The next step in corporate philanthropy

Why do corporations aim to optimize all aspects of their business besides giving?

The end of the 20th century saw a clear pivot in what society expects of corporations. In addition to conducting ethical business practices, society increasingly wants to see corporations playing a key role in addressing intractable social problems like poverty and climate change. Corporations responded. Charity Navigator shows that corporate giving grew from $12.7 billion in 2006 to $18.5 billion 2016, a 45% increase.

With this increase, many corporations have seen meaningful benefits to their bottom line. Literature on the value of corporate philanthropy to the business itself and how to measure corporate philanthropy has multiplied in line with society’s increased expectations. What is missing, however, is a clear business case for investing in the systems and processes required to do robust impact measurement.

I recently concluded a project with the biotech company Genentech where I helped to define a framework and metrics to understand the impact of their charitable giving. A critical accompaniment to the tangible framework, outputs, and outcomes was making the case for investing time and resources in a more robust impact measurement approach. While information exists about the importance of and how to design a strong corporate responsibility program, little exists about why it is important to measure the impact of giving and charitable efforts.

It may seem like an obvious next step to being able to articulate the impact of giving, but few corporations do it well. As part of the project, I benchmarked several companies—peer biotech companies and those who are considered leaders in corporate philanthropy—and I found that the vast majority only conduct the very basics of measuring dollars donated, charities/people touched, and employee hours dedicated. Many that I spoke with are only now beginning to think about how to develop a more robust measurement system.

Why the disconnect between corporations who seek to optimize all aspects of their business, but not measure and learn from their philanthropic efforts so they can give more effectively? To many corporations, philanthropy or responsibility programs remain a “nice to have” rather than a “need to have.” Executives rarely field questions about corporate responsibility practices from investors directly and do not hear the questions about philanthropy that staff receive or are embedded in ranking surveys for publications such as Fortune’s 100 Best Companies to Work For.

Treating corporate responsibility as a “nice to have” is rather short sighted. Employees—and especially millennials who will increasingly comprise the workforce—prioritize companies who give back to the community. In fact, Project ROI found that 80% of millennials want to work for a company that cares about how it impacts and contributes to society. As Terence Lim from CECP said, “To realize meaningful benefits, philanthropy cannot be treated as just another ‘check the box,’ but rather must be executed no less professionally, proactively, and strategically than other core business activities.”

The future is clear – corporations will need to be able to show how their efforts make a meaningful difference in society. This means more than publicizing dollars given or even people touched. It means investing in robust measurement approaches to show how efforts are changing behaviors and making a dent in intractable social issues. We currently have the resources to understand how to do this, but the first step is missing – making the case to decision makers to invest in thoughtful measurement. Until corporate philanthropy teams have this support from the C-suite, philanthropy will remain a “nice to have.”