Corporate Philanthropy: Functions, Landscape, Examples - An Essay On Financial Contribution.

Function of Corporate Philanthropy

Discuss about the Corporate Philanthropy for Financial Contribution.

Corporate philanthropy includes financial contribution and employee volunteering for the development of community (Tilcsik and Marquis 2013). The study will describe the function and contemporary landscape of corporate philanthropy. Apart from that, the study will also systematically address corporate philanthropy and provide examples of current corporate philanthropy examples. Various scholar debates surrounding the effectiveness of this term will also be discussed in this study. Various examples of corporate philanthropy practice will be discussed through various company examples.

According to Bartkus and Morris (2015), corporate philanthropy is the charitable donation of resources and profits of a corporation to a non-profit organization. The function of corporate philanthropy is consisted of donation of cash but Morris et al. (2013) added that it can also include the utilization of facilities and volunteer of time offered by employees of organization. Donation can be directly handled by the corporation or by indirect foundation created by the organization. It is the act of promoting welfare to others through charitable donation of time and funds. On the other hand, Tilcsik and Marquis (2013) provided a different view that corporate Philanthropy is the way of achieving social impact through generous and strategic utilization of funds, facilities, employee time and products or service for assisting community and supporting beneficial causes. It promotes love for humankind, common good and improves the quality of life of all citizens.

The types of corporate philanthropy can of two types namely matching gift programs and Volunteer programs. According to Muller, Pfarrer and Little (2014), in matching gift programs, corporations match the donations made by the employees to the entitled non-profit organization. It depends on the policies of corporations. Employees and employers both donate in a certain ratio to fundraise cash towards charitable programs. On the other hand, Masulis and Reza (2014) pointed out that in volunteer programs, corporation may not provide money right away to the organization, as they promote volunteerism of employees to the community in which they exist. Corporations provide monetary grants to the community, where employees volunteer in regular basis.

Gautier and Pache (2015) provided the view that contemporary landscape of corporate philanthropy lies in supporting the communities and surrounding markets. Profits earned by the corporation are distributed to the community it resides for increasing its image and increasing its potentiality to secure future flow of fund. The goodwill that corporation earns by corporate philanthropy definitely increases the customer’s interest and reputation. It is the greater extent towards business ethics through helping community towards its development. Support for community can strengthen the local economic of the corporation, which can further be utilized in the business operation. On the other hand, Cuypers, Koh and Wang (2015) described the internal achievements of an organization through corporate philanthropy. In this competitive world, corporate philanthropy can increase sales volume of organization is it is associated with branding strategies. The positive image created by corporate philanthropy can create competitive advantage for corporations. Volunteering time in corporate philanthropy increases the labor for the organization, which can be available in other ways.  It also increases employee morale when the employees see that their employers are interested to invest for the development of society. Employees can also get paid time off for volunteering the charity of in the society. It increases the value of the employees.

Types of Corporate Philanthropy

The contemporary landscape of corporate philanthropy can also be referred by specific assistance offered by corporation. It results in cleaner community, increasing opportunities for society people and boosting local economy. Raub (2016) provided the view that corporate philanthropy must be entertained by all types of organizations, as it helps in achieving positive image on the society. On the other hand, Szocs et al. (2016) pointed out that in this competitive world, multinational organizations are flourishing rapidly and hence employee contribution of such organizations is much more in comparison to small-scale companies. As opined by Lee et al. (2014), small-scale companies may not prove to be rapidly growing, but they can contribute in the society as a group. For instance, if vertically oriented organizations collectively raise fund, then the amount may be no less than a MNC. This will ultimately aid in consumer attraction. Kabongo, Chang and Li (2013) have contradicted this as corporate philanthropy is thought to be derailing the actual goals of an organization. The primary goals achievement may be influenced by derailed ethics through corporate philanthropy. Walker and Kent (2013) pointed out that through corporate philanthropy market development by reputation is highly achieved as it increases the consumer’s interest and presentation of company’s opinion. Whereas, Bartkus and Morris (2015) have contradicted this, as corporate philanthropy is thought to put uncontrolled capital management and even there is no guarantee that the consumers will positively react to any business offer. Therefore, there is a risk for the organization.

Muller et al. (2014) pointed out that companies that follow corporate philanthropy, gets the support of surrounding markets and communities. In this way, companies will be able to become sustainable and stabilize their future revenue flows. Local economic success can be achieved though such activities. On the other hand, Raub (2016) contradicted that often organizations fail to understand where they need to focus their corporate philanthropy. The businesses fail to understand the amount of money they need to invest and achieve the most out of that. Organizations have to be prepared to spend money, time and power of decision making so that there is no direct benefits.

While taking into consideration the various views of the authors, it is clear that corporate philanthropy has both positive and negative impacts. Even though there are disadvantages, but the amount of benefit outstands its detriments. It can also be said that considerable positive business flows just by corporate philanthropy cannot be directly measured. The substantial outcome is always the collective form of individual marketing strategy, corporate social responsibility and corporate philanthropy. Finally, it can be said that corporate philanthropy will definitely result in enhancing publicity in the society but the magnitude will differ. More number of organizations needs to contribute in the society through corporate philanthropy. Corporate Philanthropy should be espoused greater number of corporation for the development of community.

Contemporary Landscape of Corporate Philanthropy

Tim Cook, the CEO of Apple introduced the program of match employee donation. According to Masulis and Reza (2014), the organization matched over $25 million worth donation of employees, which ultimately resulted $50 million worth charities around the world. In October 2014, the organization decided to expand its charitable program for including all the countries in which it operates. Recently, it has extended its program from US-based non-profit organization to other organizations in the world. On the other hand, Gautier and Pache (2015) opined that the organization also introduced volunteer grant program in which it provides $25 to the employees of respective organization.

According to Raub (2016) Google has “diverse giving option” in their corporate philanthropy and has worldwide reach from New York to Germany, UK and many more. In the last year, more than 6500 employees of Google volunteered 80000 hours service and matched $21 million of employee donation for 9000 organizations in all over the world (Kabongo, Chang and Li 2013). With an intension to provide advanced technological support to Government, Google provides “Code of America” having annual gift around $3 million for developing civic technological support. Tilcsik and Marquis (2013) opined that the organization donated 5000 Raspberry Pi Computers for providing computer science education to 25000 Japanese children.

According to Bartkus and Morris (2015), in matching gift program, the employees of Microsoft donated $1 billion for charitable organizations. In 2014, the organization donated technological support to more than 86000 organization 125 countries. The organization provided technological support in terms of both software and hardware. On the other hand, Masulis and Reza (2014) opined that the organization started volunteer match program in 2005 in which the employees received $25 per hour for the non-profit organization for volunteering at least four hours.

According to Cuypers, Koh and Wang (2015), PepsiCo has initiated PepsiCorps, which is volunteer matching program and places employees from India to Ghana to New Mexico for aiding with corporate giving initiatives. On the other hand, Raub (2016) opined that the volunteers of PepsiCo have assisted in constructing water purification tower for the students and teachers of a school in Southwest China. In 2009, the employees of the organization initiated Food for Good in which they served 1.6 million free healthy meals to children of inner city.

Conclusion

While concluding the study, it can be said that corporate philanthropy is the way in which corporation promotes welfare for others through charitable donation of cash or time. It is consisted of cash donation but it also incorporates utilization of facilities and volunteer of employee’s time.  In corporate philanthropy, corporations offer financial grants and other facilities for supporting the community towards its development. It also enhances the competitive advantage of corporations through increasing positive image in the society. Therefore, more numbers of corporations should espouse corporate philanthropy towards community development. 

Reference List

Bartkus, B.R. and Morris, S.A., 2015. Look Who’s Talking: Corporate Philanthropy and Firm Disclosure. International Journal of Business and Social Research, 5(1), pp.01-14.

Cuypers, I.R., Koh, P.S. and Wang, H., 2015. Sincerity in corporate philanthropy, stakeholder perceptions and firm value. Organization Science,27(1), pp.173-188.

Gautier, A. and Pache, A.C., 2015. Research on corporate philanthropy: A review and assessment. Journal of Business Ethics, 126(3), pp.343-369.

Kabongo, J.D., Chang, K. and Li, Y., 2013. The impact of operational diversity on corporate philanthropy: An empirical study of US companies.Journal of business ethics, 116(1), pp.49-65.

Lee, Y.K., Choi, J., Moon, B.Y. and Babin, B.J., 2014. Codes of ethics, corporate philanthropy, and employee responses. International Journal of Hospitality Management, 39, pp.97-106.

Masulis, R.W. and Reza, S.W., 2014. Agency problems of corporate philanthropy. Review of Financial Studies, p.hhu082.

Morris, S.A., Bartkus, B.R., Glassman, M. and Rhiel, G.S., 2013. Philanthropy and corporate reputation: An empirical investigation. Corporate Reputation Review, 16(4), pp.285-299.

Muller, A.R., Pfarrer, M.D. and Little, L.M., 2014. A theory of collective empathy in corporate philanthropy decisions. Academy of Management Review, 39(1), pp.1-21.

Raub, S., 2016. When Employees Walk The Company Talk: The Importance Of Employee Involvement In Corporate Philanthropy. Human Resource Management.

SzÅ‘cs, I., Schlegelmilch, B.B., Rusch, T. and Shamma, H.M., 2016. Linking cause assessment, corporate philanthropy, and corporate reputation. Journal of the Academy of Marketing Science, 44(3), pp.376-396.

Tilcsik, A. and Marquis, C., 2013. Punctuated generosity how mega-events and natural disasters affect corporate philanthropy in US communities. Administrative Science Quarterly, p.0001839213475800.

Walker, M. and Kent, A., 2013. The roles of credibility and social consciousness in the corporate philanthropy-consumer behavior relationship.Journal of business ethics, 116(2), pp.341-353.