OPINION: Corporate philanthropy is as much strategic as it is ahelpful part of a functioning society

Within 48 hours of September 11, major corporations had offered

$50 million to the relief efforts. They gave rescuers everything

from Johnson & Johnson medical supplies to McDonald's hamburgers, and

they donated cash to the charities that promised to help the victims'

families: $10 million each from Microsoft and GE, and $5

million from The Walt Disney Corporation.



In so doing, they overwhelmingly rejected the pernicious philosophy that

insists the only social responsibility of business is to be

profitable. This view has been attributed to conservative economist

Milton Friedman, who argued in a 1970 New York Times Magazine article

that business fulfills its role to society by merely turning a profit,

and that managers should not make donations to charities without the

express instruction of shareholders. Management guru Theodore Levitt

takes a similar position, arguing that solving societal problems is the

exclusive province of government.



Others have gone even further, arguing that companies betray their own

interests when they support nonprofits, which are often critical of

corporations.



But smart businessmen have always understood that Friedman is both right

and wrong. He's right that the primary goal of business is to turn a

profit and create wealth for shareholders, jobs for employees, and

products for customers. But he's wrong in that profitability can never

be cleanly separated from the well-being of the society in which a

company functions.



At the extreme, that's an obvious point. Societies with oppressed

populations are rarely attractive markets for either capital or sales.

But it's true at the margins, too. Addressing societal issues like

education, disease, poverty, and environmental risk creates a healthier,

wealthier society, and more fertile ground for enterprise.



As for the claim that managers have no right to dispense shareholder

funds to philanthropic causes, that's only a meaningful stance if

corporate philanthropy is regarded as altruism rather than as an

investment. But strategic philanthropy is an investment in both the

goodwill of key stakeholders and in the continued prosperity of

society.



It's fine for companies to admit some self-interest in their

philanthropic acts. In this case, that self-interest is enlightened, and

means only that companies - like people - are inextricably connected to

the societies in which they operate.



PR people must remind management that the business cannot be viewed in

isolation from society as a whole, that "giving back" to society is not

just generous, but a prudent investment in the long-term well being of

the institution. Most companies instinctively recognized that fact in

the wake of September 11, and acted appropriately. Don't let them forget

it as things return to normal.



- Paul Holmes has spent the last 15 years writing about the PR business

for publications including PRWeek, Inside PR, and Reputation

Management.



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