PROs must be alert to controversial philanthropy

There was a time when corporate philanthropy was merely a reflection of the CEO’s personal interests. Just as CEOs who enjoyed golf were likely to direct sponsorship cash towards golf tournaments, CEOs who had survived a battle with prostate cancer were likely to direct philanthropic cash towards cancer charities.

But over the years philanthropy has grown more strategic. Smart companies now align their charitable activities with their business interests (pharma firms supporting science education, for example) or their values. In such cases, philanthropy has become an extension of PR, a vehicle for the comp-any to demonstrate to its stakeholders that it shares their concerns about the society in which it operates.

As philanthropy has grown increasingly strategic, it has also grown increasingly controversial. A decade or so ago, firms such as AT&T and Dayton Hudson found themselves mired in controversy over grants given to Planned Parenthood.

And a group called the Capital Research Center now exists ‘to end the liberal bias in corporate philanthropy’.

Warren Buffett’s investment company Berkshire Hathaway had taken an unusually creative approach to philanthropy, one that appears to address concerns about management misuse of shareholder money and to ensure that giving is aligned with stakeholder values. Through a so-called ‘charitable dividend’ plan, the company allowed its shareholders to designate $18 a share for up to three charities of their own choosing.

Buffett, as a major shareholder, made large donations of his own, including many to Planned Parenthood, and that’s where the problems started. Anti-choice groups protested at the company’s annual meetings, and this year an employee at a Berkshire Hathaway subsidiary began a petition drive to put an end to the donations. As a result, the company is discontinuing the charitable dividend programme.

There were surely better solutions: perhaps one that would have allowed all stakeholders, including employees and customers, to have a say in how the money was distributed. But the decision should be a wake-up call to other firms.

Philanthropic decisions need to be evaluated in terms of their impact on stake-holder relationships, and PROs need to decide what the company’s values are and how far it is prepared to go to defend those values.

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