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Janet Ben Business

Better Business for a Fairer World: Corporate Philanthropy

By Samuel Williams - Christian Aid Private Partnerships Lead

Published on 7 December 2021

A significant - and important - shift in corporate thinking

The past 15 years has seen significant shifts in businesses taking their position within a globalised economy as more important than a mere 'tick-box exercise', and begin integrating ‘whole system’ corporate responsibility thinking into core operating strategies.

Initiatives such as B-Corp, Future Fit Benchmarks, the Sustainable Development Goals and Christian Aid’s Salt Business Networ have enabled businesses to look beyond charitable giving to Civil Society Organisations (CSO’s) as their only means of ‘doing good’. Rather, many businesses have, and will continue, to imbed ‘impact’ [1] into their core activities.

This shift in corporate thinking, which may feel well established to some, is actually a reasonably recent and important shift away from the narrow corporate capitalism of Friedman’s shareholder primacy that dominated the 1980s and 1990s. 

The Charities Aid Foundation identified, in their 2018 Corporate Giving by FTSE 100 report, that collectively, corporate donations in sterling had reduced to £1.9 billion over the period of the study, whilst the % of pre-tax profits assigned to impact within individual organisations was reported to be up by an average of 2.4%. How do we explain this?

Have FTSE 100 companies become less profitable, or is there another explanation?

One explanation of this could be that FTSE 100 companies have become less profitable during the period of the study. However, we know this not to be the case with FTSE 100 company valuations increasing by over 25% during the period.

Therefore, a more likely explanation is that charitable activities by FTSE 100 companies during the period was increasingly taken ‘in-house’ and is thus represented by the increased percentage of pre-tax spending towards impact activities - whilst cash donations to third-party charitable intermediaries such as INGOs decreased.

In other words, corporates have taken charitable decision-making in-house rather than outsourcing it to CSOs, which may previously have been the norm.

Whilst corporates continue to look for partnerships to direct their funding, they increasingly look for greater operational and brand synergies and multi-channel impact of their funding – that is to say, corporate funding is often intelligent, impact focused, beneficial for business and thus integrated into brand identity.

The trend towards integrated corporate responsibility is widely encouraged by the values-based business movement that seeks to blur the lines between good business and good citizenship.[2]

However, this shift towards business for good does not come without significant challenges, especially when operating in emerging and vulnerable economies.

Why 'helicopter development' is not the solution

ClearView Research and the Vodaphone Foundation found that philanthropic giving and corporate responsibility investment, seeking to deliver positive impact throughout supply chains, tend to favour delivering transformation in partnership with western NGOs rather than delivering impact directly or in partnership with local actors.

They go on to stress that this 'helicopter development' which drops in aid does little sustainable good, and rather perpetuates a kind of ‘neo colonialism’.

Here, we offer a great benefit by delivering almost 100% of development programmes with local partners. Over 75 years, Christian Aid has been working to establish its best-in-class approach to delivering sustainable development that is shaped and implemented by those most invested in its success – the communities themselves.

This approach has shown remarkable impact, not least demonstrated through the Philanthropic Capital Investment Fund. This donor fund is committed to high social returns, through resourcing local businesses and farmers to scale, grow and develop a stable and dignified market-based solution to poverty.

[1] Used here to encapsulate charitable activity where the maximisation of impact and sustainability are key deliverables which may or may not include not for profit organisations in its delivery.

[2] J. Elkington, Green Swans

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