Business philanthropy seen as an investment
Strategic philanthropy. It sounds like a contradiction in terms. But observers in the field of corporate social responsibility - which includes philanthropy, volunteerism, and ''social investment'' - are arguing that corporate America gives most effectively when it gives to serve enlightened self-interest.
''It's a fairly simple idea,'' says Jan Dauman, chairman of the Intermatrix Group, a consulting firm. ''Corporate social responsibility is seen as an investment in the infrastructure of which you are part. Corporations need to see philanthropy as an investment like their investment in research and development.''
This view is by no means widely prevalent, however. A study by the Mutual Benefit Life Insurance Company of Newark, N.J., found that two-thirds of the chief executives interviewed (representing both major and smaller corporations) felt there was an inherent conflict between the obligation to be profitable and the obligation to be responsive to community needs.
In fact, in a time of economic pressure it may be hard to justify corporate philanthropy in the short term. But, says Mr. Dauman, ''If you look at the long-term interests of the business as the same as those of the society, it's easier to do.
He is critical of President Reagan's call for increased corporate philanthropy and volunteerism. ''If it's an add-on because the President asks you to do it, I wouldn't spend a penny. You should undertake these programs only if it's justified in terms of long-term objectives.''
Stephen Nowlan, chairman of the consulting firm HRN in Philadelphia, says: ''What used to be goody-goody program activities need to be recast into some specific strategy. One of the major problems is that the whole area of corporate social responsibility has been seen as a side stream of the main business line.''
As social responsibility investment becomes part of the mainstream, companies are demanding clearer evidence of results accomplished with their money. They're asking the tougher question, how effective is the organization? Is it actually solving the problem it was established to solve?
Some charitable donations lend themselves to the strategic-philanthropy concept more easily than others. Aid to education, particularly in science and math, is a notable example. Most recently, though, companies are going beyond funding colleges and universities and are setting up programs to improve science and math training in elementary and high schools.
But Mary Pickard of the St. Paul Companies in St. Paul, Minn., sounds a cautionary note: Enlightened self-interest is all very well, but a company should be careful not to impose its agenda on the community. ''The question is, 'How does a corporation balance its own interests with those of the community?'
''We contribute to areas where community energy is high.'' The company has identified four areas in which to be active - crime prevention, health care, community development, and education - and has sought ''dialogue'' with local groups on how to address those issues.
Some observers argue that to ask corporations to support certain social-activist groups is to ask them to feed hands likely to bite them. ''There has been such politicization of charitable giving in this country over the past few years,'' one contributions officer says.
But some companies have worked constructively with such groups. One example is the Aetna Life & Casualty Company of Hartford, Conn. It had gotten into something of a shouting match with the National Training and Information Center, a Chicago-based social-action group that took issue with Aetna's lack of reinvestment in city centers.
''Well, if they were a credible group, we wanted to work with them,'' says Bob Roggeveen of the Aetna Foundation. NTIC needed a lot of technical assistance to be able to propose sound redevelopment deals. ''They needed people who know how to deal with banks, and that sort of thing,'' Mr. Roggeveen says. So Aetna, as contributor to worthy causes, provided consultants to help NTIC package deals for Aetna, as investor, to put money into. The result was fruitful projects in Philadelphia, Chicago, New York, and Cleveland.
''It was good for all of us, and not as dangerous as it looks, once you get behind the rhetoric of both sides. There is common ground, whose commonness is obscured for the moment.''
There are some who would suggest that there is a point where the strategic-philanthropy concept gives out; that is to say, there are some people who, no matter what a company does, will never become customers, employers, or suppliers of that company. They are helpless, or worse, potentially destructive.
But Control Data Corporation, a Minneapolis computer company, goes the strategic-philanthropy concept one better. ''Our philosophy is not just 'Where can we give away money?' but 'How can we meet social needs profitably?' '' says Judith Alnes, Control Data's corporate responsibility officer.
The first major demonstration of this concept came in the wake of race riots in Minneapolis in 1967. Control Data chairman William C. Norris, horrified like most of the city's other leaders that such a thing should happen in their hometown, decided that what the area needed was jobs.
To this end, Control Data built a manufacturing plant in the Northside area, where the riots had been. To ensure that the plant was taken seriously by the rest of the company, it was established to turn out a product essential to the rest of the Control Data line. The plant has become profitable, and remains so.
''We've been in every kind of environment known to man, from an Indian reservation to an inner-city ghetto, and we haven't been anywhere we didn't think this idea worked,'' says Ms. Alnes.
She cites the homebound handicapped as a group traditionally thought of as out of reach of anything but handout programs. But Control Data has developed a program called ''Homework,'' which has trained shut-ins for careers working on computers in their homes.
Peter Brown, a Minneapolis consultant, argues that the ultimate in strategic philanthropy involves tapping businesses for their business skill. ''Take a problem like youth unemployment. What can business do? Well, business knows how to launch business ventures. How about starting a youth business venture? You could pay youth wages to reclaim valuable components from electronic equipment, for example.''
Ron Speed, director of corporate social responsibility at Honeywell, another Twin Cities computer giant, describes his company's four-phase strategy, which ultimately brings issues back to the company: ''The first step is contributing charitable dollars, which lets us buy into ownership of an issue, so to speak; next comes putting corporate people onto an issue. Then comes getting involved in a public-private partnership. And finally comes internalization.''
He isn't quite happy with this term, but he uses it to mean a process whereby corporate practices within the company harmonize with what the company does in the community. For example, he says, it doesn't make sense to fund community child care if the company's employee transfer policies are not supportive of families. Nor does it make sense to support senior citizen centers if the company doesn't have active retraining programs for its own older workers.