patterns of

giving. Corporate giving is a different phenomenon though:

while corporate leaders’ individual decisions determine

firms’ philanthropic activities, their decisions are also

partly shaped by organizational objectives and processes.

The literature on the drivers of corporate giving thus

covers two different aspects. First, substantial research has

been conducted about the motivations of executives who

make the decisions to undertake contributions on behalf of

the company. Second, other studies have investigated the

determinants of corporate philanthropy, namely firm or

sector characteristics which positively (or negatively)

influence patterns of giving. We review these various

drivers below, following three levels of analysis: individ-

ual, firm, and sector.

Individual Drivers

Since organizations are social entities where decisions are

made by actors with various interests, many scholars

have sought to understand the reasons why executives

decide to devolve substantial resources to corporate giv-

ing. Strikingly, almost all of them have used the same

theoretical lenses to look at the problem. As Boatsman

and Gupta (1996, p. 195) put it, ‘‘corporate philanthropy

can be modeled as a profit maximization problem or as a

utility maximization problem’’. Typically, the first model

refers to neoclassical economic theory while the second is

derived from agency theory. Finally, a third theoretical

framework revolves around the ethical motives of

executives.

Profit Maximization

A strict neoclassical view sees managers as acting on

behalf of firm owners whose decisions have a single

legitimate objective, which is to increase profits for them

and thus maximize shareholder value (Davis 1973). Any

decision that does not meet this requirement is a misuse of

money that rightfully belongs to stockholders. This view

was famously defended by Milton Friedman (1970) in an

essay criticizing the rise of CSR, which is fully relevant for

corporate philanthropy as well. Contributions to social

causes bear additional costs on the firm which could

damage its productivity and, eventually, become detri-

mental to employees, customers, and the very idea of free

markets. According to Friedman, whether one is concerned

with principles or consequences, one should reject ‘‘social

responsibility’’ of businesses and instead call for individual

responsibility within firms, especially for managers to use

shareholders’ money wisely.

Friedman’s critique of any forms of corporate expendi-

ture that does not maximize shareholder value has had a

tremendous impact. However, other scholars adopting an

extended view of neoclassical arguments consider corpo-

rate philanthropy as a way to actually increase profits.

Since the 1970s, and contrary to Friedman’s predictions,

firms have increased both their levels of profits and of

corporate donations. ‘‘It must be the case that managers

and owners believe that the benefits from contributing

outweigh the costs’’ (Abzug and Webb 1996). Therefore,

profit maximization may well be a primary motivation for

executives to do corporate philanthropy, according to the

aforementioned enlightened self-interest perspective. By

creating goodwill and improving the firm’s image and

reputation, corporate philanthropy becomes a part of the

profit maximization equation (Abzug and Webb 1996;

Baumol 1970; Galaskiewicz 1985a; Shaw and Post 1993;

Stendardi 1992). It is fully expected that such contributions

will increase firm performance, yet with no precise time-

table nor financial estimates. As reviewed earlier, cause-

related marketing and many CSR approaches also imply

that firm profitability is the basic motivation behind cor-

porate philanthropy.

Managers’ Utility Maximization

A second perspective is equally prevalent in the literature.

Scholars interested in the motivations behind corporate

philanthropy have heavily relied on agency theory and the

antagonisms between the shareholders of the firm and its

managers. For agency theorists, the firm is a set of con-

tracts between ‘principals’ (owners) and ‘agents’ (manag-

ers), and if not properly controlled by the former, the latter

may avoid their duty of maximizing the market value of the

stock and use organizational resources to meet their own

ends, because they have no direct residual claims on the

firm’s income (Jensen and Meckling 1976). Managers in

weakly controlled firms are incited to divert ‘‘discretionary

profits […] to finance the consumption of various preferred

expenditures: unnecessarily luxurious office suites, excess

staff, lavish expense accounts, salaries above those neces-

sary to retain managers, and the like.’’ (Navarro 1988,

p. 70)

Corporate contributions seem to fit this framework

nicely. But to what ends would managers use corporate

philanthropy, according to agency theorists? Several

arguments have been offered. In very broad terms, it is

supposed to quench managers’ thirst for power, status,

security, and prestige (Williamson 1964, pp. 29–32). More

precisely, this quest for prestige seems to be located in the

community where the firm operates. According to the

‘social currency’ thesis, ‘‘corporate contributions to non-

profit organizations are a strategy that chief executive

Research on Corporate Philanthropy

123

officers use to gain approval and respect from local busi-

ness elites’’ (Atkinson and Galaskiewicz 1988, p. 82). By

appearing to be altruistic, managers can divert corporate

resources in order to foster their own prominence among

the local social elites (Campbell et al. 1999). Indeed,

‘‘giving programs may enable managers and directors to

support their own pet charities at shareholder expense’’

(Brown et al. 2006, p. 856) and get rents or personal

benefits as a consequence (O’Hagan and Harvey 2000).

Managers may also favor short-term benefits through phi-

lanthropy over long-term firm objectives, as short-tenured

CEOs appear to make substantially higher philanthropic

contributions (Marquis and Lee 2013).

Other studies have presented corporate philanthropy as a

defensive mechanism that managers use in order to

manipulate or to deceive their environment. It can be

mobilized by managers to counter non-governmental

organization (NGO) pressure, government intrusions, or

poor public relations (Ermann 1978; Manne 1973; Nevin-

Gattle 1996). Gaining government support and nurturing

political connections is also a motivation for managers,

especially under authoritarian regimes where property

rights are not fully protected (Sanchez 2000; Su and He

2010). Executives in firms where union power is high can

use corporate philanthropy as a cheap substitute for union

demands like healthcare benefits, and get away with it in

terms of legitimacy (Miller 2008).

Two studies offer even more controversial insights.

According to Koehn and Ueng (2009), firms which have

restated suspect earnings are more likely than their non-

restating peers to be among top givers, which seem to

indicate that managers in ‘‘wrongdoing’’ companies may

use corporate philanthropy as a cover-up for fraudulent

activities. Meanwhile, Yermack (2009) argues that some

CEOs make charitable stock gifts—notably to their family

foundations—just before sharp drops in their share prices, a

pattern that increases the value of their personal income tax

deductions arising from the gifts.

Ethical Motives

The third and last perspective used to understand executive

motivations regroups ethical considerations formulated in

terms of moral obligations to give (Cowton 1987; Gala-

skiewicz 1985a). Though almost every scholar acknowl-

edges both profit and utility maximization theses, many

also see a genuine desire by managers to do good as an

important driver for corporate philanthropy. According to

Wulfson (2001), it is one thing for managers to use a

utilitarian cost-benefit analysis to determine a philanthropic

policy; but such a decision could also be taken because it is

the ‘‘morally right’’ thing to do. While the literature heavily

focuses on consequentialist ethics such as utilitarianism, it

does not follow that there are no other ethical drivers for

corporate giving.

Choi and Wang (2007) argue that corporate philan-

thropy can be the result of top managers’ benevolence and

integrity values. Beyond economic reasons, pro-social

behavior theorists claim managers also act impelled by

moral norms, which are a strong rationale for corporate

giving (Valor 2006). A similar framing mimics the litera-

ture on individual philanthropy by invoking altruism as a

widespread reason for managers to undertake corporate

giving, especially when limited public exposure is expected

by the giving firm (Seitanidi and Ryan 2007). Some even

argue firm’s executives do not look for any gain to accrue

from their charitable support (Sargeant and Stephenson

1997). The most important factor of a firm’s philanthropy,

according to a model proposed by Dennis et al. (2009), is

the degree to which the CEO identifies himself or herself as

a philanthropist.

Firm-Level Drivers

Obviously, all firms do not allocate resources for corporate

philanthropy. Among corporate givers, there is a great

variation in amounts and practices. Various firm-level

factors indeed shape patterns of corporate giving and have

been extensively researched. We present and analyze the

results of these studies below.

Resources

Many studies hypothesized and tested a significant

relationship between either net assets or net income

before taxes of firms and the amount of their contribu-

tions. These two variables were often labeled ‘company

size’, even though such term is hazy because it could

also refer to turnover or number of staff. In these studies,

scholars used econometric models to test simple

hypotheses using available public data—especially cor-

porate tax returns (Johnson and Johnson 1970; Schwartz

1968). The most frequent finding is that firms with higher

net assets or net income have a tendency to give more,

whatever the country studied (Boatsman and Gupta 1996;

Burlingame and Frishkoff 1996; Dunn 2004; Gala-

skiewicz 1997; Levy and Shatto 1978; McElroy and

Siegfried 1985; Nelson 1970). The main argument is that

such firms draw greater attention from government bod-

ies and the general public: they must meet higher

expectations to behave in a proper way and commonly

do so through corporate philanthropy (Adams and

Hardwick 1998; Wang and Qian 2011).

Some scholars used net income before taxes as a proxy

for firm profitability. Ceteris paribus, it is argued, profitable

firms have more resources to be spent on extra activities

A. Gautier, A.-C. Pache

123

such as corporate philanthropy than poor performers do.

The results seem to hold for large businesses (Adams and

Hardwick 1998) and small businesses (Thompson et al.

1993) alike, and in the wake of catastrophic events

(Crampton and Patten 2008). However, other studies differ

and results are inconclusive (Griffin and Mahon 1997),

mainly because accounting measures of past profits do not

reflect the available resources for managers at a given time

(Buchholtz et al. 1999).

To mitigate this problem, scholars have abandoned net

income and focused on a more precise measure of the

resources available to the firm. Organizational slack (Cyert

and March 1992) or free cash flow (Jensen 1986) have been

cast as better measuring sticks of financial strength than

overall profit. These concepts respectively refer to ‘‘a

supply of uncommitted resources’’ (Cyert and March 1992,

p. 54) and ‘‘money beyond what is needed to fund profit-

able investments’’ (Seifert et al. 2003, p. 199). In a rare

empirical inquiry, Seifert et al. (2004) identified a weak but

positive relationship between such resources and cash

donations, confirming the premise that ‘having’ leads to

‘giving’.

Advertising Expenditures

Another stream of studies documents the link between

advertising expenditures and the amount of corporate

contributions. Schwartz was arguably the first to hypothe-

size a statistical relationship between these two kinds of

expenditures, proposing they could be substitutes (Sch-

wartz 1968). Indeed, corporations may use both to com-

municate about their image to the public. Levy and Shatto

(1978) made a similar assumption on the ground that cor-

porations may consider philanthropy as a form of public

relations intended to enhance a firm’s image. Both studies

found a positive but inelastic relationship between corpo-

rate giving and advertising levels.

Comparing annual percentage change in giving and

advertising figures, Fry et al. (1982) found almost iden-

tical patterns and argue that corporate giving is a com-

plement to advertising as a profit motivated expenditure.

Similar results—contributions rise with a firm’s reliance

on advertising—followed from two subsequent studies

based on IRS tax returns from two large samples of US

firms (Burt 1983; Carroll and Joulfaian 2005). However,

other recent studies mitigate these results. Leclair and

Gordon (2000) submitted evidence that only contributions

to the arts rose with advertising expenditures, and not to

other causes. Wang and Qian (2011) found that among

Chinese listed firms, advertising intensity had a negative

impact on the probability of giving, suggesting they are

substitutes rather than complements—at least for emer-

gent firms.

Ownership Structure

The ownership structure of firms is another important

variable when studying corporate philanthropy. Differing

interests between owners and managers have generated an

extensive business literature since the rise of the modern

corporation, which is characterized by a separation of

ownership and control. One of the main premises of agency

theory is that the extent of ‘‘managerial shirking’’ rises with

the degree of separation of ownership and control (Jensen

and Meckling 1976): the more dispersed the ownership, the

more discretionary power for managers to use resources for

preferred expenditures—including corporate philanthropy

(Bartkus et al. 2002; Navarro 1988).

A few empirical studies have used corporate giving to

test the arguments of agency theory regarding the influence

of ownership structure on managerial discretion. Using

data from a 1979–1981 case study of publicly held firms in

Minnesota, Atkinson and Galaskiewicz (1988) found that

companies gave less money to charity if the CEO or some

other individual owned a significant percentage of total

stock, thereby confirming the hypothesis that ‘‘owner-

managers’’ are more frugal and sensible to the bottom line

than ‘‘agent-managers’’. They also found that ‘‘managerial

firms’’, where the CEO and other shareholders own only a

small percentage of the company’s stock, were the most

likely to give large amounts to nonprofit organizations.

A more recent study of 66 US firms tested a number of

hypotheses related to governance and ownership structure.

The authors discovered that ‘‘blockholders’’ (shareholders

who own at least 5 % of a firm) and institutional investors

were likely to limit the amount donated by a firm, as big

givers had significantly fewer such powerful owners than

small givers did (Bartkus et al. 2002). Nevertheless, two

other studies found no significant influence of either

ownership concentration, as measured by the percentage of

shares held by the top three shareholders (Adams and

Hardwick 1998), or the presence of blockholders (Brown

et al. 2006) on the level of corporate donations. These

results suggest that control and discipline provided by these

powerful shareholders is less effective than predicted.

Board Membership

A related yet distinct determinant is board composition,

namely the profiles of board directors. Using data from

Fortune 500 firms in 1984, Wang and Coffey discovered a

positive relationship between the ratio of board ‘‘insiders’’

to ‘‘outsiders’’ (insiders are senior managers employed by

the company who also sit on its board, while outsiders are

not current or retired employees of the company on whose

board they serve) and corporate philanthropy (Wang and

Coffey 1992). While insider board members are likely to

Research on Corporate Philanthropy

123

engage in corporate philanthropy to improve the firm’s

long-term relationship to its different constituents, outsid-

ers tend to limit discretionary spending and protect share-

holders’ interests, whether they own shares themselves or

not. This confirms the ‘outsider perspective’ recommended

by agency theorists to curb contributions, yet the study also

contradicts agency theory since insiders owning company

shares are as likely as non-owning insiders to favor cor-

porate giving.

However, more recent tests with similar method and

data indicated that it is less the composition of the board

than absolute board size which has a significant impact of

the level of corporate donations (Bartkus et al. 2002;

Brown et al. 2006; Marquis and Lee 2013). The authors

offer two rival explanations. First, according to agency

theory, larger boards enhance CEO control over ownership,

making the firm likely to give more. Second, larger boards

also have more ties to the external environment, as addi-

tional directors are likely to respond to many different

stakeholders’ expectations. The firm is thus more likely to

give to a wide range of constituencies.

This latter insight brings us to another aspect of board

composition, namely the proportion of women and

minority directors and its consequences on corporate con-

tributions. Because of their social backgrounds, it is argued

that women and minorities on corporate boards are less

profit-driven, more empathetic to a variety of stakeholders

than their counterparts, and thus more likely to support

high contributions (Wang and Coffey 1992). This finding

regarding women is confirmed by Marquis and Lee (2013),

not only in boards but also in senior management positions.

A study of black-owned businesses show a high level of

contributions directed to activities perceived as having a

major impact on the black community, like youth activities

or community development programs (Edmondson and

Carroll 1999). A study of 185 Fortune 500 firms between

1991 and 1994 concluded that ‘‘firms having a higher

proportion of women serving on their boards do engage in

charitable giving to a greater extent’’ than those with a

lower proportion (Williams 2003, p. 1)

Executive Networks

Finally, scholars have investigated the impact of social

networks of executives on giving patterns. Research based

in the US Twin Cities area identified and successfully

tested a ‘‘corporate-elite network’’ thesis, which links the

amount of local contributions to the degree of socialization

of the CEO with other corporate givers, suggesting cor-

porate philanthropy diffuses through corporate networks,

as executives mimic the philanthropic practices of their

peers (Atkinson and Galaskiewicz 1988; Galaskiewicz

1985a). Other scholars confirmed a link between CEOs’

affiliations with nonprofit organizations and charitable

activities for certain causes (Werbel and Carter 2002).

Moreover, studying the rise of professional corporate

donations programs in Canada, Dunn (2004) showed that

executives who had volunteered as a fundraiser for non-

profit organizations were more likely to launch a corporate

donation program. On a related topic, executives who are

embedded in local, social networks appear more likely to

provide corporate contributions after a natural disaster. As

a recent study found, ‘‘businesses whose owners or man-

agers were actively involved in religious organizations

were more likely to provide cash donations to aid disaster

relief’’ (Bin and Edwards 2009, p. 606), echoing the liter-

ature on faith and individual philanthropy.

Field-Level Drivers

While it is true that corporate philanthropy patterns differ

across individual firms, there are good reasons to believe

that ‘‘the determinants of corporate giving may vary from

industry sector to industry sector’’ (Bennett and Johnson

1980, p. 138). Distinctive market considerations certainly

influence a firm’s attitude toward corporate giving, but as

Useem (1988) noted, institutional factors like a firm’s

relations with other organizations and its environment also

shape its philanthropic endeavors. Amato and Amato

(2007) found that ‘‘industry effects’’ account for 20–22 %

of the total variation in giving ratios. There are indeed

important concerns and schemes that pressure firms within

an industry to adopt similar giving patterns, which create

inter-industry differences in giving strategies (Seifert et al.

2004). Below we review the literature focused on such

industry-level or field-level drivers.

Industry Structure

Johnson (1966) was the first scholar to explore the rela-

tionship between corporate contributions and industry

structure. According to him, there are reasons to expect that

corporate philanthropy will be more intense in oligopolis-

tic, imperfectly competitive industries than in both

monopolistic and highly competitive ones. The reason is

simple: in such industries, rival firms are driven to innovate

in order to find a competitive advantage over each other,

and philanthropy is one way to do so. Monopolists do not

need such policies while smaller firms in highly competi-

tive sectors usually cannot afford them (Johnson 1966;

Useem 1988).

However, monopolists have what Burt (1983) calls

‘‘high structural autonomy’’, namely fewer market con-

straints than firms in more competitive sectors, and thus

more leeway to be generous in their giving (Maddox and

Siegfried 1980). Empirical tests seem to confirm both

A. Gautier, A.-C. Pache

123

hypotheses, with firms in oligopoly and monopoly struc-

tures giving substantially more than their counterparts in

highly competitive industries. Framing the problem dif-

ferently, some scholars found a link between industry

maturity and the level of contributions, with firms in

emerging fields giving at a relatively lower rate than in

more mature fields (Brammer and Millington 2004).

Consumer Orientation

In their seminal 1982 article, Fry et al. (1982) found that

firms which are retail- or consumer-oriented spend more on

contributions than industrial or non-retail firms. Contribu-

tions thus seem to be motivated by a need to appeal to the

public, thus to both current and potential customers. The

rationale is that corporate philanthropy can have more

impact in business-to-consumer industries, where the

demand for products or services is essentially driven by

individuals’ aspirations (Burt 1983). This contrasts with

low-contact, business-to-business industries, which are less

dependent on the positive image they convey to the general

public (Useem 1988).

Brammer and Millington (2006) tested the extent to

which ‘‘organizational visibility’’, as measured by the

incidence of news media stories covering businesses,

shaped giving patterns of a sample of companies listed on

the London Stock Exchange. Controlling for firm size, the

results indicate that organizational visibility stimulates

philanthropy within consumer-oriented industries like

media, telecommunications, and insurance. These results

contradict Galaskiewicz’s (1997) previous evidence that

corporate contributions may be independent from con-

sumer sales. Using first hand data on public recognition of

British company names, Campbell and Slack (2006)

obtained similar results to Brammer and Millington’s. The

rate of corporate giving against profit is higher for highly

visible firms over the period 1988–2002, as these firms are

compelled to answer a complex set of ‘‘societal’’ stake-

holder demands.

Environmental or Social Externalities

Industries can also become visible ‘‘because of their

association with issues that are themselves highly visible to

stakeholders’’ (Brammer and Millington 2006, p. 8). In

other words, some industries are vulnerable and prone to

public outcry because of externalities or external costs

associated with their core activities. Using a sample of 384

American firms, Chen et al. (2008) found firms with poor

performance on environmental issues and poor product

safety to be more likely to engage in corporate philan-

thropy. They are also likely to make larger gifts than better

performers on these issues. Likewise, a study of 400 listed

firms in the UK showed that ‘‘firms which operate in

industries with potentially significant environmental or

social consequences […] invest in charitable contributions

in order to mitigate the impact of their externalities on

consumers, voters and investors and reduce the risk of

regulatory interference’’ (Brammer and Millington 2004,

p. 1417). According to Brammer and Millington, however,

this effect is restricted to firms in industries that have a

strong consumer focus, such as tobacco, alcohol, oil, and

unlike metal, pulp and paper, mining. Firms in polluting

and sensitive industries like oil, mining, tobacco, automo-

bile, or aviation—where governmental scrutiny and court

case interactions are high—may be compelled to atone for

social and environmental externalities through corporate

philanthropy (Gan 2006; Tesler and Malone 2008; Wil-

liams and Barrett 2000), as part of defensive CSR or lob-

bying policies (Roberts 1992).

Fiscal Environment

Last but not least, economics scholars have long tried to

understand the effects of fiscal policies on philanthropy. A

large body of literature exists on the effects of tax rates on

individual philanthropy (Clotfelter 1985; Feldstein 1975;

Steinberg 1990), but only a few studies deal with such

effects on corporate philanthropy. Early on, Johnson (1966,

p. 504) observed that ‘‘firms give at such times and in such

ways as to minimize the after-tax cost of a given contri-

bution.’’ Strategically, they use available fiscal incentives

to deduce some of their gifts from their tax obligations.

Interestingly, lower tax rates in themselves do not seem to

encourage giving. In a longitudinal study of large giving

companies in the UK, Arulampalam and Stoneman (1995)

found that lower corporate tax rates were positively linked

to lower levels of giving. There is a ‘‘substitution effect’’

outweighing the ‘‘income effect’’ due to lower tax rates:

firms give less because they can deduce less from their

corporate taxes, and shift their available resources to other

investments. Two other studies of American firms’ tax

returns found a similar ‘‘cost-sensitivity’’ for corporate

philanthropy (Carroll and Joulfaian 2005), especially for

corporate foundations (Webb 1996), suggesting that firms

are strongly influenced by their fiscal environment.

The Organization of Corporate Philanthropy

Contrary to individual philanthropy, where many acts of

generosity are informal and spontaneous, corporate phi-

lanthropy is an organizational phenomenon. It takes place

within complex and rationalized organizations, with for-

malized action plans. Yet until a fairly recent period, cor-

porate contributions have recurrently been criticized for

Research on Corporate Philanthropy

123

their lack of strategic focus and professionalism, as some

sort of irrational exceptions to the rational behavior of the

modern firm. Going beyond general definitions and deter-

minants, a number of scholars have undertaken to ‘open the

black box’ of corporate philanthropy activities and see how

they are implemented. Representing 33 % of the surveyed

literature, their aim is to document and to understand the

organizational dimension of such contributions.

We identified three streams of work within this theme. A

first stream deals with the strategies of corporate philan-

thropy, and features a number of papers advocating or

describing the advent of ‘strategic philanthropy’ among

giving firms since the late 1980s. A second stream regroups

articles and book chapters that cover the processes among

giving firms, from decision-making processes to relations

with recipients. Finally, a third stream deals with the extent

to which corporate philanthropy is professionalized and

integrated within professional business practices.

Giving Strategies

Like any other purposeful activity in firms, corporate phi-

lanthropy requires that goals in this domain are translated

into tangible actions with sufficient resources to carry out

these goals. Giving firms rely on a ‘‘philanthropic strat-

egy’’, which simply means the firm is orderly in the

methods and procedures it uses to give money away (Post

and Waddock 1995; Saiia et al. 2003). A specific challenge

for corporate philanthropy is to find its place within the

firm’s overall strategy, since it represents a cost center,

only indirectly and tentatively adding to its profit, and thus

commonly exposed to budget cuts in difficult times.

Strategic Shortcomings of Philanthropy

Corporate philanthropy has been often criticized for its lack

of strategic value (Austin 2000; Porter and Kramer 2002).

In addition to neoclassical economists and agency theorists,

who framed their critiques in terms of profit and utility

maximization, scholars have attacked two aspects of cor-

porate philanthropy as it has so far been conducted in

practice: its low level of engagement, and its disconnection

from the firm’s core business.

In a frequently cited paper, Austin (2000) describes phi-

lanthropy as the first and least advanced stage of collabora-

tion between businesses and nonprofit organizations.

Though his model is not supposed to be normative, the author

describes the philanthropic relation as one characterized by a

low level of engagement, a peripheral importance to the

firm’s mission, scarce resources, a narrow scope of activities,

little interaction, and minor strategic value. Reviewing the

different forms of ‘‘corporate community involvement’’,

Seitanidi and Ryan (2007) consider corporate

philanthropy—which they equate to charitable donations—

as an asymmetrical relation with limited expectations, which

pales in comparison to more evolved forms like sponsorship,

cause-related marketing, or partnership. Going a step further,

Tracey et al. (2005) criticize CSR rooted in philanthropy—or

perceived as a philanthropic gesture (Obalola 2008)—on the

ground that it reinforces ineffective, potentially counter-

productive efforts to solve social problems by funding large

nonprofit organizations akin to bureaucracies.

Echoing these stern observations are Porter and Kra-

mer’s (2002, p. 2) famous statement that most corporate

contributions programs are ‘‘diffused and unfocused’’ and

‘‘consist of numerous small cash donations’’. Philanthropic

practices appear inferior to more integrative approaches to

CSR because they are disconnected from the firm’s core

business, their targets are outside the firm, and they only

yield reputation benefits (Halme and Laurila 2009).

According to Porter and Kramer, most approaches to CSR

fail because they focus on the tensions between business

and society rather than on their interdependence. The result

is uncoordinated CSR and philanthropic activities that are

disconnected from the company’s strategy and neither

make any meaningful social impact nor strengthen the

firm’s long-term competitiveness (Porter and Kramer

2006). These academic critiques most certainly reflect what

took place within many firms, with managers struggling to

position philanthropic contributions in the overall strategy.

The Rise of ‘Strategic Philanthropy’

Starting in the late 1980s, a shift occurred from the tradi-

tional ways of giving and toward what many observers

have since called ‘‘strategic philanthropy’’ (Hess et al.

2002; Logsdon et al. 1990; Marx 1997, 1999; Mescon and

Tilson 1987; Morris and Biederman 1985; Mullen 1997;

Porter and Kramer 2006; Post and Waddock 1995; Ricks

and Williams 2005; Saiia 2001; Smith 1994).

What does this notion mean? When corporate philan-

thropy is strategic, the resources that are given supposedly

have meaning and impact on the firm as well as the com-

munity that receives those resources (Post and Waddock

1995). In other words, strategic philanthropy is not altru-

istic (Burlingame and Frishkoff 1996), in that it not only

benefits the community but also ‘‘the firm’s strategic

position and, ultimately, its bottom line.’’ (Saiia et al. 2003,

p. 170). As Buchholtz and his colleagues note, the notion

has emerged as ‘‘a common meeting ground for the

opponents and proponents of corporate philanthropy’’

(Buchholtz et al. 1999, p. 169). Strategic philanthropy also

features closer relations between corporate donors and their

beneficiaries (Rumsey and White 2009).

Many articles praise the rise of this new trend in the

business world and encourage its diffusion (Bruch and

A. Gautier, A.-C. Pache

123

Walter 2005; Morris and Biederman 1985; Mullen 1997;

Smith 1994), with somewhat meager empirical or theo-

retical contributions. Only a couple of studies offer deeper

analyses. Brammer et al. (2006) tested several hypotheses

related to the way large British companies managed their

contributions. Their findings reflect the diversity of prac-

tices among UK firms but they are consistent with the

‘strategic’ outlook, as giving activities appear governed by

formal budgeting processes and plans, directly involve

main board-level company representatives, employ spe-

cialist managers, or are managed through externally-ori-

ented business functions. Campbell and Slack (2008)

investigated the degree of public disclosure of philan-

thropic activities in annual reports of a sample of British

companies. They found a relatively high rate of disclosure,

but also rather erratic narratives and little consistency over

the years, with only a minority of firms showing a ‘‘stra-

tegic approach’’ to their philanthropy.

Venture Philanthropy

One of the more discussed and advocated strategic

approach is venture philanthropy, which appeared some

15 years ago and quickly became a hot topic. Borrowing

ideas and techniques from venture capital and applying

them to solve social problems, the concept is a metaphor

that views philanthropy as a social investment whose

returns should be maximized (Frumkin 2003). A very

selective strategy, it focuses on key features of venture

capital such as risk management, performance measure-

ment, non-financial help, long-term support, and exit

strategies (Letts et al. 1997).

Venture philanthropy has been endorsed by a new

generation of philanthropists, young entrepreneurs who

made a fortune in high-tech or finance and want to find

more efficient ways to tackle public problems than the

traditional nonprofit sector (Frumkin 2003; Larson 2002).

But the idea also has its critics, because it focuses on

scaling up a few deserving projects (Kramer 2009) and

imposes market-based pressures on nonprofit organizations

(Eikenberry and Kluver 2004). Besides, the main propo-

nents have been private and community foundations, not

corporate actors. So far, empirical research on venture

philanthropy remains scarce. Only a handful of studies

have documented concrete aspects of the phenomenon,

such as the structure of venture philanthropy deals (Scar-

lata and Alemany 2011) or its execution in fields like the

arts (Cobb 2002) or medical research (Scaife 2008).

Giving Processes

The debate around the strategic nature of corporate phi-

lanthropy offers just a glimpse at its organizational aspects.

Some scholars go further and adopt a more pragmatic take

on the phenomenon. The common trait of their works is an

effort to characterize the processes involved in the imple-

mentation of philanthropic activities by corporations. Two

distinct streams emerge from the literature: some scholars

have focused on the decision-making process of corporate

giving, while others have explored the changing relations

between donors and recipients.

Decision-Making

Who decides to allocate resources for corporate philan-

thropy? In a paper cited above, Brammer et al. (2006)

tested—among others—a ‘‘centrality hypothesis’’ to eval-

uate the location of responsibility for dedicating the phil-

anthropic budget. From a sample of 200 publicly listed

companies, they found that top management plays a very

significant role in shaping the overall size of the philan-

thropic activities in most companies, the main board of

directors having the final say in 32 % of cases.

When studying corporate philanthropy, legal scholars

have often dealt with the issue of decision-making. Atop

their priorities is assessing the legitimate power of man-

agers and stockholders to make philanthropic gifts, joining

agency theorists in their interest for problems stemming

from the separation of ownership and control in modern

firms (Abzug and Webb 1996). According to Brudney and

Ferrell (2002), shareholders have a legitimate claim over

the choice of recipient organizations for contributions

loosely integrated to the company bottom line, while cen-

tralized management should prevail in other cases. How-

ever, administration costs and practical difficulties ‘‘may

make shareholder choice of corporate goodwill donations

unfeasible’’ (Brudney and Ferrell 2002, p. 1218). Indeed,

very rare are the cases where companies allow shareholders

to express their opinions before giving decisions are made.

Warren Buffett initiated the most well-known shareholder-

inclusive approach to corporate philanthropy with Berk-

shire Hathaway, on a basis proportionate to the number of

shares held. Yet the program was abruptly terminated in

2003 after a controversy over the support of a pro-choice

charity, sending a negative signal to other firms.

Employees are also involved in the decision-making

process, doubtless more often than are shareholders.

Matching employee contributions has become a familiar

practice in large American companies since General

Electric launched the first program of the kind in 1955

(Stead 1985). As Stead puts it, many companies have

evolved from ‘‘cold contributions’’ (cash gifts to faceless

beneficiaries driven by self-centered motivations) to

‘‘warm contributions’’ (cash but also in-kind gifts and

volunteering to known beneficiaries for a variety of com-

munity-centered reasons), notably in the arts. Employee

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123

involvement in large firms such as AT&T and IBM took

different forms: ‘‘team volunteerism, broader choices in

workplace giving, more input from employees on choice of

causes, and more financial support to nonprofits where

employees volunteer’’ (Smith 1994, p. 111).

Relations Between Donors and Recipients

Beyond decision-making, a stream of research has sought to

characterize the relations between corporate donors and

their recipients. Interestingly, Husted (2003) argues that

cash contributions are a way for firms to outsource their

CSR policy to expert nonprofit organizations, with only

minimal involvement in the management of the projects

themselves. By contrast, in-house projects ‘‘require corpo-

rate involvement that goes beyond the donation of money or

goods. The firm plans, executes, and evaluates the project

[…] with all of the advantages and disadvantages of orga-

nizational hierarchies’’ (Husted 2003, pp. 486–487). What

the author names ‘‘collaboration’’ lies somewhere in the

middle. The strengths of corporate contributions are high

autonomous coordination between givers and recipients and

strong incentives for the latter to comply with and exceed

requirements. However, they suffer from ‘‘low centrality’’

because such activities are often unrelated to the core

business mission, objectives, and competencies, and from

‘‘low specificity’’ as contributions are easy to duplicate and

do not primarily benefit corporate donors.

Tracey et al. (2005) go further and criticize traditional

corporate philanthropy for the paternalistic, lopsided rela-

tions it sets up between firms and ‘‘third sector organiza-

tions’’. Beyond in-house projects and collaborative

approaches, they document the emergence of a new orga-

nizational form of corporate-community partnership in the

UK labeled ‘‘community enterprise’’. Such enterprises are

multifunctional, generate most of their revenues through

trading with other firms, and possess democratic gover-

nance structures. These features allow them to be ‘‘equal

partners’’ for companies willing to invest in a long-term

partnership with their communities. A similar study in

Canada showcased the rise of ‘‘equal partnerships’’, where

companies with a strong founding vision fully engage in

their communities (Foster et al. 2009). In a recent Ameri-

can study, nonprofit managers reported a significant trend

toward more symmetrical partnerships with companies, as

old-fashioned philanthropy is being replaced by ‘‘a more

strategic model based on mutual benefits’’, which seems to

satisfy both parties (Rumsey and White 2009, p. 303).

Professionalism

More strategic and inclusive than we may have thought, the

organization of corporate philanthropy as it is practiced

nowadays presents a third counterintuitive trait pointed out

in several academic works: its professionalism. This echoes

the growing influence of professional values and practices

in the nonprofit sector (Hwang and Powell 2009).

Professionalizing the Function

As early as 1985, an influential paper in the Harvard

Business Review laid out forceful arguments for treating

corporate philanthropy with ‘‘the same sound manage-

ment practices that work elsewhere in your company’’

(Morris and Biederman 1985, p. 151), such as recruiting a

strong and independent manager in order to put a little

distance between the CEO and the gifts. The authors

lamented that many companies did not recruit the right

profile for the job: public relations specialists or personnel

executives were often preferred to operational managers

from profit-making divisions, whereas the latter seemed

better equipped to deal with nonprofit directors and to

analyze grants as investments (Morris and Biederman

1985, pp. 154–155).

Likewise, Mescon and Tilson (1987) wrote about

‘‘professionalizing the contributions function’’ like other

operational functions, a trend the authors observed among

leading American firms at the time. Soaring contributions

requests and a strong emphasis on results led firms to

professionalize their philanthropy in terms of goals and

objectives, guidelines for selection, criteria for evaluation,

and staff competence. Contrary to Morris and Biederman,

Mescon and Tilson embraced public relations practitioners

as best qualified to administer philanthropic programs.

Contributions Officers

Academic interest for corporate philanthropy professionals

is best illustrated by Galaskiewicz’s (1985a, b) insightful

study of ‘‘contributions officers’’ networks in the Minne-

apolis—St. Paul metro area, whose findings show that firms

with professional contributions staffs tend to know and

support the same recipient organizations. He defines their

mission as overseeing corporate contributions to nonprofit

organizations, whether these are disbursed through a

foundation or a direct giving program. Citing a document

edited by the Conference Board, he outlines their basic

responsibilities: ‘‘screening requests, executing grant

approval, and handling related correspondence, payment

procedures, and record keeping. […] budget preparation

and administration, development of policy and procedures,

and coordination of work of the contributions committee

and foundation board’’ (Galaskiewicz 1985b, p. 641).

Through their knowledge of community needs and poten-

tial recipients, contributions officers thus absorb transac-

tion costs related to the uncertainty of grant-making.

A. Gautier, A.-C. Pache

123

An interesting point made by Galaskiewicz is that,

except for those working in the largest firms, they may lack

autonomy and status that other occupational groups enjoy

in business environments, making them ‘‘semi-profession-

als’’ only (Etzioni 1969). As Carrigan (1997, p. 46) notes,

‘‘corporate philanthropy is often an ad hoc activity given

only part-time attention by a member of staff who has other

‘more pressing’ duties’’. To assess the degree of profes-

sionalization of giving officers, Galaskiewicz uses three

proxies: spending 50 % or more of their time on philan-

thropic activities; having ‘contributions’ or ‘foundation’ in

their job titles; and belonging to one or several professional

associations. Using data from a sample of 59 firms with

more than 200 employees, he found a reciprocal effect

between the level of contributions and the professionalism

of the staff, irrespective of other factors like market posi-

tion, profitability, or network structure (Galaskiewicz

1985a, pp. 122–142). Additional research led by Useem

confirms the positive link between high donations and high

professionalism, in both directions (Useem and Kutner

1986; Useem 1988), while suggesting that professionali-

zation of corporate philanthropy leads to similar patterns of

giving among firms (Useem 1991). A recent study of a

representative panel of Canadian executives confirms ‘‘a

reciprocal relationship between the existence of a profes-

sional donation program and the level of donations made

by a business’’ (Dunn 2004, p. 343).

Position in the Organizational Structure

To which department does corporate philanthropy belong?

Where in the organization chart does it fit? The Association

of Corporate Contributions Professionals offers an

intriguing answer on its website: ‘‘Furthermore, the cor-

porate citizenship professional must work with and through

virtually every department within a company to accomplish

their job effectively. Whether it is coordinating with

operations to deliver aid supplies during disaster relief,

developing programs with HR to increase employee satis-

faction and loyalty or facilitating positive publicity with the

communications department—the corporate citizenship

professional must be the ultimate definition of a team

player’’ (ACCP 2012).

When not directly placed under the authority of the

CEO, corporate philanthropy usually belongs to either one

of the following departments: public relations/communi-

cation, marketing, or human resources (Carrigan 1997). It

is noteworthy that several marketing scholars advocate for

the integration of corporate philanthropy into marketing

departments, on the ground it is by itself a product to be

‘sold’ to various stakeholders with skills and tools mastered

by marketers (Collins 1993; McAlister and Ferrell 2002;

Murray and Montanari 1986; Tokarski 1999).

The Outcomes of Corporate Philanthropy

With 31 % of the reviewed literature, the outcomes of

corporate philanthropy are an important area of inquiry.

Yet a single issue has been excessively researched at the

expense of others: the particular consequences of corporate

philanthropy on firm profitability or financial performance,

as part of a broader research agenda on the presumed

benefits of CSR for firms (Griffin and Mahon 1997; Or-

litzky et al. 2003).

Beside this typical focus on shareholder value, scholars

have showed interest in the outcomes of corporate phi-

lanthropy on other categories of actors. With a framework

derived from stakeholder theory (Freeman 1984; Haley

1991), we propose to split the review of such literature in

five parts: outcomes on shareholders, consumers, employ-

ees, local communities, and governments. As will be dis-

cussed, corporate philanthropy has a potential to impact all

firm stakeholders. But not necessarily in a positive way, as

several papers—often with strong ideological fervor—

display detrimental outcomes as well. Of great concern is

the practical difficulty of measuring the outcomes of con-

tributions, which is true for managers and for scholars

studying the subject.

Though it consists of a coherent body of literature,

research on the outcomes of corporate philanthropy echoes

works concerned with individual drivers, reviewed above.

There is of course a difference between what managers

think contributions will entail and what actually happens,

yet a couple of studies overlap both questions. In the

present section, we concentrate on those studies which

offer substantial findings.

Shareholder Value

Whether one frames corporate philanthropy as a commit-

ment to the common good, a community investment, or as

marketing, it is expected that, ultimately, contributions will

benefit the company. Contrary to Friedman’s (1970)

admonition, there is now a widespread belief—implicit or

explicit—in the business community that firms with a

sound corporate philanthropy program perform better than

the others. For this reason, a crucial question is whether

contributions have any meaningful positive impact on

shareholder value. This is precisely what a number of

scholars have tried to address in the past few years.

Using similar quantitative approaches, several studies

found a positive relationship between the amount of cor-

porate giving and financial performance (Lewin and Sabater

1996; Patten 2007; Su and He 2010; Wang and Qian 2011;

Wokutch and Spencer 1987). But their authors are very

cautious not to jump to the conclusion that corporate phi-

lanthropy directly increases shareholder value. Surveying a

Research on Corporate Philanthropy

123

sample of manufacturing US companies in 13 different

industries, Wokutch and Spencer (1987) analyzed the

relationship between corporate giving and firm perfor-

mance, using return on total assets and return on sales as

proxies. Firms labeled as ‘‘sinners’’, characterized by a

criminal record (i.e., guilty of monopolistic practices, con-

spiracy, illegal mergers and acquisitions, foreclosure of

entry, franchise violations, exclusive dealing, price dis-

crimination, refusal to deal, tying arrangements, or alloca-

tion of markets) and low levels of contributions, performed

significantly worse than firms with either no crimes or high

contributions on both performance measures, with repeat

offenders at the bottom. However, there are two rival

interpretations of this finding: markets may punish the ‘bad

guys’, but as the authors note, ‘‘it is also possible that these

firms made smaller philanthropic contributions and com-

mitted crimes because of their poor financial performance’’

(Wokutch and Spencer 1987, p. 73).

In the specific case of emergency giving, as embodied by

the 2004 tsunami relief effort, Patten (2007) found a statisti-

cally significant positive relationship between large donations

and the stock value of firms in the days after press releases

revealed their gifts. In line with Godfrey’s (2005) proviso,

Patten cautions that financial performance will not increase if

corporate philanthropy is not perceived as genuine by stock-

holders, even for very large contributions. A related study

focused on investors’ appreciation of disaster donations found

that firms involving their employees in the donation effort

elicited more positive reactions from shareholders than the

others. According to the authors, such involvement indicated

‘‘the firm’s ability to bounce back from the disaster’s adverse

effects’’ (Muller and Kraussl 2011, p. 203).

Conversely, some studies found either no significant

relationship (Campbell et al. 2002; Seifert et al. 2003,

2004) or non-linear relationships (Wang et al. 2008)

between the level of contributions and financial perfor-

mance. Meanwhile, a couple of studies vested in the same

research question either stay at a superficial level of ana-

lysis (Smith 1994), or propose a series of hypotheses

derived from a complex model that need to be tested

(Godfrey 2005). The elusive link between corporate social

performance or CSR (including corporate philanthropy)

and financial performance is one of the most researched

and frustrating questions among scholars interested in the

business and society relations: many variations appear

across firms, industries, and periods, as robust and wide-

spread conclusions remain to be drawn (Barnett 2007;

Seifert et al. 2004; Wang and Qian 2011).

Consumer Attitude and Choice

As a non-price differentiation factor, corporate philan-

thropy may influence actual and potential consumers to

have a favorable attitude toward the firm, to become loyal

to its products and services, hence leading to increased

sales (Mullen 1997; Smith 1996)—and potentially to

higher financial performance. It is particularly expected

with cause-related marketing (Barone et al. 2000; Varad-

arajan and Menon 1988). But is it true in practice? Several

scholars, mostly from marketing departments, have tackled

this issue.

Corporate philanthropy and cause-related marketing,

understood as elements of CSR strategies, were found to

have an influence on consumer beliefs and attitudes toward

firms’ products. More precisely, what consumers know

about a company in terms of CSR positively impacts how

they evaluate its products (Brown and Dacin 1997) or the

firm itself (Ross et al. 1992). Bringing together a rich array

of theoretical frameworks and in situ interviews with 171

customers of various drug stores of two national franchis-

ing chains, Luo (2005) confirmed the fact that corporate

philanthropy can be used to reinforce the relations between

firms and their patrons. He actually showed that ‘‘as drug

stores put more emphasis on strategic philanthropy as

perceived by customers in the community, customers will

have stronger social ties with the store and be more loyal to

the store’’ (Luo 2005, p. 399).

However, do favorable attitudes necessarily translate

into increased sales? Not necessarily, reports a detailed

study about the impact of corporate philanthropy on con-

sumer perceptions of brand equity in the athletic shoes

industry. Using two experiments, its author inferred that

‘‘traditional philanthropy may be effective for corporate or

brand image objectives, but ineffective for brand evalua-

tion and purchase objectives’’ (Ricks 2005, p. 130),

whereas cause-related marketing provided a better alter-

native to boost sales. On the contrary, two studies identified

a link between philanthropy and sales. Using US data from

1989 to 2000, Lev et al. (2010) showed a significant and

positive impact of corporate giving on subsequent sales

growth, most forcefully in consumer-oriented industries

like retailing and financial services. Ten years earlier,

Barone et al. (2000) devised two pairs of studies, whose

results confirmed that cause-related marketing positively

affects consumer choice, provided that firms act for what

consumers perceive to be ‘‘appropriate reasons’’, and that

price and performance trade-offs of purchasing such pro-

ducts remain low.

Global effectiveness of corporate philanthropy on con-

sumer choice is, at best, equivocal. However, a handful of

fine-grained studies offer a better understanding of the

phenomenon. First, the nature of the product being pro-

moted in a cause-related marketing campaign may influ-

ence its effectiveness. Based on two laboratory

experiments and one field study, Strahilevitz and Myers

(1998) distinguished between ‘‘frivolous products’’

A. Gautier, A.-C. Pache

123

(pleasure-oriented consumption, which may bring on

feelings of guilt after acquisition) and ‘‘practical products’’

(goal-oriented and ordinary consumption, with no guilt and

little pleasure). They provided strong evidence that cause-

related marketing practices are more effective with frivo-

lous products such as expensive cologne or a luxury cruise,

than with practical products like laundry detergent or skim

milk. This is because ‘‘the altruistic utility offered by

charity incentives may be more complementary with the

feelings generated from frivolous products than with the

more functional motivations associated with practical

products’’ (Strahilevitz and Myers 1998, p. 444). In other

words, cause-related marketing is successful because it

atones for consumers’ guilt from acquiring superfluous

items.

Another empirical investigation, conducted by Menon

and Kahn (2003) through a series of four laboratory stud-

ies, showed that ‘‘cause promotions’’ (e.g., a 10-cent cor-

porate gift to an environmental NGO for every purchase of

a shampoo bottle) were found to have a stronger positive

influence on consumers’ appreciations than ‘‘advocacy

advertising’’ (e.g., a TV spot sponsored by a firm and

produced by a NGO raising awareness on climate change).

As they put it, ‘‘consumers elaborated more about the

possible motives behind advocacy advertising than they did

about cause promotions, which they viewed as a more

usual business promotion’’ (Menon and Kahn 2003, p. 325)

Thinking too much about what motivates a firm to do good

results in less favorable evaluation, as CSR ratings decline

with the degree of elaboration of philanthropic practices.

Among other findings, Menon and Kahn showed that high

congruence between the firm’s brands and the social issue

sponsored yielded favorable ratings for cause promotions

but not for advocacy advertising. In the latter case, a tight

fit indicated a vested firm interest in the campaign, which

consumers rated negatively.

Indeed, skepticism and distrust among consumers are

common as poorly-designed philanthropic strategies may

be perceived as ‘‘cause-exploitative marketing’’ (Sasse and

Trahan 2007; Varadarajan and Menon 1988). Forehand and

Grier (2003) found evidence that consumers dislike firms

that seem to hide the strategic benefits of corporate phi-

lanthropy behind pure public-serving motives. Like

shareholders, many consumers are sensitive to the genuine

character of corporate philanthropy (Lee et al. 2009) and

averse to ‘‘ingratiation’’, when firms want to be seen as

good instead of actually acting in a good way (Godfrey

2005).

Employee Morale

Philanthropy may also have a positive impact within the

firm, on key stakeholders who embody its values and traits

on a daily basis: its employees. Indeed, it is commonly

believed that corporate giving is a source of pride, cohe-

sion, productivity among incumbent staff, which will in

turn benefit the organization in the long run (Brammer and

Millington 2005; Shaw and Post 1993). Moreover, corpo-

rate giving may contribute to enhance firms’ attractiveness

as employers, giving them a competitive advantage to

recruit qualified staff (Turban and Greening 1997). In many

industries, human resources managers have involved

employees in programs such as corporate volunteering,

workplace giving, matching grants, or in the choice of

causes or projects to be funded (Smith 1994). There are

nonetheless very few studies proving this link between

corporate philanthropy and employee morale.

Among the voluminous literature on employee morale,

considerable attention has been paid to the determinants of

morale, with an emphasis on employee participation

(financial or not) and involvement in the decision-making

(Baehr and Renck 1958; Worthy 1950), but with very little

consideration for corporate philanthropy. According to

Lewin and Sabater (1996), however, there is a link between

a company’s community involvement—including grants,

donations of equipment, corporate volunteering—and

employee morale. Drawing from data regarding 156 pub-

licly held business in the US, they found a positive rela-

tionship between each variable and business performance,

and an even stronger one between the interaction of both

community involvement with employee morale and busi-

ness performance, suggesting also the presence of feedback

loops between all variables.

Generating goodwill among employees has been a pri-

mary motive for doing corporate philanthropy, which

Porter and Kramer (2002) famously criticized as being

unrelated to the firm’s strategy and its competitive context.

In particular, they considered matching grants as a chief

reason why corporate philanthropy had been criticized—

and rightfully so: ‘‘Although aimed at enhancing morale,

the same effect might be gained from an equal increase in

wages that employees could then choose to donate to

charity on a tax-deductible basis. It does indeed seem that

many of the giving decisions companies make today would

be better made by individuals donating their own money’’

(Porter and Kramer 2002, p. 57). Another critique stems

from the idea that contributions are an expressive form of

leadership used by managers to extract commitment and

obedience from their employees (Haley 1991). Obviously,

more work is needed to assess the outcomes of corporate

philanthropy on employees.

Local Community Welfare

Another stakeholder category upon which corporate phi-

lanthropy is supposed to have positive outcomes is ‘‘local

Research on Corporate Philanthropy

123

communities’’ (Haley 1991). As early as in the 1980s,

corporate involvement in local communities started to gain

prominence, both in terms of cash donations and employee

volunteering (Burke et al. 1986). Firms financing philan-

thropic projects near their facilities do so because they

expect to improve the living conditions in their community

and to raise awareness about its commitment, thereby

benefiting from positive effects on their business in the

long run (Mescon and Tilson 1987). Besides shareholders,

consumers and employees, who may well live in the

community, firms characterized by a strong dependence on

its local environment target all ‘‘important third parties’’

(Nevarez 2000, p. 201).

One of the key insights of Porter and Kramer’s (2002,

p. 58) work on corporate philanthropy is that businesses

cannot flourish in a degraded environment: ‘‘their ability to

compete depends heavily on the circumstances of the

locations where they operate’’, including local infrastruc-

ture and market sophistication. The concept of ‘‘shared

value’’ requires enabling ‘‘local cluster development’’

(Porter and Kramer 2011). These are characterized by an

array of favorable institutions and public assets on the same

territory, such as related firms, suppliers, service providers,

academic programs, transportation, and clean water. Cor-

porate philanthropy can be geared toward such institutions

and assets in order to serve the community’s interests while

preserving a competitive environment to do business. This

is illustrated by the geographical patterns of contributions

after natural disasters: firms tend to concentrate their help

in regions where they operate (Muller and Whiteman

2009). Unfortunately, little factual evidence exists of the

consequences of corporate philanthropy on local commu-

nity welfare.

Using a more restrictive meaning of the notion of

community, Edmondson and Carroll (1999) surveyed 74 of

the largest Black-owned businesses in the US to identify

and to understand their giving patterns. Their findings

showcased the strong priority among owners to fund

activities perceived to have a major impact on the Black

community: youth activities, gifts to colleges, management

tutoring to other firms, and church activities. The top rea-

son given by respondents for giving back to the community

was ‘‘to protect and improve the environment in which to

live, work, and do business’’ (Edmondson and Carroll

1999, p. 175). But the study did not provide any evidence

of the actual impact.

Campbell and Slack (2007a, b) investigated the inter-

esting case of British ‘‘building societies’’ in the late 1990s,

which dramatically increased their contributions to local

charities amid political threats on their mutual status. They

provided significant evidence that mutual societies used

corporate philanthropy ‘‘as a part of the fine tuning of

strategic positioning with respect to a particular

constituency—its members, often based in local commu-

nities, who, collectively, have power to determine the legal

status of a given building society’’ (Campbell and Slack

2007b, p. 337). In other words, managers of these organi-

zations thought gifts were a good way to buy up support

from a particular type of stakeholders, characterized by

their concentration in a particular geographical area and

their power to change the status quo. To our knowledge,

there is no proof that such strategy was positive.

New firms in a community can also alter traditional

philanthropic patterns. In a study comparing the local

consequences of contributions from three sectors

emblematic of the new urban economy—software, enter-

tainment, tourism, Nevarez (2000) showed a shift away

from usual nonprofit recipients toward outsider nonprofits

in higher education and the environment. ‘‘Many firms

from the new industries are currently ‘doing good’ in the

community—just not through the traditional urban business

community’s favorite charities’’ (Nevarez 2000, p. 221).

Government Support

By virtue of their monopolistic control over law and order,

governments are powerful stakeholders for businesses.

Governments can create more or less favorable regulatory

environments for corporations. Given this premise, con-

tributions can be used by firms to create favorable business

climates and to protect themselves from higher taxes or

trade restrictions (Haley 1991; Neiheisel 1994). Indeed,

throughout American industrial history, corporate philan-

thropy was for a long time a ‘‘reactive’’ strategy after

threats of government intrusion in corporate freedom

(Nevin-Gattle 1996). Yet government support for busi-

nesses can also result in subsidies, privileges, barriers to

entry for foreign competitors. A specific modern American

feature—reflecting the hazy boundaries between philan-

thropy and politics (Zunz 2011)—is the possibility for

corporations and unions to fund administrative costs of

‘Political Action Committees’, allowing large firms to

support political activities and get heavily involved in

political affairs (Useem 1986).

Interestingly, the handful of studies concerned with the

outcomes of corporate philanthropy on business-govern-

ment relations are neither based in the US nor in Europe. In

an exploratory study of corporate philanthropy in El Sal-

vador, Sanchez (2000) interviewed business and trade

association representatives to find that firms practiced

contributions not only for altruistic motivations but also to

gain political legitimacy: ‘‘a less obvious, yet perhaps more

important, outcome is the fact that politicians, regulators,

and the public at large become beholden to the corporation

as a result of the good will generated by philanthropic acts’’

(Sanchez 2000, p. 366). The country’s troubled recent

A. Gautier, A.-C. Pache

123

history led to a loss of legitimacy from corporate actors in

the public opinion and the international community,

prompting business leaders to adopt modern, socially

responsible practices like corporate philanthropy. Alas, the

study does not go far enough to provide evidence for the

success of this strategy.

Given the considerable role played by governments in

the economy of Asian countries in general and of China in

particular, it is understandable that Chinese companies

represent an intriguing area of investigation of business-

government relations. Using random survey data on 3,837

Chinese private firms, Su and He (2010, p. 87) recently

presented evidence that companies ‘‘carried out philan-

thropy activities to better protect property rights and nur-

ture political connections and in turn, lead to better

enterprise profitability’’. The weaker the institutional

environment, they suggested, the stronger the results. For

instance, ‘‘donations-intensive enterprises’’ obtained better

loans from State-owned banks. Corporate philanthropy in

China appears as one informal mechanism among others

used by private enterprises to develop and to secure their

activities.

Another empirical and recent study based in China also

provided evidence that corporate philanthropy helps firms

gain social legitimacy (approval from the public) and

political legitimacy (approval from government officials),

which enables them to gain the necessary political access to

achieve high financial performance (Wang and Qian 2011).

The authors likewise argued that philanthropy is a practical

way for firms to gain political resources in transition

economies where institutional conditions are not well-

established yet. Their study showed this is especially true

for firms which are neither government-owned nor well

connected to the political establishment.

Finally, a related and very specific stream of research in

critical sociology has focused on the ‘corrosive’ influence

of philanthropy on democracies. US philanthropy in par-

ticular has long been criticized by Marxist scholars for

reproducing class divisions (Silver 1998), shaping higher

education according to the elites’ interests (Curti and Nash

1965), and aggressively exporting the American model

worldwide (Arnove 1982). However substantiated, these

critiques usually target rich individuals (Odendahl 1991) or

large private foundations (Fisher 1983), and not corporate

philanthropy per se. Yet the most researched objects in this

stream are the powerful US foundations created by indus-

trial magnates like Carnegie, Rockefeller, and Ford, and

there is no doubt that philanthropy and corporate capitalism

have been two prominent and complementary features of

the American experiment (Acs and Phillips 2002; Zunz

2011). The relations between corporate philanthropy and

governments in Western democracies are complex and bear

mutual influences involving control, encouragement, and

competition (Neiheisel 1994). More research is needed to

understand the nature and the impact of these influences.

Future Research Directions

Literature on corporate philanthropy has delved into many

aspects of the phenomenon, which are reviewed above. In

about 30 years of research, scholars have uncovered key

features regarding the essence, the drivers, the organiza-

tion, and the outcomes of corporate philanthropy. Never-

theless, our knowledge on this matter is nowhere near

complete. There are several gaps in the literature which

still hinder our understanding and deserve further investi-

gation. In the following section, we review these gaps and

propose directions for future research along each of the

four main broad themes covered by the literature.

The Essence of Corporate Philanthropy

We were surprised to find so little conceptual debate in the

literature regarding the definition of corporate philan-

thropy. As displayed in Table 1, only a handful of articles

even attempted to propose a definition and the results are

not persuasive. There is a lack of both precision and per-

spective in the way corporate philanthropy is presented in

the literature. All three rationales we reviewed (commit-

ment to common good, community investment, marketing)

leave unanswered questions pertaining to the actual

boundaries of the phenomenon. First, it is unclear what

qualifies as ‘philanthropy’ among all corporate expenses

that link the firm with its outer environment. For instance,

are corporate art collections philanthropy or sound invest-

ments (Suddaby 2011)? Second, when firms solicit per-

sonal contributions from consumers (through cause-related

marketing) or employees (through matching gifts pro-

grams), is it ‘corporate’ or ‘individual’ philanthropy?

Defining more precisely what corporate philanthropy is and

what it is not remains an important stake.

Except Carroll’s (1991) two-decade-old taxonomy, we

were really surprised to find almost no conceptual link

between corporate philanthropy and CSR in the abundant

literature on CSR, as reviewed in recent meta-analyses

(Dahlsrud 2008; Garriga and Mele 2004; Matten and Moon

2008). As newer concepts of sustainable development

(Elkington 1997) or social business (Yunus 2007) gain

prominence both in theory and in practice, the positioning

of corporate philanthropy vis-a-vis these alternative

approaches needs to be revisited and clarified. Will it

mutate, merge with or dissolve into aforementioned con-

cepts? Future research will need to carefully compare the

literatures produced on these concepts and to explore

whether and how fundamental changes in the political and

Research on Corporate Philanthropy

123

economic spheres impact the very essence of corporate

philanthropy. We suspect that this exploration will require

revisiting the rationales identified by previous research and

question the role of corporate philanthropy as a business

practice and a core element of business strategy.

The Drivers of Corporate Philanthropy

Studies investigating the drivers of corporate philanthropy

are numerous and provide a rich set of answers to the

fundamental question: ‘‘Why do corporations give?’’

However, it is important to note that empirically, these

studies use very similar methods (observational studies

based on regression analysis) and data (aggregated figures

from large US or UK companies). This lack of methodo-

logical diversity is a first shortcoming of this literature.

While they are rigorous and informative, these studies use

simple or multiple linear regressions in order to test the

effect of one or more independent variables on corporate

giving amounts. Most authors control for other variables in

order to isolate single determinants. Only a handful of

studies propose integrative models with clear relationships

between independent variables and identify mediating

mechanisms (Buchholtz et al. 1999).

A second shortcoming is that these studies provide little

guidance for understanding the causal ordering between

variable relationships. The most inconclusive relationship

may be between corporate philanthropy and firm profit-

ability: do firms give because they have available resour-

ces, or does giving increase their financial performance,

leading to more available resources (Margolis and Walsh

2003; Orlitzky et al. 2003)? Corporate philanthropy is a

multifaceted, multi-stakeholder phenomenon whose drivers

and outcomes are difficult to measure (Wood and Jones

1995). Substantial further research using observations and

experiments, quantitative and qualitative approaches, is

needed to establish causality links more firmly.

Although a wide set of questions related to the drivers of

corporate philanthropy have already been addressed, we

identified remaining gaps. A first set of gaps pertains to

characteristics of firms and industries. To our knowledge,

no studies have so far explored the link between the nature

of goods or services sold by a firm and the intensity of its

philanthropic contributions. Among consumer-oriented

industries, there are important differences regarding the

nature of the service act or the type of relationship with

customers (Lovelock 1983). Firms selling intangible ser-

vices such as banking or insurance may be more in need of

corporate philanthropy to appeal to their stakeholders’

imagination and commitment than firms providing tangible

services. It would be interesting to explore whether the

nature of the goods or services sold by a company influ-

ences the volume and form of its philanthropic activities.

With most studies focusing on large national or multi-

national corporations, it would also be important to explore

the degree to which the drivers identified for large com-

panies still hold for SMEs, whether SMEs are more or less

inclined to philanthropy than large firms, and what condi-

tions enable SMEs to engage in such activities (Lepoutre

and Heene 2006).

A second set of gaps pertains to environmental factors.

Since corporate philanthropy has been argued to enhance

employees morale (Lewin and Sabater 1996) as well as the

firm’s appeal to potential recruits (Turban and Greening

1997), it would be interesting to explore the degree to

which tensions on the employment market in a given

industry or community lead firms to engage in corporate

philanthropy. Additional factors such as a local commu-

nity’s social capital (Putnam 1993), wealth level, or social

needs level could further be explored as potential drivers of

corporate philanthropy for local firms. Finally, fiscal

incentives such as tax deductions on gifts are arguably

superior drivers of corporate philanthropy than tax rates.

However, virtually no empirical study has analyzed the

impact of such incentives on corporate giving patterns, as

opposed to the literature on individual philanthropy

(Feldstein and Clotfelter 1976).

More broadly, the literature on the drivers of corporate

philanthropy tends to isolate individual cases and to ignore

institutional dynamics across firms and industries. In less

than 50 years, corporate philanthropy went from nonexistent

to a legitimate, taken-for-granted activity in virtually all

large and multinational firms. We need a better under-

standing of both the institutionalization process of philan-

thropic practices among businesses and the actors involved

in the related institutional work (Lawrence et al. 2009). In

particular, the roles of professional organizations (Green-

wood et al. 2002), the media as well as external consultants in

this process should be explored. Research on corporate

philanthropy could further explore whether the emergence of

philanthropic activities among large firms is the result of a

broader identity or social movement (Rao et al. 2000, 2003).

The Organization of Corporate Philanthropy

Research on the organization of corporate philanthropy is

relatively recent and has only begun to highlight the variety

and complexity of corporate philanthropy practices. We

outline below what we identified as the main gaps of this

branch of the literature.

The major shortcoming in this literature is arguably the

absence of a clear conceptualization of what a giving

strategy may be. While recent articles describing emergent

practices such as ‘strategic philanthropy’ or ‘venture phi-

lanthropy’ implicitly recognize that different approaches to

giving may have different impacts, we still lack a clear

A. Gautier, A.-C. Pache

123

understanding of the array of available giving strategies,

whether connected to the core strategy or not. Indeed, once

corporate executives decide to engage with philanthropy,

there are many different ways in which they can allocate

their funds to meet their goals. Do they favor small grants

to numerous recipients or concentrate their aid on a few

selected beneficiaries? Do they fund people, nonprofit

organizations, or launch their own operational structures?

Do they partner with other firms or act on their own? How

do they select causes and beneficiaries? More broadly,

what is missing is a clear understanding of the core com-

ponents of a giving strategy (Frumkin 2010) and how a

combination of these components, as they interact with

internal and external conditions, may lead to specific out-

comes for the giving firm as well as for its beneficiaries.

Such an understanding is essential for firms to be suc-

cessful in reaching their philanthropic goals, yet this

prominent issue has so far been ignored in the academic

literature.

Another important gap in the literature on the organiza-

tion of corporate philanthropy pertains to decision-making

processes. The practice of philanthropy requires to decide

how much to give to whom. Whereas firms are used and

equipped to make decisions related to the allocation of

resources to maximize profitability, they are less familiar

with choosing the right resource allocation to satisfy phil-

anthropic concerns. Understanding how these atypical

decision-making processes unfold would therefore shed light

on a new dimension of corporate behavior. As of today, we

know very little about the way decisions are taken by exec-

utives and selection committee members in charge of allo-

cating philanthropic funds. What is the decision-making

process? Who participates in it? What official and unofficial

factors are taken into account? Given the idiosyncratic

character of philanthropic decision-making, its study and

analysis would require mobilizing ethnographic methods, in

order to discover the process as it unfolds, in addition to

retrospective accounts of participants to the decision.

Another overlooked aspect is the role and function

played by corporate philanthropy officers within firms

(Galaskiewicz 1985b). More specifically, it will be

important to understand their interface position between

firms and the outside world. Grants are usually directed to

nonprofit organizations, and philanthropy officers are

responsible for managing the relations between the cor-

porate giver and these nonprofit recipients. They are thus

likely to face conflicting institutional demands in their

daily activities, balancing the firm’s economic logic with

societal expectations as embodied by nonprofit actors

(Pache and Santos 2010; Thornton and Ocasio 1999). How

contributions officers manage these conflicting demands

and deal with multiple organizational identities (Pratt and

Foreman 2000) are promising avenues for future research.

The Outcomes of Corporate Philanthropy

Finally, we now turn to the gaps pertaining to the outcomes

of corporate philanthropy. Research in this stream has been

relatively prolific, yet this literature has mainly focused on

the effects of corporate philanthropy for the firm in terms

of profitability, employee, or customer satisfaction. An

important limitation of that research is that it has not been

able to relate specific giving strategies to outcomes. Is

‘strategic philanthropy’ more likely than other giving

strategies to enhance a company’s economic performance,

as claimed by several scholars? Answering this question

will be an important next step to help companies design the

strategies that best address their internal and external

challenges.

So far, very little effort has been made to document the

outcomes of corporate philanthropy on beneficiaries. This

lack of scholarly interest for the way corporate contributions

affect recipients does not reflect a rising trend in the philan-

thropic sector: the difficult but crucial task to evaluate and

quantify performance of activities that are not directly mea-

surable by financial means, also known as ‘‘impact measure-

ment’’ (Duncan 2004; Maas and Liket 2011). We need more

knowledge not only of the rationales behind impact mea-

surement and the methods used by firms to assess their own

contribution to a given cause, but also of the actual effects on

targeted beneficiaries. Also, it would be interesting to test

whether a concern for impact measurement has consequences

on actual practices of corporate philanthropy. Importantly,

future research exploring the impact of corporate philanthropy

on beneficiaries will need to differentiate between impact on

end beneficiaries (homeless people, disenfranchised youth,

etc.) and the effects, whether positive or negative, that cor-

porate philanthropy has on intermediary organizations

(nonprofits, NGOs, social enterprises, etc.) serving end

beneficiaries.

Accounting for Context in Corporate Philanthropy

Research

Cutting across all four broad research themes is an important

aspect that is surprisingly overlooked in the literature.

Research on corporate philanthropy has thus far been pre-

dominantly Anglo-Saxon, as 87 % of reviewed studies were

published by authors affiliated either in the US or in the UK.

Corporate philanthropy has a long history in these countries

and takes place in favorable legal, political, economic, and

cultural contexts. These contextual elements most certainly

influence how corporate philanthropy is defined, encouraged,

organized, and assessed, yet research has remained oblivious

of this seminal dimension. As the respective roles of gov-

ernments, corporations, and civil societies vary across coun-

tries and regional areas, it is likely that the nature of corporate

Research on Corporate Philanthropy

123

philanthropy may vary accordingly. For instance, societies

with strong traditions of reciprocity or communality may be

more likely to implicitly expect businesses to give large

amounts of resources locally.

In this article we reviewed empirical studies of corporate

philanthropy based in China (Su and He 2010; Wang and Qian

2011), South Korea (Lee et al. 2009), El Salvador (Sanchez

2000) and Nigeria (Obalola 2008). They suggest that corpo-

rate giving in developing countries obeys to different cultural

norms and traditions than in Western countries. We also

reviewed a couple of studies comparing data from different

countries or regions (Muller and Whiteman 2009; Scarlata and

Alemany 2011). We need more of both these types of studies

in order to get a deeper understanding of this global yet

localized phenomenon. In particular, transnational compara-

tive research studying variations of definitions, perceptions,

and practices across various settings could explain how cor-

porate philanthropy has been partly adapted or translated from

Anglo-Saxon models (Djelic and Sahlin-Andersson 2006),

and to which extent there is a convergence toward a global

model (Anheier et al. 2011; MacDonald and Tayart de Borms

2010; Simon 1995). Scholars could take stock of the growing

literature comparing CSR practices in various world regions

(Dobers and Halme 2009; Jamali and Mirshak 2007; Matten

and Moon 2008) and see which findings also apply to corpo-

rate philanthropy.

Conclusion

This literature review highlights the growing scholarly interest

for the now institutionalized phenomenon of corporate phi-

lanthropy. Over the course of 30 years, academic research has

drawn a rich and complex picture of firms as philanthropic

actors, pointing to who they are, what may motivate them,

how they may behave and what their impact may be. Despite

these invaluable contributions, much remains to be explored

about corporate philanthropy, in a context where the respec-

tive roles of businesses, governments, and civil societies

experience fundamental changes. With this review, we pro-

vide a roadmap for future research and thereby hope to spur

further scholarly interest for this intriguing phenomenon at the

crossroads of business and society.

Acknowledgments The authors would like to thank the editor and

two anonymous reviewers who provided feedback and suggestions to

an earlier version of the article. We are also thankful to Amanda

Williams for her early assistance in reviewing the literature.

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