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Philanthropy as a value-creating CSR tool



Monday, May 05, 2008

Companies wishing to create long-term value need to inspire credibility and legitimacy in the eyes of their stakeholders. One way for a company to become a good citizen is to become involved in the local community or to give to charity.

By offering jobs, investing capital, buying goods and doing business every day a company has a positive influence on society. Companies make a contribution by accepting their financial responsibility in relation to shareholders and other stakeholders. One of the most important things a company can do for society is to help the economy to prosper. Nonetheless, in the battle for customers, investors and employees it is becoming increasingly important to inspire confidence among the most important stakeholders. One way for companies to take social responsibility is to be good citizens and become involved in philanthropy and society at large.

But merely doing good is not always an adequate reason for giving away shareholders’ money. Moreover, a company’s credibility can be harmed if its activities are perceived to be inconsistent, contradictory or compensation for a bad conscious over everything else the company does. A strategic partnership with voluntary organisations, on Non-Governmental Organisations (NGOs), which is an integrated part of the business, is, therefore, to be recommended. Whatever it is the brand name stands for should combine social and economic goals and to improve the company’s long-term business potential.

Huge impact for philanthropy

A survey by H&H shows that roughly one in every three of Sweden’s top 100 listed companies has a partnership with voluntary organisations, according to what the companies say on their websites. Around every other company among the 600 largest listed companies in Europe has such a partnership, and among the 150 largest companies in Europe the proportion more than 80 per cent. WWF and the Red Cross are the two organisations that most often have partnerships with Swedish and foreign companies. Many Swedish companies also have a partnership with SOS Children’s Villages while among foreign companies UNICEF is a frequent partner.

Five-point plan of action

Each company should identify the areas in society where its help would be relevant. Preferably, these should be closely related interests within the company’s areas of activity. These can be areas related to the business in which the company has expertise, resources and contacts. It could be a matter of supporting the homeless or youth sports for companies in the property industry, or of supporting schools in India in the case of engineering companies with factories there.

A guide to a sound strategy for social responsibility

  1. Define the company’s overriding strategy
  2. Define the goals for its social responsibility
  3. Define the process for implementing the strategy and achieving the goals
  4. Identify and define partners
  5. Define the process for regular follow-up of goal achievement

On 6 May H&H will be arranging a customer seminar on dialogues with stakeholders, which are an important component in a company’s CSR communication. The seminar will look at the question of which voluntary organisations would be suitable partners, how philanthropy and social responsibility can be a CSR tool and what demands ethics analysts make on a company’s communication.

READ MORE

Are you interested in learning more about how common it is to have partnerships with NGOs and other voluntary organisations in a specific sector or in different countries in Europe?

You can read more about this in the 2007 CSR Spotlight Report, which deals with CSR communication online. The report is based on three case studies of European companies from different countries and sectors. You can also find examples of best practices that can help you to find the means and the inspiration to make you online communication of CSR more effective.

The report can be ordered at www.webranking.eu or by sending an email to .

Updated 5/6/2008 3:09 PM

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