What Corporate and Individual Philanthropy Have in Common

McKinsey just released one of the global surveys it conducts with CEOs or C-level executives around the world. This one focused on "The State of Corporate Philanthropy." With the rise of the corporate social responsibility movement, and increased demands by consumers for businesses to be good social citizens, it is no surprise that corporations use philanthropic giving as a way to not only reap social benefit. Nearly 90 percent of the companies surveyed by McKinsey now "seek business benefits from their philanthropy programs as well."

So, like individual philanthropists who use charitable vehicles to not only donate money to causes they care about, but to realize the greatest tax advantages and ease the transitions between generations, businesses use philanthropy to do good and do well at the same time. This is really no surprise.

What is also not surprising is that, like individual philanthropists, the majority of corporate philanthropists aren’t satisfied that their donations are making the desired impact:

Whatever the business goals of their philanthropy programs, more than 80 percent of respondents say they are at best only somewhat successful at meeting them. Respondents are slightly more positive about how well their philanthropy efforts meet social goals or stakeholder expectations.

Perhaps the most striking similarity is that those corporate philanthropists are most strategic in their giving. The companies that report that their philanthropic giving is most effective are those that, "align their philanthropic programs with the social and political trends that are most relevant to their businesses...These effective companies are also likelier to consider local community needs and alignment with business objectives when they decide how to focus their corporate philanthropy programs. And they are much more likely to collaborate with other companies on philanthropic programs and to believe that their programs will become increasingly global."

The bottom line for companies and for individuals appears to be that strategic giving is more effective than reactive, or impulsive giving (sometimes called "charitable check writing"). As more and more organizations shift toward measuring the impact of charitable dollars, there will surely be more data to support this thesis, hopefully spurring a shift toward more strategic philanthropy by both people and companies.

Caroline Heine