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InternationalMarketing Review12,4

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Global corporatephilanthropy: a strategic

frameworkFrançoise L. Simon

Columbia Business School, New York, USA

Over the past decade, corporate philanthropy has undergone two fundamentaltransformations, reflecting major management trends: strategic refocusing andglobalization.

Faced with increased competitive pressures and tighter resources, companiessuch as Avon and AT&T have redefined philanthropy by tying it directly tocorporate strategy and structuring it to interact with business units andoptimize the workforce itself (Smith, 1994). The strategic use of philanthropy isnow seen as a component of long-term competitiveness, rather than a short-term awareness builder and sales generator. While traditional corporate givingfell in the USA by 1 per cent (to US$5.9 billion) in 1992, the first decline since the1930s, cause campaigns have become a fast-growing item in marketingbudgets, increasing from US$200 million in 1984 to nearly US$1 billion in 1993;however, even this growth is slowing: from 151 per cent in 1990-1993, to 24 percent in 1992-1993 (Smith and Stodghill, 1994). In a context of persistentdownsizing and greater accountability, companies are selecting non-profitpartners for their strategic fit and providing them with management tech-nology, communications support, product packages and volunteer teams,rather than simply handing out cash donations.

Adding a second layer of complexity to this new model is the fact that socialissue marketing has started to globalize – the current Avon Breast Cancer/Women’s Health campaign, for instance, has been extended to over tencountries in the Americas, Europe and Asia in 1992-1994, and furtherexpansion is now planned. In emerging markets, in particular, it has beenrecognized that corporate/non-profit alliances hold even more promise than inOrganization for Economic Co-operation and Development nations, since thesedeveloping countries are still uncluttered by social marketing and have muchgreater needs in this area. Global competition is already developing. Over 200Japanese companies have established formal giving programmes in the USA,and Hitachi has already set up the Hitachi Foundation to develop and manage aworldwide philanthropic strategy (Smith, 1994).

Globalization, however, introduces a new set of challenges on both sides ofcorporate/non-profit alliances. Many organizations, such as the United Nations,have attempted to develop uniform worldwide guidelines for corporate socialresponsibility; as early as 1975, the UN Economic and Social Council (ECOSOC)

International Marketing Review,Vol. 12 No. 4, 1995, pp. 20-37.© MCB University Press, 0265-1335

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was set up to design a “UN code of conduct for transnational corporations”,intended as a comprehensive set of guidelines on human rights, localization ofownership and decision making, and monitoring systems. Two decades later,ECOSOC has yet to complete the task. Even if it had, the extent of internationalcompliance would remain questionable (Amba-Rao, 1993; Donaldson, 1989).

In recent years, many companies such as Caterpillar Corporation havedeveloped extensive internal codes of conduct with provisions for enforcement.However, enforcement of the codes has not matched their enactment for variousreasons, such as joint ventures with the host government as a partner, or localpractices which conflict with those of the firm and home country. For instance,in the case of Caterpillar, its employment policy under the US EqualEmployment Opportunity Act of non-discrimination, based on sex or handicap,may not be enforceable in some countries (Sturdivant and Vernon-Wortzel,1990). Ethical dilemmas such as the practice of bribery are also notorious in thisrespect (Haegg, 1984; Tavis, 1988).

This issue is further complicated by the fact that many major non-profitorganizations are themselves global and therefore vulnerable to the ethicalvariances which affect their corporate partners (see Figure 1).

Consider the following examples:

● A major child-centred, global non-profit group, with a central policyexcluding arms, liquor and tobacco manufacturers from its alliancenetwork, finds out – too late – that one of its Asian chapters accepted asizeable donation from a US company with tobacco operations. Worse,the donation was accidentally revealed to the press by one of the non-

Figure 1.Corporate philanthropy

– global environment

Internationalagencies

Home countrygovernment

Stakeholders/constituencies

Host countrygovernment

Multinationalcorporation

Subsidiary

Nationalchapter

Globalnon-profit


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profit group’s celebrity spokespersons, on tour in Asia, therebygenerating considerable adverse publicity and undermining the non-profit’s credibility.

● A leading multinational, having entered a multi-year alliance with aglobal environmental group, uncovers that one of its national brancheshas engaged in highly questionable publicity stunts, and that another isbeing investigated for an embezzlement scandal.

● A global, non-profit group with extensive field operations in the humannutrition area, and running an anti-hunger campaign, discovers that itsUK subsidiary concluded a product licensing agreement with a pet foodmanufacturer – while not unethical per se, this manoeuvre isunderstandably viewed by the non-profit group’s top management asawkward, inappropriate and counter-productive to the communication ofa clear mission.

While it is unrealistic to expect to monitor with total accuracy all non-profitfield operations, and all multinational subsidiary activities, it is neverthelesspossible to develop a dual strategic framework for non-profit companies andtheir corporate partners, enabling them to chart a course in the ethical minefieldof global alliances. In particular, both entities should be able to screen theirpartners for integrity and for strategic fit, to determine the optimum scope andmix of the alliance portfolio (ranging from event sponsorships to productlicensing and employee mobilization), and to monitor implementation andresults across borders.

We will first focus on a corporate alliance framework, and will, in a secondsection, develop a sequence of non-profit guidelines.

Corporate framework for global cause alliances“As we approach the end of the century, companies will be known as much forthe causes they support as the products they sell”, predicts Jerry Welsh, whowas the principal architect of the 1983 American Express campaign to raisefunds for the renovation of the Statue of Liberty – generating US$1.7 million inthree months and gaining recognition as the birth of cause marketing in itsoriginal, promotion-based form (Arnott, 1994; Kotler and Andreasen, 1991).

Inspired by social marketing success stories such as ice-cream maker Ben &Jerry’s (which gives away 7.5 per cent of pre-tax profits), leading companiesnow favour long-term, integrated programmes such as the Coors BrewingCompany’s literacy campaign, and the Avon Women’s Health crusade. A mainadvantage of a longer term involvement is that it has a measure of built-inimmunity against charges of opportunism.

A first question for any company contemplating a social issue campaignshould concern its effectiveness. While early studies of CRM tended to becritical, recent consumer research has shown overall acceptance of social issuemarketing, tempered by a persistent degree of scepticism. CRM was firstcriticized for its potential to undermine philanthropy, as it came to be perceived

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as “business”. By the 1990s the academic consensus tended to view corporate/non-profit alliances as win/win partnerships (Garrison, 1990; Holmes andKilbane, 1993).

Empirical assessment of the impact of cause marketing on brand choice hasgenerally yielded a positive association. A 1991 study found that over 50 percent of those sampled would be willing to try a new brand which used a causemarketing approach; more specifically, a 1994 study showed that responses toenvironmental advertising were all more favourable when consumers formedpositive advertiser and message ethical attributions (Davis, 1994; Ross et al.,1991).

A benchmark study of US consumer attitudes towards cause marketing wasconducted by Roper Starch Worldwide and Cone/Coughlin Communications in1993, surveying a nationwide cross section of nearly 2,000 men and women 18years of age and over (Cone/Roper, 1994). While overwhelmingly favourable tothe general concept of cause marketing, these respondents had morereservations about its implementation: 85 per cent stated that they had a morepositive image of a company supporting a cause they cared about, and 64 percent believed that corporate philanthropy should be a standard part of a firm’sactivities. However, 58 per cent retained a degree of scepticism, agreeing thatcause marketing may be “just for show to improve the company’s image”, andthat it really does not help causes. Respondents also had a clear preference forlong-term company commitments (see Figure 2). The “halo effect” of asustained philanthropic involvement was perceived as extending, not only toconsumers, but also to other constituencies such as employees, vendors,community and opinion leaders. While tactics such as event sponsorships, fundraisers and advertising were seen as acceptable by 80 per cent of respondents,the most credible ways for companies to show commitment were clearlytangible ones such as donations through a foundation (77 per cent), donations ofa percentage of sales or profit (72 per cent) and the creation of socialprogrammes (68 per cent).

Actual purchase behaviour, however, still lagged significantly attitudinalstatements. While 51 per cent of respondents said they would be likely to paymore for a product or service if it were associated with a cause they care about,only 20 per cent said they had actually bought a product or service in the past12 months because it was associated with a cause. When asked about the mostimportant purchase factors, if price and quality were equal, respondents didrank “socially responsible business practices” above advertising (31 per centversus 27 per cent), but much more important was their past experience withthe brand (77 per cent). Finally, only 26 per cent could name a company as “mostsocially responsible”; most frequently cited were Ben & Jerry’s, Anheuser-Busch, McDonald’s and Coca-Cola, as well as Du Pont, Procter & Gamble andKodak. Even fewer (18 per cent) could name a “least socially responsible” firm,but the list was fairly focused, including major polluters (Exxon, DowChemical) as well as alcohol and tobacco manufacturers.


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These findings suggest that, while consumers have become quite receptive tocorporate philanthropy, they are insufficiently informed about its actualpractice by specific firms. Given the heavy advertising and/or PR budgetsallocated to publicizing activities such as McDonald’s research partnership withthe Environmental Defense Fund or Anheuser-Busch’s recycling success, therelatively low awareness levels shown in the Cone/Roper survey suggest thatcommunications strategies need to be reassessed.

One last survey indicator which confirms this dissonance between corporateefforts and consumer preferences is the “social issues gap”; while respondentslisted crime, the environment, homelessness, education and drug abuse as theirtop concerns, they did not perceive business as having accomplished enough in

Figure 2.Opinions about cause-related marketing (percentage of respondents polled) Source: Cone/Roper (1994)

Good way tosolve socialproblems

19 52 17 4 8

Should bestandardpractice

20 44 22 5 10

Have a morepositive imageof product orcompany

34 51 38 4

Like to seecompaniescommitted overa long periodof time

38 44 10 3 6

Agree strongly

Agree somewhat

Disagree somewhat

Disagree strongly

Don't know

Key:

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any of these areas; by contrast, the two issues of greatest perceived corporateachievement (equal rights for minorities and women) received relatively lowconsumer ratings (see Figure 3).

It is important to note that, in global campaigns, social issue priorities shouldbe tested in every national market. Surveys conducted on behalf of UN agenciesand other global organizations have consistently shown a great variance amongthe top ten issues and organizations listed, even within G-7 nations; while theRed Cross dominates in the USA, Médecins sans Frontières would be top-ratedin France, Caritas in Spain and local groups in Japan.

Given this complex market environment, what approach can corporationsadopt to ensure maximum fit with consumer priorities and efficiency inimplementation? Figure 4 outlines a five-step sequence ranging from missionformulation to external partner selection, operational action plan, internalrestructuring and campaign design.

This stepwise approach should help avoid many of the pitfalls ofcorporate/non-profit alliances, which typically occur when companies skip orminimize the first three stages (with the most important strategic content) andjump into the more tactical fourth stage, that of campaign design.

Mission definitionParticularly important is the first stage of issue identification, in terms of itsvalues fit with the company’s mission and operations. While Anheuser-Busch,

Figure 3.Social issues gap

35

30

25

20

15

10

5

0

34

9

29

22

28

5

27

10

27

21

16

31

14

28

20

16

Crime

Enviro

nmen

t

Homele

ssne

ss

Educa

tion

Drug

abus

e

Equal

right

s/mino

rities

Equal

right

s/wom

enAID

S

Key:

Should work hardest on

Has worked hardest to solve

Source: Cone/Roper (1994)


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for instance, has received positive media coverage for its social issue marketingfocused on the environment, it was broadly criticized in early 1994 for itsunrelated alliance with the Muscular Dystrophy Association (Piastro, 1994).The company’s environmental alliances were in fact validated by its internal(well quantified) accomplishments in aluminum can recycling; in 1991, itreached a milestone by recycling one used can for every one of the 17 billioncans it produced – thereby also saving 95 per cent of the energy needed to makealuminum from raw ore. Set up in 1978, the Anheuser-Busch RecyclingCorporation (ABRC) is an example of a long-term alliance success; it reached itsgoal by building an extensive network of wholesalers, scrap dealers andcharitable groups, and “incentivizing” this partnership at all stages. In

Figure 4.Global corporatephilanthropy – astepwise approach

Step 1: Mission (re)definition

• Identify cause, based on fit with company’s culture, structure, operationsand values

• Define strategic mission of projected alliance; ensure fit with overallcorporate mission

• Assess global viability and sustainability

Strategyformulation

Step 2: Non-profit partner(s) selection

• Screen potential partners according to four criteria– Worldwide reputation and ethical track record (based on independent

ratings and consumer research)– Financial and field effectiveness– Global scope and consistency of single partner versus flexibility of

multiple partners– Other corporate partnerships (conflicting or synergistic)

Step 3: Matching action and promotion

• Conduct internal audit (operations relevant to alliance)• Create/update code of ethics• Develop action plan (with quantifiable goals)• Design the alliance structure (select internal partners and allocate

responsibilities)

Step 4: Campaign/programme development

• Design campaign/set objectives in each market• Select target segments (based on research)• Decide on adapted versus standardized product and media mix• Allocate resources

Step 5: Performance monitoring

• Quantitative assessment = funds raised, media coverage• Qualitative assessment = awareness/attitude tracking

Strategyimplementation

Strategyevaluation

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particular, ABRC created a grass-roots infrastructure made up of schools,hospitals and other non-profits, paying consumers a total of US$150 million in1991 for their recycling efforts (Anheuser-Busch, 1992).

By contrast, the Muscular Dystrophy Association alliance spurred criticismfrom several disability- , alcohol- and drug-related organizations, maintainingthat such an alliance between a beer brewer and a medical charity was morallywrong. Especially unconscionable, it was charged, was Anheuser-Busch’spractice of “promotions that say the more alcohol you buy, the more they willdonate to charity” (Piastro, 1994).

Another example of a poor fit between a cause campaign and a corporatemission was the recent sponsorship by Sears, Roebuck & Company of a 40-cityconcert tour by rock star Phil Collins, intended to raise over US$1 million for thehomeless; according to Sears, this effort was to “reinforce the idea that Sears isthe most compelling place to shop” through a series of national televisionadvertisements. Understandably, at least part of the press failed to see theconnection between a rock star, homelessness and Sears’ retailing advantage(Smith and Stodghill, 1994). Over six years ago, Peter Drucker stressed theimportance of a clearly defined mission for innovation and success (Drucker,1989).

Non-profit partner selectionCurrent consumer preferences for long-term philanthropic commitments makeit ever more imperative for a firm to screen its potential non-profit partnerssystematically. In many G-7 nations, independent ratings bureaus track basicindicators of financial effectiveness and ethical accountability.

However, major non-profit companies have become as vulnerable ascorporations to wide publicity of improprieties such as the United Way recentscandal. This is one of the reasons why companies are increasingly opting forthe flexibility of multiple partners in different markets; a single global allianceoffers the consistency of a unified worldwide campaign, but a network ofmultiple partnerships has the added advantage of “freshening up” the appeal ofa cause through a series of different promotional approaches.

Matching action and promotionAll too often, companies open themselves to consumer and media criticism byattempting to “buy points” through charitable contributions, even though theseare peripheral to their core business – and sometimes even antithetical to theirother practices. In this vein, General Motors (GM) took full-page advertisementsto celebrate Earth Day 1990 and Glidden sponsored in 1993 a campaign called“Clean Air for Kids” which included a US$60,000 donation to the NationalAudubon Society. Environmental cause marketing may be the most sensitivephilanthropic area, leading quickly to charges of “greenwash” when companiesdo not match their cause promotions with extensive internal audits and actionplans. GM’s fuel-efficient Chevrolet Geo line, for instance, sponsors anenvironmental programme, planting more than 150,000 trees in recent years.


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However, the campaign has been criticized as “greenwashing,” because GM hasbeen a leader in the lobby against improved fuel efficiency in cars and is laggingits European competitors in true environmental strategies (Zbar, 1993).

In contrast, Volkswagen leads in this area by engineering a radical expansionof the product life-cycle concept, beyond sales and service and towards totalremanufacturing, through its “3V” policy (Vermeiden, Verringen undVerworten, or prevention, reduction, recycling). Prevention includes reducingsolvent emissions at the source by switching to water-based paints, andrecycling has a 100 per cent target – despite the complexity of car materials.Based on its experience at a pilot dismantling plant, Volkswagen announcedthat it would take back its new Golf model free of charge – a factor which helpedGolf win the 1992 European Car of the Year award (Schmidheiny, 1992).

Any significant philanthropic programme should therefore be preceded by acomprehensive audit of all relevant internal operations, accompanied by areview and/or update of the company’s code of ethics, and followed by theappropriate action plan. This approach appears to be applicable to most OECDmarkets. A recent environmental survey of the top 100 British companies, forinstance, showed a coupling of charitable donations and sponsorships with aset of socially responsible actions directly related to the firms’ core businesses.The latter range from capital investment in cleaner production processes torecycling policies and staff secondment programmes. For instance, BritishSteel’s plant development includes new environmental control facilities andmonitoring of older sites, ICI has committed funds to CFC replacements, andSafeway and Tesco lead in collection programmes for bottle and packagingrecycling (Vyakarnam, 1992).

As philanthropy activities have evolved from simple donations to complexprogrammes integrating cash, technology transfer and volunteer teams, thedevelopment of an alliance now includes designing the appropriate internalstructure. This is especially important in multi-country programmes, where thesubsidiaries do not have easy access to the resources of a headquarters-basedfoundation. Levi Strauss, for instance, has promoted community relations in itsnon-US operations by empowering “community involvement teams” at theplant level, in which employees tour the community, assess local needs andimplement grassroots projects such as AIDS education campaigns (Smith,1994).

High profile philanthropy activities in overseas operations carry a specialrisk, however, if they are found to coincide with unacceptable local practices,such as exposing workers to unsafe conditions. It is therefore essential, whenglobalizing a campaign, to conduct audits of all subsidiaries and verify the localimplementation of corporate ethical codes.

Despite the added risk entailed by any decentralization, overseas expansioncan greatly increase the strategic use of philanthropy. Sponsoring socialinitiatives can play a key role in opening markets: in Vietnam, before the liftingof the US embargo, Motorola donated high-technology communications

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equipment linking rural health clinics to urban hospitals, thereby creatingimportant relationships with government officials.

Soon after American Express opened an office in Budapest in 1991, thecompany seconded an executive to the Hungarian foreign ministry andsponsored university research and high school programmes in tourismmanagement. When American Express enlisted government officials andbusiness leaders from airlines, hotels and restaurants, it not only securedadditional funding, but also created an invaluable network connecting it withthe leading local players in the tourism sector (Smith, 1994).

Campaign/programme developmentAs indicated above, the long-term success of a global campaign depends on thesystematic implementation of the preceding three steps, starting with missiondefinition. This process was generally followed by Avon as it developed itsmulti-country Breast Cancer campaign, which led to the Avon Worldwide Fundfor Women’s Health.

In a first phase, Avon identified a unique programme proposition that filled aniche and fit the corporate vision of being “the company that best understandsand satisfies the product, service, and self-fulfillment needs of women –globally”.

Avon’s social issue was selected through a dual process of internal andexternal analysis; after a successful 1992 UK. campaign which raised US$3million over the summer, Avon tested the media interest, scientific/culturalclimate and, most important, consumer response in the USA. Consumerresearch indicated breast cancer as a top health concern, and an externalsituation analysis showed that, although it was widely covered by the media,the issue revealed a significant awareness gap, with 59 per cent of US womennot following early detection guidelines. Since science had provided no newtreatments in a generation, early detection was the only viable approach – andbecame therefore the focus of Avon’s campaign.

Avon’s programme also had to meet an internal structural requirement inphase I, stipulating that it should capitalize on the company’s direct-sellingsystem and specifically on its seven million sales representatives in over 100countries (including 415,000 in the USA). A multimedia concept passed thistest, including sales of an awareness pin and distribution of an educationalbrochure by the salesforce, supported by television specials on PBS, ABC Newsand Telemundo.

In phase II, Avon focused on alliance building through a multiple partnerapproach including, in the USA, the YWCA in collaboration with the Center forDisease Control, the National Alliance of Breast Cancer Organizations, to whichit contributes a US$1 million fund, and the National Cancer Institute, for whichAvon provides grass-roots outreach publicity and supporting services such asan information hotline.

These two phases, which also included an internal resource allocationprocess, were carried out within the very short timeframe of February-


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September 1993. One year later, product sales had generated US$6.5 million,over 100 community-based detection programmes had been funded, 120 millionwomen had been personally reached by the salesforce, and the media coveragegenerated 250 million print impressions and a combined 6.9 million televisionaudience. The main objectives of the second wave of public outreach, started inOctober 1994 within the context of a five-year campaign, were to renewcorporate impact on the issue and win third-party endorsements.

Global expansion took place swiftly, with ten countries covered by the end of1994. However, Avon recognized immediately that the programme wouldrequire local adaptation and even transformation, as women’s health needsvaried widely in its main markets. It therefore set up the Avon Worldwide Fundfor Women’s Health, which has raised over US$16 million to support localinitiatives. Their focus varies from breast cancer in the USA, Canada, the UK,Mexico, Venezuela, Spain and Malaysia, to Women’s Health Care in Brazil and“Silver Age Support” in Japan (supporting caregivers of the elderly).Programme design also has been adapted to each country market’s needs.Brazil, for instance, has set up a two-tier education programme whereby salesmanagers learn about women’s health through Avon-sponsored seminars, thentrain the nearly 400,000 representatives who report to them (Avon, 1994).

Performance monitoringFinally, a long-term philanthropy programme must be monitored regularly, notonly for fund-raising efficiency, but also for awareness building and attitudechanges in the target segments.

The Avon programme, for instance, has to date monitored funds and theiruse (funds raised overseas are used in the country which has generated them)and has also recorded television viewership and media print impressions (atleast in the USA). Avon, however, has not tracked the programme’s ultimateeffectiveness indicators, i.e. change in awareness levels (except in the UK), andincrease in early detection behaviour.

Non-profit guidelines for global alliancesIn the same way as a strategic framework is needed to ensure the success ofglobal philanthropy programmes for corporations, leading non-profitorganizations with worldwide operations require a similar stepwise approachfor partner selection and programme design and implementation.

Starting, like the corporate process, with a review of the overall mission, thenon-profit approach also moves on to partner selection, but diverges afterwardsto include a positioning phase, before the final programme design andorganization. Positioning has become necessary, given the increasing com-petition among non-profit organizations; it includes a worldwide competitiveanalysis leading to the development or update of the non-profit organization’sdifferentiation, and it proceeds with the quantification of this differentialadvantage, through financial and field performance indicators. In the nextphase, the campaign design takes into account, like its corporate counterpart,

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product and programme adaptation issues. Finally, performance is monitoredthrough quantitative and qualitative methods (see Figure 5).

Corporate partner selectionAfter a review of the projected alliance’s mission, which follows the processdescribed above for corporations, the major task of a non-profit organization isthe screening of potential partners. While a number of independent rankingsexist, experience has shown that, in order to be effective, a partner screeningprocess must be highly customized.

Many attempts have been made, since the 1970s, to classify corporationsaccording to “stages of moral development” (Sridhar and Camburn, 1993) or

Figure 5.Non-profit frameworkfor corporate alliances

Step 1: Mission definition

• Define strategic mission of projected alliance; ensure fit with overallmission

• Assess global applicability

Strategyformulation

Step 2: Corporate partner(s) selection

• Screen potential partners according to six criteria– Worldwide reputation and ethical track record– Fit of corporate and non-profit values– Market leadership and financial stability– Sectoral appropriateness– Other non-profit and corporate alliances– Size and range of resources

Step 3: Non-profit positioning

• Conduct a triple assessment to determine the non-profit’s relativedifferentiation

Step 4: Programme design and implementation

• Same process as corporate approach

Strategyimplementation

Strategyevaluation

Competitiveanalysis

Marketassessment(by segment)

Resource evaluation(financial and field

performance)

Positioning

Step 5: Performance monitoring

• Same process as corporate approach


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“phases of responsibility” (Sethi, 1975). The latter charts a path from socialobligation (defensive stance based on stockholder interests and legalcompliance) to social responsibility (reactive approach, but extended to allstakeholders) and to social responsiveness (interactive mode with stakeholders,anticipatory actions and commitment to social as well as economic goals).These categories remain very general, however, and, on the basis of standardsecondary sources, such as annual reports, most multinationals would appearto belong to the third stage of development. The same limitations apply tocorporate codes of ethics. Are they managerial tools for shaping change orvague aspirational credos? Their formulation matters less than theirimplementation, which cannot be judged from the outside, particularly inmultinational corporations. A further problem lies in the fact that non-UScorporations have far fewer formal codes than US companies. A 1990 survey ofthe largest German, British and French companies showed that 49 per cent (inGermany) to 70 per cent (in France) of them did not have any codes (Langloisand Schlegelmich, 1990). Another evaluation, four years later, found no solidevidence of the effectiveness of corporate codes as transformational instru-ments (Stevens, 1994). More specific and tangible screening tools come fromvarious independent rankings. The Council on Economic Priorities, forinstance, already ranked companies in the 1980s on behaviours such asenvironmental strategy, military contracting, and women and minorityemployment (Vogel, 1992). Again, however, these guides are not universallyavailable, and are not comparable in their criteria across countries.

It is therefore necessary for non-profit companies to develop their ownscreening process for major, long-term partners, according to five main criteria.Worldwide reputation and ethical track record are the most easily assessedthrough standard secondary sources. Values fit is more difficult to evaluate, butcritical to an alliance’s success. It may also be fairly elusive, as it tends to evolveover time. For an environmental non-profit company, for instance, McDonald’swould have been in the 1980s an unlikely partner owing to its reputation as amajor polluter; however, the company responded by 1989 with a recyclingprogramme and signed a 1990 agreement with the Environmental DefenseFund which included funding for a long-term R&D collaboration. By the mid-1990s, the company’s “values fit” with other environmental partners hadtherefore positively shifted. Besides market leadership and financial stability,both essential for a high-profile, sustained campaign, the non-profit companyshould also look for sectorial appropriateness. This is particularly timeconsuming to assess in a diversified multinational, but essential nonetheless,since the omission of this screening step could lead to the break-up of analliance and/or negative publicity.

The appropriateness of a company’s core business is relatively easy to assess,in a first stage. For instance, a leading global non-profit organization hasclassified potential partners into three sectorial categories:

(1) Do not consider (tobacco, alcohol, military contracting).

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(2) Consider with extreme caution (pharmaceuticals, energy).(3) Consider with caution (services, publishing, retailing, tourism, consumer

goods).Firms in the second category have high partnership potential but also highexposure risk: pharmaceutical firms are major suppliers of in-kind donations tomany charities centred on human development, such as CARE, but they alsotend to attract negative publicity when clinical trials or early product launches,particularly in developing countries, result in medical complications or deaths.Similarly, energy firms have unparalleled global scope, resources andmotivation for alliances, particularly with “green” causes, but they also carrythe risk of an Exxon Valdez crisis, as a worst case scenario.

While a core business is fairly easily judged, the entire scope of a largemultinational’s worldwide operations can only be evaluated through apainstaking, country-by-country direct assessment, often requiring insiderindustry information.

For instance, while Philip Morris would be immediately excluded by a non-profit company with the above policy, Daimler-Benz might appear as a highlydesirable partner. Only a fairly involved screening process, however, or theassistance of an industry expert, would reveal that Benz has a subsidiary,Messerschmitt, with a large military contracting business. Since this is anindirect relationship, it does not appear in the annual report or other widely-disseminated documents. Similarly, PepsiCo would pose a problem to a non-profit company with the same tobacco/alcohol/arms exclusion policy, since itpasses all tests except the subsidiary one (it has a significant wine and spiritsoperation).

At a third, most complex level of screening, a non-profit company wouldjudge not only the core business or subsidiary operations, but also the alliancesof a potential corporate partner. In sectors such as airlines or automobiles,alliance networks are extensive and involve literally hundreds of partners andsuppliers worldwide. In addition, a non-profit organization should also researchother philanthropic alliances of its potential corporate partner. A conservativegreen group such as the National Audubon Society, for instance, would be likelyto rule out a company with an existing alliance with Greenpeace, in order toavoid the “halo effect” of the negative publicity often attracted in the past byGreenpeace’s aggressive tactics.

It is important to note, however, that sectorial fit should show culturalsensitivity in a multi-country assessment. Anti-alcohol policies, for instance,are questionable when applied to an Asian background; a leading non-profitorganization recently found that its best potential Japanese partner, in terms ofresources, philanthropy track record and overall prestige, was Suntory. This ledit to re-examine and make flexible its sectorial policy, depending on the culturalcontext of the alliance. Because of these nuances, however, it is essential that thescreening process for a major potential alliance be highly centralized by thenon-profit organization. While its overseas chapters’ input is necessary for the


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screening, these chapters cannot, for the reasons above, be entrusted to makeglobal alliance decisions.

The final stage of the screening process focuses, not only on the size, but alsoon the range of resources offered by a potential partner. For non-profitorganizations such as CARE or the Red Cross, the optimal partner in thisrespect may be a global airline, which can provide free passenger and cargoservices, advertising space in its inflight magazine, brochure distribution in itsretail agencies, as well as event sponsorship and other media.

Since resource potential and values fit may be the most important screeningcriteria for an alliance, they may be matrixed in a way that lets a non-profitorganization evaluate the trade-offs to be made. As Figure 6 shows, for ahypothetical environmental non-profit group, a top partner may be a travelservices group such as American Express or a media company (The TurnerBroadcasting System, for instance, has an extensive alliance with the NationalAudubon Society). An automobile manufacturer, while high in resources, wouldbe lower on the “values fit” scale – depending on its actual environmentalstrategy; GM’s “greenwash” might exclude it, while Volkswagen’s extensiverecycling and alternative-fuel research, countered by the fact that it is still apolluter, might classify it in the medium category (see Figure 6).

Figure 6.Corporate partnerselection =resources/valuesassessment – thehypothetical case ofa non-profitenvironmentalorganization

Global travelservicesgroup

ormedia firm

H

Outdoorclothing

manufacturer

M

Organicproducegrower

L

Automobilemanufacturer

Mineralwaterbottler

Regionaldairy

Majorchemicalor energycompany

Nationalbeer

company

Localbrewery

H

M

L

Valuesfit

Resource potential

Note: Hypothetical case = environmental non-profit

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PositioningOnce one or several companies have been identified and screened, the non-profitorganization must reverse the process and, in a sense, “sell” itself to its potentialpartners. This is made necessary by a competitive environment where, in theUSA alone, over one million non-profit organizations are now registered. As ina corporate situation, a non-profit organization positioning will depend on atriple assessment of its competitors’ advantages, its market needs by segment,and its own resources. The latter may be the most complex to assess, since non-profit organizations have not, until recently, had the same need for ac-countability and performance quantification as their corporate counterparts.Their most important resources, for instance, may not be physical assets, butrather intangibles or hard-to-value items such as “name equity” (i.e. the prestigeand sales generation power of a name such as the Red Cross) or the time equityof their worldwide volunteer forces.

Although it is theoretically possible to estimate this time equity in everycountry operation by the following calculation:

Total yearly man-hours donated × International Labour Organisationaverage wage in country X,

no non-profit organization has to date done it owing to the complexity of theprocess.

All non-profit companies, however, now use quantitative measures offinancial performance to position themselves vis-à-vis their competitors. Themost standardized measure is financial effectiveness, or the percentage of fundsreceived which is used in field operations (versus fundraising or admin-istration). Both CARE and the Red Cross, for instance, have quoted financialeffectiveness ratios of 92 per cent; CARE, however, includes gifts-in-kind andUS government-donated Food-for-Peace in its ratio, which positively skews it.Potential corporate partners should therefore scrutinize, not only performanceindicators, but also their basis of calculation, in their non-profit screeningprocess.

Other indicators are also used, such as the ratio of volunteers for every paidemployee (reaching 50 for the Red Cross) and what could be called “donationleveraging”. CARE, for instance, states that each private dollar donated ismultiplied by a factor of 8.23 through gifts-in-kind, matching US governmentcontributions, support from host governments, etc.

While financial effectiveness is now tracked (although not in a standardizedmanner) by all leading non-profit companies, field efficiency remains largelyunmeasured and yet would constitute a powerful means of differentiation.While, for obvious logistical reasons, not all field programmes can be assessed,some accountability could be ensured by closely monitoring a number of pilotprogrammes through the following indicators:

● baseline situation and initial quantitative goals (i.e. increase clean waterdistribution by X per cent within Y time in region Z);


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● strategic approach (non-profit role versus partners, specific contributionof each in supplies and training);

● achievements against goals (tracked yearly for project duration);

● sustainability (technology transfer to local communities andmaintenance efficiency).

Programme design/performance monitoringOnce a non-profit company has completed its positioning process and used it inits “sales presentation” to potential corporate partners, the alliance buildingphase is completed with the mutual selection of one or several partners. Thecampaign process then proceeds as described above for corporate partners, andis thereafter monitored in the same way.

ConclusionAt a time when economics and demographics have shrunk cash and volunteerpools for non-profit organizations, and transformed many companies throughdownsizing, the strategic use of philanthropy can give both entities a powerfulcompetitive edge. As companies globalize, they can use philanthropicprogrammes to open new markets and forge a unified global image; as non-profit companies also develop their global operations, they increasingly needcorporate support, not only in cash, but also and more importantly in tech-nology transfer and volunteer mobilization.

However, the very complexity of a global corporate/non-profit alliance maylead to an ethical minefield. While it remains impossible to quantify andmonitor all aspects of such partnerships, their risk component can be greatlyreduced, and their financial and awareness building potential maximized, bythe use of a strategic framework as a requirement of any major philanthropyprogramme.

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