Philanthropy is the effort or inclination to increase the well-being of mankind, as by charitable aid or donations.

Definition:

Corporate philanthropy or corporate giving is the act of corporations donating some of their profits, or their resources,
to nonprofit organizations.

Corporate giving is often handled by the corporation, directly, or it may be done through a company foundation.

Corporations most commonly donate cash, but they also donate the use of their facilities, property, services, or
advertising support. They may also set up employee volunteer groups that then donate their time.

Corporations give to all kinds of nonprofit roups, from education and the arts to human services and the environment.

Also Known As: Corporate Giving

Examples:

IBM gives millions of dollars each year to nonprofits through its corporate philanthropy program.

Corporate Philanthropy

Q: What is corporate philanthropy?

A: The word philanthropy is derived from the Greek language, meaning "love for mankind". Corporate philanthropy
refers to the giving by a for-profit company directly to charitable organizations from the corporation or to
individuals in need with the intention of improving the quality of life. The expense incurred through voluntary
grant-making is typically planned as part of the company's annual budgeting process.

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.

Today, corporations want to measure value and accomplishment, not based on corporate resources provided to
improve society, but by actual outcomes achieved. Corporations view grants as strategic investments intended
to achieve measurable charitable returns.
Q: What benefits does corporate philanthropy provide?
A: Corporate philanthropy has moved beyond grant-making and check writing. It is now regarded as a sound
business practice that is in the best interest of shareholders and stakeholders alike, and it is often included as a
part of a company's mission and business practices.

Corporate philanthropy can benefit companies in a number of ways:

Benefits to the business:

 Enhances corporate reputation

 Improves relations with government, the community, and key stakeholder groups
 Supports a company's strategic business goals
 Enhances brand recognition
 Attracts better employees and increases retention
 Helps create healthier communities for business viability
  Increases employee and customer loyalty
 Strengthens relationships with customer, clients, and vendors
 Provides human and capital resources to nonprofit organizations that may be helping employees and
their families

Benefits to stakeholders (employees, management team, shareholders, etc.):

 Builds employee morale and engagement

 Develops future workforce contributing to a sustainable company
 Provides employee/management training and skill building (e.g. project and time-management,
leadership opportunities, teamwork activities, etc.)
 Increases understanding of co-workers and appreciation for diversity
 Enlarges sense of community and social obligation
 Encourages appreciation for contributions from all levels within the organization
 Increases pride and responsibility

Benefits to the community (local and global):

 Improves quality of life for community members

 Provides human and capital resources to nonprofit organizations that may be helping employees and
their families
 Assists in alleviating community social issues
 Enhances the impact of monetary contributions directed into the community
 Creates healthier communities

Q: What is the Committee to Encourage Corporate Philanthropy and how was it founded?
A: The power of the networking is apparent in business, government, academia, and even philanthropy around the
world. Headquartered in New York, the Committee to Encourage Corporate Philanthropy (CECP) was launched in
November 1999, with renowned actor-director-philanthropist Paul Newman as its chairman. Soon afterwards,
Ken Derr, retired chairman and chief executive officer of ChevronTexaco, joined Newman as co-chair.

The Committee was founded with the vision of helping to raise awareness and the level of strategic corporate
philanthropy. The Committee was structured to identify, promote, and recognize business practices and
measures of national and global corporate philanthropy. Members were expected to embrace and encourage
other business leaders to advocate the case for corporate philanthropy.

By invitation only, CECP's membership is limited to CEOs and chairpersons of the most important and influential
companies. The organization's membership has grown to more than 100 members, whose philanthropic
contributions represent as much as 45 percent of the U.S. total of reported corporate gifts. The amount of
reported inflation-adjusted corporate giving has risen 41 percent in the last five years, from $9.5 billion in 1998
to $13.5 billion in 2003. Today, CECP is led by Sanford "Sandy" Weill, also chairman of Citigroup Inc., and has
expanded its board of directors to include 22 active senior executives.
 Corporate Giving

By Jennifer Milam

Graduate Student, Center on Philanthropy at Indiana University

Definition

Corporate giving or corporate philanthropy is the act of corporations donating a portion of their profits or resources to
various non-profit organizations. The function of corporate giving can be handled directly by the corporation or through
a company foundation. The most common resource that corporations donate is cash; however, corporations also donate
the use of their corporate facilities; property (such as used computers, buildings or land); gifts of products, services and
equipment; advertising support; executive loans; and many corporations have employee volunteer groups that donate
their time. Corporations give to a wide variety of nonprofit organizations, which include education, the arts, human
services, health, the environment, public benefit and many others.

Historic Roots

The concept of corporate giving dates to the turn of the century and the rise of the modern corporation. In its early
decades, corporate philanthropy was uneven in practice, limited in scope, and subject to legal and populist dispute. Since
World War II, however, the debate has shifted from whether or not to give to how much to give, and most major
corporations now engage in regularized giving programs.
(Useem, 1987, p.340)

It was accepted for the wealthy to spend their money on philanthropy in the late 19th and early 20th centuries;
however, it was harder for corporate philanthropy to legitimize itself (Himmelstein, 1997, p.15). Most felt that
corporations had an obligation to maximize profits for their shareholders and that was their only duty; some economists
still feel this way. Roosevelt's 1936 tax act was the first time that corporations were permitted to deduct charitable
contributions up to 5% of pretax profit from their federal income taxes. Prior to 1936, donations typically had to be a
legitimate business expense; there had to be a direct benefit to the business or the employees. After 1936, more leeway
was given to corporate giving; however, giving was still tied to direct benefit, and there was still a great deal of
ambiguity as to what qualified. Another reform that intended to encourage corporate giving came in 1981 when the
amount of charitable contributions that corporations could deduct increased from 5% to 10%. The 1981 tax reform has
not had the effect that it intended; corporate giving remains around 2% of pretax profit.

In 1953, the New Jersey Supreme Court heard the case A.P. Smith vs. Barlow. A.P. Smith Manufacturing Company gave
Princeton $1,000 and was sued by a stockholder. The ruling in favor of Smith eliminated the rule that corporate giving
had to provide a "direct benefit" to the company, instead, corporations had social responsibilities to the whole
community. This justified giving to higher education since it was a societal benefit; today education receives the largest
portion of giving from corporations.

Importance and Ties to the Philanthropic Sector

According to Giving USA, corporations' charitable contributions totaled approximately $8.5 billion or 5.6% of the total
giving to the nonprofit sector in 1996 which is an increase of 8% over giving in 1995. This figure does not account for
money that was given out of marketing, sales, advertising or public relations budgets. Additionally, the value of
donations of corporate volunteer's time, gifts of products or other non-cash gifts are not included in these figures.
Corporations are able to contribute their business expertise to nonprofits. Even though corporate giving makes up the
smallest percentage of contributions to non-profits, 5.6% compared to 79.6% by living individuals, 6.9% from bequests
and 7.8% by non-corporate foundations, the non-cash gifts that corporations give have an additional unmeasured
impact on nonprofits.

Ties to K-12 Social Studies

Economics

One of the most obvious and most difficult questions concerning corporate giving is why they give. For many ".corporate
giving raised the distinct issue of whether or not the managers of corporations may donate money not belonging to
them personally but to shareholders" (Himmelstein, 1997, p.16).

A theory that attempts to explain why corporate giving makes economic sense is neoclassical or corporate productivity
theory. Based on this theory, making a profit is what motivates corporations to make contributions. An improved bottom
line is how the corporation can tell if its philanthropy has been successful. An example of this theory at work is when
railroad companies in the early 20th century supported the YMCA in building facilities at terminal points along the
construction route to house the workers.

A theory that addresses the concerns that corporations' only responsibilities are to their stockholders is stakeholder
theory. This theory proposes that corporations have responsibilities to other groups that have a stake in their operation.
This group can include customers, employees and communities to name a few. This model is the argument that
corporations use most often today to justify why it is in their interest to have a corporate giving program.

Civics

Another theory as to why corporations give is that it is their civic duty to do so. James Joseph states that "Some
businesspeople argue that businesses are corporate citizens, with rights and duties of citizenship. Some even argue that
the corporate charter makes corporations trustees of the public good" (Shannon, 1991, p.9). This puts forth the idea that
corporations should be doing more than simply making a profit: that they should be good corporate citizens.

Important Related Nonprofit Organizations

There are several nonprofit organizations that serve as a source of information for corporate giving officers. These
organizations frequently provide training, host conferences, and provide legal services and technical assistance. Listed
below are some of these organizations as well as a brief description of their function.

Council on Foundations
1828 L. Street NW
Washington, DC 20036
(202)466-6512                            (202)466-6512           
www.cof.org
Their mission is to promote responsible and effective philanthropy by assisting existing and future grantmakers.
Corporate grantmakers are particularly involved with their Corporate Grantmakers Committee.

The Foundation Center

79 Fifth Avenue
New York, NY 10003
(212)620-4230 Fax (212)691-1828
www.fdncenter.org
The Foundation Center provides direct links to corporations' giving programs and to company-sponsored private
foundations.

The Points of Light Foundation

1400 Street NW Suite 800
(202)729-8000 Fax (202)729-8100
www.pointsoflight.org
This organization is primarily concerned with volunteerism and they have a section devoted to corporate volunteerism
as well as staff that offer courses and help with corporations starting their own volunteer programs.

The Conference Board

845 Third Avenue
New York, NY 10022
(212)759-0900 Fax(212)980-7014
www.conference-board.org
Corporate giving officers tend to be involved with the Contributions Council. This council has meetings and focuses on
the contributions made by corporate giving programs.

Another useful source of information about corporate giving programs is often the corporations' web page. Frequently,
information about the focus of their corporate giving can be found under community or other similar titles. Some
examples of companies where one can learn about their community relations and corporate giving programs by
accessing the corporate web page are Clorox, Eastman Kodak, BankAmerica, The Gap, and Chrysler.

Bibliography

Burlingame, Dwight F. and Young, Dennis R., 1996. Corporate Philanthropy at the Crossroads. Bloomington and
Indianapolis, IN: Indiana University Press.

Council on Foundations, 1982. Corporate Philanthropy: Philosophy, Management, Trends, Future, Background.
Washington, DC: Council on Foundations.

Himmelstein, Jerome L., 1997. Looking Good and Doing Good: Corporate Philanthropy And Corporate Power.
Bloomington and Indianapolis, IN: Indiana University Press.

Kaplan, Ann E. (ed.), 1997. Giving USA 1997: The Annual Report on Philanthropy For the Year 1996. New York, NY:
AAFRC Trust for Philanthropy.

Shannon, James (ed.), 1991. The Corporate Contributions Handbook: Devoting Private Means to Public Needs. San
Francisco, CA: Jossey-Bass.

Ussem, Michael, 1987. "Corporate Philanthropy," in Powell, Walter W. (ed.), The Nonprofit Sector: A Research
Handbook. New Haven, CN: Yale University Press