The Australian Centre for Philanthropy and Nonprofit Studies, qut

Reference List



Chapter 12: Business giving

Daniel Arias

The components of business giving

Corporate responsibility

‘… the manner in which companies behave ethically and responsibly in their core business. This includes ethical and responsible treatment of stakeholders, including staff, customers, investors, safe products, ensuring responsible practice through the supply chain, as well as contributing more generally, beyond what might be considered core business, to community wellbeing.’

This definition aligns with how the Center for Corporate Citizenship in Boston College’s Carroll School of Management defines what it labels ‘corporate citizenship’, which is a proxy in many Unitd States (US) corporations for the management approach some call CSR:

‘At its core, corporate citizenship is about the role business plays in 21^st century society. It encompasses corporate activities related to community involvement, philanthropy, environmental, and governance issues. Companies that embrace it seek to strengthen their relationship with communities and build sustainable strategies for addressing large societal issues.

In the United Kingdom (UK) in recent years, professor David Grayson from the Doughty Centre for Corporate Responsibility at Cranfield School of Management, has been working with corporations in Europe, Australia and China to position CSR as a positive force that can fuel business growth and development, while contributing to social and environmental sustainable development.

He writes about ‘corporate social opportunity’, based on innovations in developing new or improved products and services, serving under-served or creating new markets, or organising the business differently in a new business model. The goal of corporate social opportunity is to create an environment in an organisation in which numerous corporate social opportunities are possible (Grayson and Hodges 2004).

Corporate community investment

The Centre for Corporate Public Affairs states CCI defines how an organisation uses its resources (monies, management, employee time, influence) in local communities to positively support the community (Centre for Corporate Public Affairs and Business Council of Australia 2007).

This investment is a core and integrated business investment that is part of organisational strategy, whereas in the past these activities were at the periphery. Consequently, this enables community organisations to effectively acquire and leverage sustainable corporate resources to build social capital.

Both the Centre for Corporate Public Affairs, operating in Asia Pacific, and the Boston College Center for Corporate Citizenship, working in North and South America, work closely with leading corporations. They both define philanthropy, community partnerships, workplace giving and workplace volunteering as components of CCI (Centre for Corporate Public Affairs and Business Council of Australia 2007; Boston College Center for Corporate Citizenship 2015).

Corporate philanthropy

Corporate philanthropy lacks a clear or unified framework to define specific philanthropic activities. The academic literature identifies a number of areas in which clear parameters are required:

• 
  are corporate art collections philanthropy or merely sound commercial investments? (Suddaby, Hardy and Nguyen 2011)
  
• 
  how does cause-related marketing relate to corporate philanthropy? Is it a component of an organisation’s overall corporate philanthropy strategy? (Galaskiewicz and Wasserman 1989; Moir and Taffler 2004), and
  
• 
  does sponsorship differ from corporate philanthropy because there is a direct counterpart to the investment, namely ‘access to exploitable commercial potential’ derived from the sponsored activity? (Meenaghan 1991).
  

Corporate philanthropy is defined 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. Other assets include securities, land, buildings, use of facilities or utilities, materials and supplies, intangible assets, services, and unconditional promises to give those items in the future.’ (Statement of Financial Accounting Standards 1993)

The definition above suggests that any transfer of funds or resources from a business to another entity is only philanthropic if it requires no reciprocity.

In much of the literature from the US, any giving by business is implicitly treated as ‘philanthropy’. In Australia, and among many Fortune 500 companies in the US, philanthropy (donating monies only, related or unrelated to business strategy with no expectation of any benefit to the business) is explicitly considered to be one element among many that comprise CCI or corporate citizenship (Centre for Corporate Public Affairs and Business Council of Australia 2007).

Corporate volunteering

The literature refers to corporate volunteering and workplace volunteering interchangeably. Peak volunteering organisations globally seek to increase the number of companies that provide time during their hours of employment to engage in volunteer work for charities and NGOs:

‘Volunteerism is one of the most common approaches companies take in making community involvement part of their corporate citizenship efforts. Employee volunteers are perhaps the greatest asset companies can leverage when trying to have a positive impact in the communities where they operate and do business.’ (Centre for Corporate Public Affairs and Business Council of Australia 2007)

‘Corporate volunteerism provides great benefits to a community while generating business value in the form of increased employee engagement and opportunities for team-building.’ (Boston College Center for Corporate Citizenship 2015a)

In a report for National Australia Bank, The Allen Consulting Group (2007) stated:

‘Corporate volunteering is defined as allowing staff to engage in unpaid work for a community organisation during work hours for a wider societal benefit, and for the possible benefit of the volunteer and for the corporation … Allocating staff time for community projects is becoming a key feature of many CSR programs.’

Korngold (2005) identifies six key factors that motivate businesses to get involved with nonprofit organisations (NPOs), including via volunteering:

• 
  developing leadership
  
• 
  facilitating team-building
  
• 
  enhancing appreciation of diversity
  
• 
  fostering loyalty and a sense of community
  
• 
  building visibility and goodwill, and
  
• 
  promoting economic development.
  

As McGregor-Lowndes, Flack, et al. (2014a) noted, international comparisons of the rates of volunteering are difficult to establish; the same is true for comparisons of workplace volunteering from nation to nation.

The literature suggests workplace volunteering has plateaued in the US (Eisner et al. 2009) and is rising from low bases in Australia. In the National Survey of Volunteering Issues a large proportion of volunteer-involving organisations had not involved corporate employee volunteers (Volunteering Australia 2011).

In the UK the London Benchmarking Group (LBG) reported 640,000 employees of companies in the UK participated in workplace volunteering programs in 2014 and contributed 4.8 million working hours through their workplace program (London Benchmarking Group 2014).

Corporate foundations

In the US especially, but also in Australia, the UK and other parts of Europe as well as in South America and parts of Asia, corporations fund some of their CCI from entities known as foundations.

The word ‘foundation’ has no precise legal meaning across jurisdictions globally. However, in philanthropic terms it refers to a trust established to make grants to charities, NGOs, individuals or to carry out charitable purposes. A foundation also refers to a fund which exists to provide ongoing support to a particular organisation, or to a charitable organisation itself (Philanthropy Australia 2016).

A corporate foundation differs from other trusts and foundations in that it derives the majority of its income from a profit-making company. It receives income from several models—as investment income on assets originally given by a company, regular donations from a company, an endowment linked to a company’s profits, in lieu of shares, or money raised by a company’s customers or employees (MIT Sloan Management Review 2005).

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