Opinion: Corporations meet demand of social responsibility

In reality, capitalism enables many businesses, business leaders and company employees to give generously.

The holiday season is a good time to reflect on American business generosity.

In 2005, corporations gave an estimated $13.77 billion to communities, education, poverty relief and other worthy causes, according to a study by the Giving USA Foundation.

Corporations and individual businesspeople gave through foundations often funded by them. Combined corporate and foundational gifts exceeded $44 billion in 2005. The figure does not include the millions of dollars given in cash and products by closely held corporations, partnerships and sole proprietorships.

Corporate philanthropy meets societal demands that business be socially responsible. Economist Milton Friedman argued only individuals can have social responsibilities and corporations exist solely to make profits for shareholders.

Today, however, the public expects corporations to support communities and improve the lives of multiple stakeholders.

Strategic giving

To satisfy profit and social responsibility requirements, many corporations and foundations give strategically. Instead of writing checks to many unrelated charities, corporations narrow their focus to specific societal needs, such as AIDS, health care and education. Companies look for transparency and accountability from the organizations and groups they support.

While altruism often motivates corporate giving, corporations also act out of self-interest. Why not? Corporate leaders and shareholders expect results from corporate donations. Besides helping others, strategic philanthropy promotes brand awareness, strengthens corporate reputation and improves employee morale.

Corporate giving programs often involve cash donations– sometimes large amounts of cash. In 2005, Wal-Mart’s cash donations totaled $236.1 million, making it the first company to give more than $200 million in cash in a single year.

Increasingly, however, corporate donations combine cash and products. For example, in 2005 Pfizer and Merck each presented more than $1 billion in cash and products to charitable causes. Cash and product donations from Bristol-Myers Squibb Co. and Johnson & Johnson exceeded $500 million each.

Sometimes corporations find it more helpful to give company products to meet specific needs. Apple Computer Inc. is a prominent supporter of San Francisco’s nonprofit children’s museum, Zeum. Apple gave Zeum advanced computer equipment so children can create animation and visual art. Intel Corp. gave 100,000 computers to schools in low-income neighborhoods.

Employee participation

Corporate strategic philanthropy often includes involving employees. Many corporations make volunteerism a part of the business culture. CA Inc. grants employees three days each year for volunteer work. In addition, two-weeks each year CA Inc. employees share their technical expertise with local nonprofits.

Bethpage Federal Credit Union gives employees work-release time for volunteer work. In 2005, Bethpage employees spent more than 2,200 company hours helping low-income people prepare income tax returns, training nonprofit leaders and doing other charitable acts. Hewlett-Packard’s Digital Villages project consists of employees infusing technology into inner-city communities.

Employee involvement benefits corporations in several ways. It improves employee morale as they work on projects important to them. Letting employees use some work hours for charitable causes aids recruitment and retention. Employee involvement humanizes the corporation within a community. The corporation stops being faceless and impersonal.

Corporate philanthropy is an important part of corporate social responsibility, along with governance and environmental sustainability. Nongovernmental organizations and other stakeholders track corporate donations. Society evaluates corporations on what they give, to whom they give money and products, the effectiveness of their giving, and on profitability. Many corporations publish their own social responsibility audits explaining their yearly giving and community efforts. More Americans need to read those audits to gain a greater appreciation of business generosity.

John D. Copeland, J.D., LL.M., Ed.D., is an executive in residence at the Donald G. Soderquist Center for Business Leadership and Ethics and professor of business at John Brown University in Arkansas.