Harvard Corporate Governance Forum: “Making the Business Case for Corporate Philanthropy”

There is an excellent analysis of corporate philanthropy programs in the U.S. – reviewing their trends, issues,and tendencies – the Harvard Law School Forum on Corporate Governance and Financial Regulation:

http://hvrd.me/qUKOpi

The majorconclusions of the entry, madeby Matteo Tonello of TheConference Board, are asasfollows:

Given the diversity of corporate giving programs, there is no “one size fits all” approach to evaluating the effects on social welfare, and companies must individually determine which metrics best suit their needs. But overall, companies should consider the following steps for effective oversight:

1. Approve an annual philanthropy plan that is consistent with the company’s business strategy.

2. Ensure that appropriate resources are available for the company’s giving professionals to carry out the plan.

3. Implement internal controls to prevent executives from interfering with the plan for their personal benefit.

4. Assess the outcome of the plan.

Conclusion

Expectations for corporate philanthropy are evolving. Officers and directors can no longer treat charitable giving as a peripheral activity or an after-the-fact distribution of profits. In order to make a business case in support of corporate philanthropy, executives should integrate giving with other business activities, institute controls to limit managerial opportunism, and develop procedures to measure and evaluate financial and social outcomes. It is no longer sufficient for corporate philanthropy to simply “do good.” If corporate giving is to succeed in the long run, it must provide a financial return. Acknowledging the economic benefits of corporate philanthropy does not negate its power to alleviate social problems and enhance communities.

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