Corporate Philanthropy Grapples With How to Create Giving Programs

Denver

Many companies are in the midst of transformation in the way they think about creating social good — and are interested in finding models in which they can simultaneously improve the world and their bottom line, participants in a session for corporate grant makers said today.

In a talk at the annual Council on Foundations conference, Kyle Peterson, managing director of FSG Social Impact Advisors, said that businesses have moved in the last 10 years from ignoring or understating problems to wanting to solve them and believing that doing so can be beneficial to their companies.

“What we’re looking at now is how to move toward more shared value,” Mr. Peterson said.

He cited several examples of companies that have tried this approach:

* General Electric, whose “Healthymagination” effort is trying to improve health care by reducing costs and increasing quality and access. “This matters to the business,” said Mr. Peterson. “They realized that if they get involved in this space, they can solve huge problems that government isn’t solving, that NGOs aren’t solving.”

* Mars, the candy company, which is investing in new seed stocks and fertilizers to improve the output of cocoa farmers in Ivory Coast, something that will help its business but also the farmers.

Corporate foundations have also adopted new models. Among them:

* Grand Circle Foundation, the foundation arm of a venture-travel company in Boston, which gives grants to orphanages, schools, and museums that are visited by people who take its trips.

* A nonprofit group created by PetSmart, which raises money from customers to support animal adoptions.

* Pearson Foundation, the philanthropic arm of the media and education company, which is working with New Leaders for New Schools, a group that supports school principals.

But Mr. Peterson emphasized that while those examples sound great and straightforward, they are very complicated to create and to do well. He said that many companies are struggling now with the “how” — how to actually shape and implement programs that create “shared value” for the company and society.

Among the challenges:

Resistance to change. There seem to be a set of circumstances — a supportive CEO being one of them — that make it easier to embrace change, said Mr. Peterson.

Getting started. Whether its the people from the corporate foundation or employees on the business side who are trying to push change, they may face challenges communicating those ideas to others, getting support for change, and finding people interested in working with them, he said.

Foundation role. Questions will arise around how to ensure that efforts to promote social good aren’t abused once the business side gets involved, Mr. Peterson said. He also said the company will have to grapple with what will happen to the traditional grant making done by the foundation.

Governance. Companies will have to struggle with what type of leadership model works best to run an effort that involves both the business side and the foundation, he said.

Competencies. What kind of people will be needed for this new model of shared value? Mr. Peterson asked. What talents and skills will be needed?

“It’s hard,” said Mr. Peterson. “We were naive in the beginning about how quickly things could change. It all sounds so rosy, doesn’t it, like it’s easy. It’s not.”

Another challenge, said Akhtar Badshah, senior director of community development with Microsoft, is determining how to set goals about how much money the company can expect to make off of an effort that is also focused on creating social good.

He said that when a business is working internationally, in places where many people are living on less than $2 a day, there may not be an opportunity to profit.

“We need to be careful about whether we’re looking at this as a revenue generator versus profit,” he said. “It starts getting down a slippery slope.”