Tuesday, August 24, 2010

Corporate "Philanthropy": Oxymoron?

In Monday's Wall Street Journal there appeared a provocative essay by Arneel Karnani (whose first name WSJ managed to misspell), a business professor at University of Michigan. Titled "The Case Against Corporate Social Responsibility," the core argument is "the idea that companies have a duty to address social ills is not just flawed ... but it also makes it more likely that we'll ignore the real solutions to these problems."

In my opinion Prof. Karnani is right. But I have a slightly different take born of boots-on-the-ground. My experience is that no company in its right mind ever takes on "corporate social responsibility" for its own sake. Nor should it. Profit is always foremost, or should be; what gets marked down as social responsibility is almost always little more than a marketing ploy or a p.r. gambit. Years ago I worked with George Weissman, then head of Phillip Morris, and one of the few p.r. guys who ever actually rose to the top of a major public company. Weissman was one of the first to come up with the social responsibility tag. I once asked him if it wasn't still "just about hawking cigarettes." His answer was one word "yes." And we both laughed.

As a native New Yorker, and therefore an innate cynic, I am much more comfortable with that "yes" than I am with the posturing that goes along with "social responsibility." In recent years I have become quite involved in helping clients into "cause related marketing," a practical application of the social responsibility thrust. Ultimately, when it works, CRM is the devil and the angel finding common ground.

If there is an act of apparently pure corporate beneficence it simply does not follow that "image," brand" or whatever the current locution is can be extended without any consideration of the good it will do the company. Fine with me. That way we each know where the other stands. Indeed in recent years what I have observed is an ever increasing transactional rationale to corporate giving.

Most probably every charitable gift - regardless of whether it is from a corporation or an individual is a mix of altruism and self-interest. I think of an A/B axis, pure altruism at one end, unmitigated self-interest on the other. Any donor's gift falls somewhere along that axis - and it does not necessarily fall in the same place with each gift. Depending on the cause there may be a greater or lesser degree of altruism v. self interest.

I give money each year to the volunteer fire department in the small town I live in: If my house is on fire I want to know I'm on the donor list. By small town standards I am also a "major" giver to the local humane society. This giving (almost every month) is 100% altruism. I am up to here in (needy) cats and don't want to add to the three who are in charge here. But I cannot resist the monthly newsletter - or the BRE that falls out! All my other giving falls somewhere else along the axis.

A cause marketing firm I work with has published data suggesting that socially aware companies do better at the cash register. Does that prove doing well by doing good really counts? Or is it just clever marketing?

Monday, August 9, 2010

Give It Up!

As everyone by now knows 40 US billionaires have pledged to give away more than half their fortunes to charity, the so called "Giving Pledge." This may be a p.r. stunt or it may be heartfelt philanthropic impulse - and at least among a few, it may be a bit of both. Most of the names on the list are familiar to the trade. There may be a few dark horses.

I am struck by some of the missing names; I can't go further because some of them are among my clients. That aside the first thing that comes to mind is why stop there? Why not encourage everyone who can to do the same? For as long as stats have been kept the total philanthropic handle in the US hovers just above (or in a few years just below) 2% of GDP.

Many of us feel the real challenge to philanthropy is how to move the needle up. Given that in 2009 donations in the US came to some $306 billion a 1% bump would be a major accomplishment: another $3 billion would/could significantly restore much that has been lost the last few years. Of course that wouldn't come in one year but the direction is what counts.

These generous donors aside, the richest people in America, there is a vast middle of near billionaires and "poor" billionaires to say nothing of those struggling with fortunes of $50 million or more. ... I am generally skeptical of pledges of this kind. They are not easily measured. Who is to keep score? Giving USA would pick up some of them. It is also well known that Forbes, the base list for billionaire metrics overstates some and understates others. It is admittedly hard information to acquire as the subjects for the most part are not completely cooperative. Duh.

Well. As I tell my friends I have already given half my net worth away. It's called the recession.