A well-designed corporate giving program clearly articulates a congruence. Acknowledging the economic benefits of corporate philanthropy does not negate. ExxonMobil is the world’s largest publicly traded international. Employee giving; ExxonMobil. ExxonMobil Corporate overview. Corporate Social Responsibility at. The Nintendo Wellness Connection Program supplies. What kinds of community and corporate giving activities does Nintendo of. The Competitive Advantage of Corporate Philanthropy The Idea in Brief Caught between critics demanding . Public cynicism, not goodwill. Yet companies can give strategically: by using philanthropy to improve their competitive context . Through context- focused philanthropy, corporations provide money, capabilities, and partnerships to charitable causes in ways that sharpen their own competitive edge. The Idea in Practice Where to Give. To generate the most social and economic value, focus your philanthropy on environmental conditions that will most enhance your productivity: Factor conditions. It's a golden age for corporate giving to. The easiest way to implement such a program is to take a look at your donor list or board. Increase the presence of trained workers, high- quality scientific and technological institutions, adequate physical infrastructure, and available natural resources. Exxon Mobil makes substantial donations to improve roads in developing countries where it operates. Dream. Works, a film production company, trains high school and community college students in skills required in the entertainment industry. Expand local markets and increase local customers. Apple Computer donates computers to schools, introducing its products to young people. Schools benefit; students and teachers become sophisticated consumers; Apple. Context for strategy and rivalry. Ensure that rules, incentives, and norms governing local competition encourage investment, protect intellectual property, open local markets to trade, and reduce corruption. Example: Transparency International. Local citizens benefit. Sponsoring companies gain access to markets. Encourage development of clusters: local concentrations of interconnected companies, suppliers, industries, and institutions in a particular field. Having high- quality supporting industries and services nearby enhances your firm. American Express depends on travel- related spending for much of its credit card revenues, so it cultivates clusters to improve tourism. Its Travel and Tourism Academies, located in thousands of secondary schools in ten countries, trains students for careers in travel agencies, airlines, hotels, and restaurants. Local citizens gain jobs; Am. Ex strengthens its industry. How to Give. To enhance your philanthropy. Most philanthropy involves giving money to other organizations that deliver the social benefits. To select grantees that will produce the greatest social impact for your philanthropic dollar, leverage your local employees. Grand Circle Travel uses its overseas offices to identify fundable historical preservation projects. Promote effective nonprofit organizations to attract additional donors and improve the outlook for all players. Advance best practice. Develop new means to address social problems. Put them into widespread use. Example: Pfizer developed a drug treatment for preventing blindness caused by trachoma. It donated the drugs to developing countries, working with world health organizations to create infrastructure to prescribe and distribute them. The program will reach 3. Pfizer. Corporate philanthropy is in decline. Charitable contributions by U. S. The reasons are not hard to understand. Includes when and how benefit payments are made, benefits calculators and benefit fraud. Benefits for families.Executives increasingly see themselves in a no- win situation, caught between critics demanding ever higher levels of . Giving more does not satisfy the critics. And executives find it hard, if not impossible, to justify charitable expenditures in terms of bottom- line benefit . This dilemma has led many companies to seek to be more strategic in their philanthropy. Increasingly, philanthropy is used as a form of public relations or advertising, promoting a company. Although it still represents only a small proportion of overall corporate charitable expenditures, U. S. Arts sponsorships are growing, too. While these campaigns do provide much- needed support to worthy causes, they are intended as much to increase company visibility and improve employee morale as to create social impact. Tobacco giant Philip Morris, for example, spent $ 7. Not surprisingly, there are genuine doubts about whether such approaches actually work or just breed public cynicism about company motives. The economist Milton Friedman laid down the gauntlet decades ago, arguing in a 1. New York Times Magazine article that the only . If the corporation makes a contribution, it prevents the individual stockholder from himself deciding how he should dispose of his funds. The majority of corporate contribution programs are diffuse and unfocused. Most consist of numerous small cash donations given to aid local civic causes or provide general operating support to universities and national charities in the hope of generating goodwill among employees, customers, and the local community. Rather than being tied to well- thought- out social or business objectives, the contributions often reflect the personal beliefs and values of executives or employees. Indeed, one of the most popular approaches. 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. What about the programs that are at least superficially tied to business goals, such as cause- related marketing? Even the successful ones are hard to justify as charitable initiatives. Since all reasonable corporate expenditures are deductible, companies get no special tax advantage for spending on philanthropy as opposed to other corporate purposes. If cause- related marketing is good marketing, it is already deductible and does not benefit from being designated as charitable. But does Friedman? Underlying it are two implicit assumptions. The first is that social and economic objectives are separate and distinct, so that a corporation. The second is the assumption that corporations, when they address social objectives, provide no greater benefit than is provided by individual donors. These assumptions hold true when corporate contributions are unfocused and piecemeal, as is typically the case today. But there is another, more truly strategic way to think about philanthropy. Corporations can use their charitable efforts to improve their competitive context . Using philanthropy to enhance context brings social and economic goals into alignment and improves a company. In addition, addressing context enables a company not only to give money but also to leverage its capabilities and relationships in support of charitable causes. That produces social benefits far exceeding those provided by individual donors, foundations, or even governments. Context- focused giving thus contradicts Friedman. Cisco Systems, to take one example, has invested in an ambitious educational program. By focusing on social needs that affect its corporate context and utilizing its unique attributes as a corporation to address them, Cisco has begun to demonstrate the unrealized potential of corporate philanthropy. Taking this new direction, however, requires fundamental changes in the way companies approach their contribution programs. Corporations need to rethink both where they focus their philanthropy and how they go about their giving. But this is a false dichotomy; it represents an increasingly obsolete perspective in a world of open, knowledge- based competition. Companies do not function in isolation from the society around them. In fact, their ability to compete depends heavily on the circumstances of the locations where they operate. Improving education, for example, is generally seen as a social issue, but the educational level of the local workforce substantially affects a company. The more a social improvement relates to a company. In establishing its Networking Academy, for example, Cisco focused not on the educational system overall, but on the training needed to produce network administrators. Competitiveness today depends on the productivity with which companies can use labor, capital, and natural resources to produce high- quality goods and services. Productivity depends on having workers who are educated, safe, healthy, decently housed, and motivated by a sense of opportunity. Preserving the environment benefits not only society but companies too, because reducing pollution and waste can lead to a more productive use of resources and help produce goods that consumers value. Boosting social and economic conditions in developing countries can create more productive locations for a company. Indeed, we are learning that the most effective method of addressing many of the world. Most corporate expenditures produce benefits only for the business, and charitable contributions unrelated to the business generate only social benefits. It is only where corporate expenditures produce simultaneous social and economic gains that corporate philanthropy and shareholder interests converge, as illustrated in the exhibit . It is here that philanthropy is truly strategic. A Convergence of Interests Competitive context has always been important to strategy. The availability of skilled and motivated employees; the efficiency of the local infrastructure, including roads and telecommunications; the size and sophistication of the local market; the extent of governmental regulations. But competitive context has become even more critical as the basis of competition has moved from cheap inputs to superior productivity. For one thing, modern knowledge- and technology- based competition hinges more and more on worker capabilities. For another, companies today depend more on local partnerships: They rely on outsourcing and collaboration with local suppliers and institutions rather than on vertical integration; they work more closely with customers; and they draw more on local universities and research institutes to conduct research and development. Finally, navigating increasingly complex local regulations and reducing approval times for new projects and products are becoming increasingly important to competition.
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