Recession Driving Changes in Corporate Philanthropy

Instead companies pushing greater volunteerism.

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"Nonprofits are businesses," says Deloitte's Hochberg. "How do you recruit? How do you develop talent? How do you use technology? What's your financial management strategy? What's your marketing strategy? These are business questions."

Companies are also mixing and matching these approaches. Microsoft has helped set up "Microsoft Innovation Centers" to encourage technology research in over 40 countries, using Microsoft products and training. It also gives Microsoft products to nonprofit organizations and helped train staff from 5,000 nonprofits last year. The company pairs that with the old-style giving-to-charity approach, but with a new crowd-sourcing twist: Microsoft will match any donation of up to $10,000 per year that any employee in North America makes to any nonprofit organization, from the Red Cross to the local animal shelter, no questions asked. So every year, Microsoft ends up donating to between 16,000 and 20,000 different organizations, says Akhtar Badshah, the company's senior director of global community affairs. "It allows our employees the freedom to believe in their issue," Badshah says. "Does it help morale? Absolutely."

That experience is common, says Coady. Programs like volunteering and matching employee contributions can have as much to do with making employees happy as with serving the community. "A lot of the business case for philanthropy has to do with morale and retention," she says.

Wait, the business case for philanthropy? That's right: More and more, companies are trying to use philanthropy to build their businesses at the same time they're doing good. Now that "corporate social responsibility" has matured from a buzzword to standard business practice, it's becoming more common to think of philanthropy and business not as two separate things, but things that are mutually reinforcing.

"There is also a marketplace case to be made for this," says Hochberg. "When we're out there doing this work, we're showcasing what Deloitte is all about, which is solving business problems. We just happen to be doing it for the Boys & Girls Club, not for a Fortune 500 client. It's showing people what we do best."

Long-term goals. Nestlé, the Swiss food giant, has led the way in this trend by developing a philanthropic focus that is closely aligned with its long-term business goals. It focuses its charitable work on helping boost productivity among the farmers it works with, reducing water use, and developing more nutritious products. "For our business to be successful in the long run, it must consider the needs of two primary stakeholders at the same time: the people in the countries where we operate and our shareholders," Nestlé's corporate leaders said in a statement.

Other companies have followed Nestlé's lead. McDonald's has worked with Conservation International to improve sustainable fishing stocks to in turn ensure a healthy supply of its Filet-O-Fish sandwiches into the future. Cisco has set up "networking academies" around the world to develop information technology professionals who could eventually become Cisco customers.

Nestlé even changed its articles of association to say the company aims for "long-term, sustainable value creation" rather than short-term financial gains. And its chairman, Peter Brabeck-Letmathe, has gone so far as to say he doesn't believe companies should be involved in charity work at all. "I'm personally very much against corporate philanthropy," he said in a television interview earlier this year. "You shouldn't do good with money which doesn't belong to you. What you do with your own money, this is absolutely fine."

But this attitude has raised the question: If it's smart business, then at what point does it stop being charity? If these are things companies should be doing anyway, why do they deserve a pat on the back (and a tax break) for it?

"If the business is explicitly enhancing its profit along the way, is it really altruism? Isn't that just good business?" asked a report published this year by the CECP, based on research by the consulting company McKinsey. "In light of the explicit profit motive, it's easy for external stakeholders to be cynical about companies taking action of this kind. But seen from the opposite point of view, satisfying the financial expectations of the company's owners (shareholders, for public companies) is paramount."