Quick. Name a company today grappling with severe image issues.
Quick. Name a company today grappling with severe image issues.
Chances are you thought of a little software outfit in Washington
Microsoft and its leader, Bill Gates, have addressed the company’s image
problems in several ways over the past few years, and one of the things
they’ve done is to delve into philanthropy.
It remains to be seen whether Microsoft’s largess will melt away the
public’s money envy and give people a warm feeling inside when they hear
the company’s name. But Microsoft’s philanthropic activity raises that
very question: whether giving away millions can help revive a bad
reputation, or at least maintain a decent one.
Microsoft’s software donations to schools and libraries also point up
the biggest trend in corporate philanthropy today: giving to causes that
are linked to a company’s core competency - usually called ’strategic
philanthropy.’ More is likely to be heard about such strategic giving if
the newly formed Committee to Encourage Corporate Philanthropy succeeds
in raising annual donations to dollars 15 billion by 2004 (from just
under dollars 9 billion in 1998). ’We want companies to increase
strategic philanthropy,’ says Paul Ostergard, the committee’s president
and CEO. ’It’s not only altruistic but they also see a business value
for what they give.’
Getting what you give
But are they right in seeing that value in giving? ’You get what you
give’ may be an old saying, but it is highly relevant in today’s
competitive, measurement-oriented business environment. Companies are
starting to be known by the philanthropies they back, even though in
many cases that means being more selective in determining how and who
’Two key factors have changed the philanthropy landscape,’ says Harlan
Teller, the Chicago-based head of Hill & Knowlton’s global corporate
’There is the realization that corporate citizenship can have an impact
on issues management and the increasing occupation with corporate
positioning and branding.’
But the jury is still out on whether philanthropy improves a company’s
On one hand, in a reputation survey done last year by New York
University’s business school, Microsoft ranked high for vision,
leadership and financial performance, but low in emotional appeal and
social responsibility - despite giving away dollars 25 million in cash
and dollars 79 million in software in fiscal year 1999.
’It seems to me that (Microsoft’s philanthropy) has had minimal impact
on its corporate reputation,’ says Robin Kim, a Cohn & Wolfe group vice
president and manager of the firm’s San Francisco office.
On the other hand, there are some statistics in philanthropy’s
The 1999 Cone/Roper study on social marketing shows that over 80% of
Americans have a more positive image of companies that support causes of
interest to them. The study also notes that among the 10% of the US
population considered to be ’influentials’ - people who help shape
trends - nearly half are able to spontaneously name a good corporate
citizen. Wal-Mart, McDonald’s, Procter & Gamble and Ben & Jerry’s are
traditionally among the leaders.
Merle Lawrence, senior manager for community affairs at Levi Strauss,
insists that one advantage of her company’s global giving program has
been to shield the company from bad press.
Sometimes the benefits can come from far afield. For example, in the
early 1990s, AT&T’s foundation addressed issues such as promoting the
importance of the federal welfare program Women, Infants and Children
(WIC). While that cause is outside the company’s immediate business
interest, AT&T’s lobbyists were at the same time advocating that
industry, rather than government, should be the main force in the
Internet’s growth. Because of the work on WIC, AT&T CEO Robert Allen
participated in a 1992 post-election summit. After addressing the
nutrition issue, then President-elect Bill Clinton called upon Allen to
discuss the information super-highway, which gave him the chance to
deliver the points favored by his government affairs staff.
But of course, giving away money or services isn’t a panacea.
’Philanthropy is only one of the pieces of the puzzle,’ insists Dinah
Waldsmith, the manager of communications initiatives at Business for
Social Responsibility, a group in San Francisco. ’A company can’t give
money to environmental organizations and then continue to drop toxic
waste and expect to be viewed as a good corporate citizen.’
Similarly, B.J. Cooper, senior vice president for strategic
communications at APCO Associates in Washington, DC, says a long-term
view is crucial; firms that think they’ll get a reputation quick-fix
through philanthropy should think again. ’If a company comes to us and
says, ’We want to raise the company’s profile by spending dollars
100,000 on this (charitable) project,’ we would tell them they do not
want to take such a cynical approach. There are better ways to go about
One thing’s clear: good deeds can’t buttress a reputation if no one
knows about them. Being too quiet - which several experts say too many
companies are - can cost both the company and non-profits a PR boost.
’The fact is, there is no better opportunity to say nice things about
yourself - that people will actually sit still and listen to - than when
you’re demonstrating corporate largess,’ says H&K’s Teller.
Some large PR agencies such as APCO and H&K have set up practices to
help corporate clients develop more strategic approaches to giving.
Boston-based Cone is just one of the firms that has developed a strong
niche advising clients about philanthropy and cause marketing. But the
big change has been taking place in the corporations themselves.
The strategic approach is certainly a departure from the past. PR
professionals often say - derisively - that in the past the CEO simply
made his pet projects the beneficiaries of corporate charity. Giving was
done more from a sense of civic obligation than for any PR boost.
When, in the 1950s, many larger corporations started forming corporate
foundations, the giving process became institutionalized. However, it
was still often mired in a conventional pattern that lacked verve. By
the early 1990s, new managers were coming into prominence with a more
results-oriented focus. Giving away money while laying off workers
during that period’s recession, combined with the United Way scandals,
added impetus for new approaches that demanded more accountability and
In a 1994 Harvard Business Review article, corporate philanthropy expert
Craig Smith noted that companies such as IBM and AT&T ’have come up with
an approach that ties corporate giving directly to strategy.’
Caryn Pawliger, program director at the Public Affairs Council, says,
’More and more giving is moving toward the areas where companies know
best,’ while APCO senior vice president Ellen Mignoni insists that
strategic philanthropy should be considered part and parcel of ’how the
company views itself and its mission.’
For example, at its start in the mid-1990s, the Bill and Melinda Gates
Foundation focused on health issues and improving life in the Pacific
Northwest. But Gates later broadened the scope to include donating
computers to libraries and schools, and Microsoft moved to match that by
giving software (both entities have promised to give dollars 200 million
Giving in all areas
In another example of strategic philanthropy, last year the PacifiCare
Foundation, the charitable arm of the California-based health
maintenance organization, established a partnership with the American
Diabetes Association to heighten awareness of the disease among senior
citizens. The goal is to have, through better management, fewer hospital
stays and emergency room visits by seniors at PacifiCare and other
health facilities. The foundation gave a check for dollars 500,000 last
year to the ADA and has pledged dollars 1 million this year.
’It seemed to be a natural match,’ says Nick Franklin, PacifiCare’s
senior vice president for public affairs. ’Diabetes is one of the
disease conditions targeted by our medical management team.’
In October 1999, ConAgra launched a more strategic philanthropic program
to capitalize on its status as America’s second-largest food
Former corporate communicator Lynn Phares is now president of the
ConAgra Feeding Children Better Foundation. ConAgra has partnered with
Second Harvest, a national network of food banks, to provide the
computers and trucks that can bring about better coordination between
food banks and food processors.
Similarly, it’s not surprising that much of Levi Strauss’ giving
addresses issues concerning younger adults; the company’s strongest
market is 15-to-24 year olds, according to Lawrence, the company’s
community relations manager. In recent years, the foundation and the
company’s marketing department have been jointly sponsoring projects
like PAX, a national student-led group tackling gun violence. The brand
gave money for a concert tour last summer, during which PAX conducted
community outreach. This year, the concert tour is being repeated and
the foundation is upping the commitment to dollars 250,000 to cover
Internet and grass-roots organizing.
Levi’s has traditionally devoted 2.5% of pre-tax profits to corporate-
and foundation-giving programs - more than double the typical average
for a US company. Because of the tough times the company is going
through, that percentage has been falling. Last year the company’s
combined giving was just over dollars 20 million in over 40 countries.
This year it will be about dollars 16 million.
A strategic approach is often centered on the community in which the
company conducts its business. For example, Wal-Mart is a heavy
contributor to community causes, donating an estimated dollars 163
million in 1999 through a variety of efforts. Much of the giving is done
on the local level, providing college scholarships and funds for
churches, community charities and the Boy and Girl Scouts. Home Depot
conducts similar charitable efforts on the local level.
In Levi’s case, the company’s community giving can mean global
As much of the clothing maker’s work has shifted overseas (it closed
nearly 20 US plants in recent years), so has its philanthropy; 40% of
corporate and foundation giving is currently done outside the US to
communities that Levi’s relies on to assemble its products, including
towns where subcontracting is done. At the same time, it maintains
charitable programs in US cities three years after plant closings, with
an emphasis on job training and creation.
It’s not always about the cash
As Microsoft’s software donations show, philanthropy doesn’t mean giving
only cash. In fact, ’show me the money’ apparently means little to the
public when measuring a corporation’s citizenship. In a 1998 H&K
Corporate Citizen Watch survey, 43% of respondents said that donations
of products or services are the ’most impressive’ forms of commitment,
while another 37% cited employee volunteering. Only 12% cited giving
large sums of money.
Optical retail chain LensCrafters has donated eyeglasses to 1.3 million
underprivileged people. LensCrafters doctors also visit nursing homes,
shelters and health fairs to provide screening and repair services.
Similarly, Timberland, in addition to providing cash contributions, has
promoted employee volunteerism through its association with City Year, a
community service program in Boston for youth that served as the model
Timberland employees donated over 20,000 hours of service in 1998.
One downside to the strategic trend may be cynicism on the part of some
observers that a company is really giving for selfish reasons. In
Microsoft’s case, several critics say Gates and company were donating
equipment and software only to expand their market - by hooking
teenagers on Windows.
’Giving away software is a sound marketing strategy, but it’s not
philanthropy, any more than it would be if the Ford Foundation gave away
millions of dollars worth of free transmission parts that only fit Ford
cars,’ wrote Tom McNichol in a 1997 Salon article.
The criticism does not ruffle Bruce Brooks, Microsoft’s director of
community affairs. Brooks points out that the company donates its best
products to libraries and they are free to add or drop programs as they
’It is a tangible product that we have here and we think it helps
people,’ he says. He likens the barbs to rebuking grocers for giving
away food to food banks. Brooks disclaims the idea that Microsoft would
try to ’buy’ reputation, though he hopes its charity helps put forward a
human face for the company.
The issue is clearly a sticky one for many companies. ’Companies put
themselves at risk of being questioned for their motives or being
defensive about something that’s inherently a good thing,’ says C&W’s
Kim. ’But just like you’d have a crisis communications strategy in place
before the crisis hits, you want to be a good corporate citizen before
that reputation is ever questioned.’