Corporate Giving: Whatever You Call It, It’s Not Philanthropic

There are many myths and erroneous assumptions about how corporations manage their community investments. The first myth (and probably the most important one to dispel) is the notion of corporate philanthropy – that corporations are philanthropic entities that share human goals and ideals. The faster we dispel that myth, the sooner we will understand the true essence of corporate community investment.

Corporations are not philanthropic. They are not looking to make a difference in the world through their community investments (I am using the word “philanthropic” in its truest sense – loving humankind).

In saying so, I am not making a value judgement about corporations, especially large multi-layered corporations. Corporations play a very important role in Western democracy and capitalism. But a corporation is not a living, breathing entity. It cannot be good, any more than it can be evil. Its stakeholders (management, customers, employees, shareholders) all play key roles in shaping corporate actions but it is important to remind ourselves that corporations cannot have feelings. Thus, their giving cannot be motivated by genuine philanthropy.

Corporate Philanthropy, Corporate Social Responsibility and Community Affairs

We use many terms to discuss corporate giving. Most of this terminology fails to accurately describe how corporations make social investments.   Corporate philanthropy (too paradoxical), corporate social responsibility (too broad), community affairs (too vague) are all laden with shortcomings. For the purpose of this article (and future articles in this series), I will use the term “community investment” to describe corporate giving. It is a clear and relatively straightforward, and I’m not sure there is a better one.

These articles will focus on how corporations spend money in the community and, to a lesser extent, how corporations allocate their human capital to serve the sector as volunteers.   The extent of corporate giving in Canada is often overstated. Collectively, corporations in Canada gave $2.3 billion in 2009, although this figure is admittedly inaccurate due to inconsistent reporting tendencies on the part of corporations (Ayer, Imagine Canada, 2009). Compared to individuals (who give over $10 billion annually), corporations aren’t big financial players but since their gifts are often large, highly recognized, multiyear commitments, they get more than their share of the spotlight.

The fact that corporations cannot be inherently philanthropic means that their giving cannot be motivated by altruism, faith, empathy or other decidedly human emotions. This fact is critical. Charities need to understand donor motivations in order to successfully appeal to the donor’s willingness to give. The next several articles will discuss these motivating factors and provide advice about how to navigate through the muddy waters of corporate community investment. The end goal? Long-term, sustainable and lucrative partnerships between the corporate and charitable sectors.

How Corporations Decide To Allocate Social Investments

My first article on corporate community investment attempted to dispel some of the basic tenets of corporate philanthropy – namely, that the notion of “corporate philanthropy” is a misguided one because all corporate giving must be driven by building shareholder value and that the values associated with philanthropy (empathy, love and other decidedly human emotions) cannot be expressed by corporations (in that article, I also underscored that I was not rendering any judgment on the moral validity of corporations).

In this article, I want to talk more about the decision-making process at corporations when it comes to allocating their social investments. By understanding the influencers of corporate decisions, charities can better understand how to navigate their emails, phone calls, grant applications and proposals.

The first thing that I’ll say about the decision-making process is that it’s typically very complex (and that there is very little consistency across different organizations). This complexity is exacerbated by the fact that a single organization may have many influencers. For example, at Mackenzie Investments, my former employer, some decisions were made straight out of the office of the CEO. Others were heavily influenced by senior management or the sales teams. Most decisions were made within the context of the Mackenzie Investments Charitable Foundation where staff volunteers at all levels were key influencers, shepherded by the Foundation’s well-articulated Giving Guidelines.

So if we look at Mackenzie’s gifts, both through the Foundation and outside of it, we might struggle to find common ground. Over the past several years, Mackenzie has been a major supporter of Queen’s University, TIFF, North York Harvest Food Bank, Holland Bloorview Kids Rehab Hospital Foundation and Scarborough Women’s Centre (all of these gifts are of public record). If you can find a common thread between these gifts, hat’s off to you! There isn’t one, except the fact that these are all wonderful charities  These gifts were guided through different processes managed by different individuals. Even in a mid-sized corporation (Mackenzie has less than 1000 employees), the decision-making process can make your head spin.

The complexity of the corporate decision-making process is exacerbated by the fact that it is constantly changing. Corporations are in a constant state a flux and these variations extend to their community investment practices. Sometimes this unevenness is a result of changing roles within the corporation. Other times, it is the product of a change in community investment philosophy (which may or may not be the result of broader strategic decisions around marketing, branding, or human resources management). Whatever the case, even for a corporation with whom you currently have a relationship don’t assume that you understand the decision-making process.

Many corporate-charitable relationships fail because of faulty assumptions. In many cases, charities assume they know and understand what a corporation is seeking from its community investments. These assumptions often extend to the decision-making process.   Don’t assume that the community investment decisions are made by the CEO, senior management, the Foundation president or community investment professionals. Furthermore, corporations rarely advertise how community investment decisions are made (perhaps because they don’t want these individuals subjected to a barrage of emails, phone calls and LinkedIn requests!).

Corporate Philanthropy Decision-Making

So the root of understanding corporate decision-making is to ask appropriate questions of the corporation. When I meet with a corporation, I am obviously trying to understand their broader community investment strategies and tactics. But equally important is gaining an understanding of their decision-making process.

Here are the questions to ask:

  • Please walk me through the decision-making process for your community investments
  • Is there anyone that I should be talking to specifically?
  • Are you willing to field questions about my application/proposal before it is submitted?
  • To whom should these questions be submitted?
  • What are the timelines around decision-making?
  • Do you have any other resources that will help guide me through the process?
  • In other words, it is critical to understand not just why community investment decisions are made but how. By doing so, you will greatly increase your chances of success.

About the Author

Brad Offman is Founder and Principal of Spire Philanthropy, a management consultancy specializing in corporate-charitable partnerships.  He is the former Senior Vice President, Strategic Philanthropy at Mackenzie Investments.  Brad is also former President of the Mackenzie Investments Charitable Foundation and Managing Director of the Mackenzie Charitable Giving Fund.  Prior to joining Mackenzie, Brad served as Vice President, Development at the Toronto Community Foundation.

Brad is past Chair of the Leave A Legacy Program for the Greater Toronto Area and former member of the Board of Directors for Philanthropic Foundations Canada.    He is a past Faculty Member for the CAGP Original Gift Planning Course and is currently on the organization’s Government Relations Committees.  He is also on the Editorial Advisory Board for Gift Planning in Canada.

Brad holds a Master’s Degree in Business Administration and a Master of Arts Degree from the University of Toronto and a First Class Honours Bachelor of Arts Degree from McGill University in Montreal.