December 12, 2002 | Read Time: 2 minutes
Although corporate philanthropy is in decline, a handful of large companies have begun to develop charitable programs closely tied to their corporate strategy, serving a social need and indirectly benefiting their businesses, according to the cover article in the Harvard Business Review (December).
Corporate giving as a percentage of profits has dropped by 50 percent during the last 15 years, the article says, as corporate executives have faced increasing pressure from investors to maximize profits. When companies do give, they usually donate to causes in which they have no expertise, says the article, which was written by Michael E. Porter, a professor at Harvard Business School, and Mark R. Kramer, managing director of the Foundation Strategy Group, a Boston consulting firm, and a columnist for The Chronicle.
But at least 11 companies have developed “context-focused” philanthropy, the authors write, in which they closely integrate their charitable work with their corporate missions, the article says.
Since encountering a shortage of qualified employees in the late 1990s, for instance, Cisco Systems has spent $150-million to develop an Internet-based curriculum to train secondary- and postsecondary-school students, including students in inner-city neighborhoods, in its business.
The program has helped people in some of the most economically depressed areas in every state and 147 countries get training for technology jobs; it has improved the local economy in many cities, attracted partnerships with other companies, and produced workers for Cisco.
If more companies were to establish similar types of charitable programs, the article says, the “pattern of corporate contributions would shift significantly, the overall level of contributions would likely increase, and the social and economic value created would go up even more sharply.”
The article, “The Competitive Advantage of Corporate Philanthropy,” is available for $6 at http://harvardbusinessonline.hbsp.harvard.edu.
