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.
