In 1989, American businesses gave away some $6 billion to charities, certainly no small amount of money. Yet, that sum represents a mere 5 percent of all charitable giving, and only about 2 percent of pre-tax corporate profits on average. But, corporations are in business to earn a profit; if a corporation folds, everyone loses, most especially those in need of social services.
The bottom line on corporate philanthropy is that corporations give in their own enlightened self-interest. They give to support educational reform because they are experiencing problems with the work force; they give to the arts because it enhances the quality of life in their community.
In the past decade, corporate philanthropy has changed, partly as a consequence of annual federal cutbacks totaling more than $30 billion in direct aid to non-profit organizations. The volume of requests challenges even the best-run corporate giving programs.
"There's no question that there has been an exponential growth of requests in recent years . . . serious requests, each one needing investigating," reports William C. Adams, associate professor of journalism and mass communications at Florida International University and formerly general manager of public affairs at ICI Americas Inc. Corporate-giving managers frequently assume a siege mentality; every phone call looms as a request for money, every community contact the painful reminder of pressing social needs.
Adding to the problem is the fact that most corporate giving programs lack focus and direction. "This is an absolutely critical issue in corporate contributions management. Many companies are just now developing mission statements and a program focus in response to the intense community need," according to Peter C. Morrow, Manager of Contributions and Community Affairs at E. I. DuPont de Nemours & Co. Lacking focus, they are frequently buried by community requests.
Mission and focus
Solid corporate giving programs have a well-defined mission and program focus. This aspect of strategic planning has become critical, in part due to the huge volume and wide diversity of requests. According to Adams, "More and more of the companies I work with indicate they have corporate giving missions. They may concentrate on health, environment, education . . . The trend seems to be to focus giving in a particular area to increase giving effectiveness."
"Everybody in corporate giving circles talks about the real need to attempt to measure program benefits. However, very little is done about it at present. It's trouble some to me that we don't have a handle on how effective some of the programs we fund really are; what their impact is on the community," says Mr. Morrow of Du Pont. As a result, corporate giving programs today increasingly expect some type of accountability from their beneficiaries.
Accountability is a two-way street. Responsible corporate giving programs regularly poll the community and stockholders to gauge how well they are responding to community needs, to identify emerging areas and to evaluate the successes and failures of their efforts. Du Pont relies on its managers' community involvement to give it a pulse of the community, along with close contact with United Way, the use of various studies of local human service needs, and two corporate-giving professionals to provide accountability for its $30 million program.
The Matrix Model
Due to the intricacies of American society, today's social problems are complex, resistant to change, and lack adequate resources for solutions. How then can a corporate gift, no matter how well intended, make a big difference?
Many corporations addressing complex social problems use what I call a Matrix Model to effect solutions. The Matrix Model examines which institutions have a stake in solving a social problem, then develops a web of relationships to apply effective solutions. Functioning as a communitywide partnership, each partner leverages its own contribution by virtue of the involvement of the others.
In Baltimore, Project Literacy ties together many resources in the city's efforts to combat illiteracy. Corporations and private foundations have helped finance the effort, recognizing that the quality of the future work force is at stake. Companies have instituted in-house programs to promote literacy. Social service agencies have devoted people and funds to the effort. IBM is involved, through its Infowindow software, which
teaches reading and writing.
Businesses are increasingly forming alliances designed to address specific social problems, such as pre-college education. "Our goal is to help turn out better quality educated students," says Stan Wright, Director of Corporate Contributions at Eastman Kodak, talking about his company's involvement with the Rochester public schools.
"We must meet that goal in order to continue doing well as a private enterprise. The problem is complex and long-term. In the case of investing in preschool learning centers for 3-year-olds, we're talking about a return on investment that's at least 15 years away."
Kodak brought together resources such as Bausch and Lomb, Xerox, the New York State Department of Education, and universities, as well as the school system, teachers' union, minority leaders and small businesses to address the issues.
While corporate America has a limited role to play in the philanthropic environment, that role can be significant if applied effectively.