Linking Companies and Communities

That's what corporate philanthropy does, says expert Cari Parsons, who cites IBM, Novartis, and GE for leading the way

The Committee to Encourage Corporate Philanthropy (CECP) is a national forum of CEOs and chairmen that promotes corporate philanthropy, corporate reputations, and the natural alignment of corporate giving with business objectives. CECP member companies contributed 45% of the $13.5 billion in U.S. corporate gifts reported in 2003. BusinessWeek's Jessi Hempel recently asked CECP Director Cari Parsons to weigh in on what smart companies should consider when designing their corporate contributions programs. Edited excerpts of their e-mail exchange follow:

Q: What do you see as the connection between philanthropy and corporate social responsibility?


CECP believes corporate philanthropy is a key component of a corporation's broader social responsibility and includes cash gifts, product donations, and employee volunteerism. It serves as a major link between the corporation and the communities it serves. In addition, the need for business leaders to play an active role in civic affairs is greater than ever before, especially given the government's reduced involvement in such affairs and the delegation of government responsibility to the local level.

Q: What do you see as the most promising initiatives corporations have launched this year?


A few noteworthy ones include General Electric's (GE ) $20 million health-care and education initiative in Africa (, Novartis' (NVS ) creation of the nonprofit Novartis Research Institute for Tropical Diseases, which focuses on the discovery of drugs for treating neglected diseases (, and IBM's On Demand Community program, which allows IBM (IBM ) employees worldwide to share Big Blue technology and other resources with the agencies where they volunteer (

Finally, a promising example of what a corporation and a nongovernmental organization can achieve through working together is Nokia's (NOK ) Make a Connection program with the International Youth Foundation, which focuses on promoting positive youth development. These corporations and many others are committed to making a positive contribution to the communities in which they operate.

Q: Over the past five years, what have been the major changes in corporate philanthropy?


It has moved beyond grant-making and check-writing and is more ambitious and global. Increasingly, corporate giving programs are managed strategically with clear objectives, established metrics, and reporting structures to senior management, similar to other key business disciplines.

Q: When they put together a plan for corporate philanthropy, what do companies need to consider?


CECP recommends the following considerations during the development of a successful corporate philanthropy program:

Know your beneficiaries: Select grant recipients in alignment with your company's overall philanthropy objectives. Contributions of time and money are more powerful when focused on one or two areas, such as literacy or children's health, rather than scattered across the spectrum.

Involve key executives: A strong commitment from the top is the most effective way to drive home the importance of philanthropy programs. However, developing a program that is inclusive of all employees is essential.

Define the program early on: Make clear who in the organization will oversee the program and define qualities that will produce a focused, accountable program.

Stay connected: Treat the organizations that receive your time and money as true partners. This will maximize the impact of your contributions and keep the lines of communication open.

Measure results: To get a sense of your program's success, define inputs and impacts. Inputs measure what you give (cash, in-kind contributions, and volunteerism). Impacts measure what you accomplish (changing behavior, improving skills, raising awareness).

Talk about successes: Once you have tangible results, outline a plan to communicate those results to employees, shareholders, and the public. Recognizing the efforts of those involved will go a long way to ensuring that the good works continue.

Q: How do in-kind gifts compare in importance to cash gifts?


In terms of total dollar value of corporate contributions, the division between cash and in-kind gifts was 45% and 55%, respectively [which is skewed because of the large in-kind contributions from pharmaceutical companies]. The average [breakdown] across a sample of 43 companies in our signature measurement program is 75% cash, 25% in-kind gifts.

In-kind gifts or pro-bono services provide a tremendous opportunity for corporations to express themselves in line with their corporate strengths. We've found that in-kind gifts are most valuable when channeled through an intermediary such as Gifts In Kind International or World Vision, as they are better able to pair up donors and recipients.

In addition, there has been an increased realization by nonprofit organizations and other beneficiaries that contributions come in many different forms and that they must learn to embrace and take advantage of all forms of contributions received.

Q: As companies look to the future, what should they be thinking about in regard to philanthropic practices?


There is a competitive context around corporate philanthropy. Companies should continue to make efforts to align their corporate contributions programs with their corporate goals and objectives. Establishing and reporting metrics on direct and foundation dollars, in-kind gifts, time volunteered, and management costs associated with running programs provides credibility around the value added of specific programs.

The focus on transparency of corporate contributions programs continues to increase. By executing, measuring and reporting on strategic contributions programs, companies are positioned to validate and communicate the benefits to the business, stakeholders, and the community.

Edited by Patricia O'Connell

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