European Journal of Marketing

Emerald Article: The role of strategic philanthropy in marketing strategy

Debbie Thorne McAlister, Linda Ferrell

Article information:
To cite this document: Debbie Thorne McAlister, Linda Ferrell, (2002),"The role of strategic philanthropy in marketing strategy",
European Journal of Marketing, Vol. 36 Iss: 5 pp. 689 - 705
Permanent link to this document:
http://dx.doi.org/10.1108/03090560210422952
Downloaded on: 12-10-2012
References: This document contains references to 49 other documents
Citations: This document has been cited by 35 other documents
To copy this document: permissions@emeraldinsight.com

Users who downloaded this Article also downloaded: *

Sandy Bond, (2011),"Barriers and drivers to green buildings in Australia and New Zealand", Journal of Property Investment &
Finance, Vol. 29 Iss: 4 pp. 494 - 509
http://dx.doi.org/10.1108/14635781111150367

François Des Rosiers, Jean Dubé, Marius Thériault, (2011),"Do peer effects shape property values?", Journal of Property
Investment & Finance, Vol. 29 Iss: 4 pp. 510 - 528
http://dx.doi.org/10.1108/14635781111150376

Hui Chen, Miguel Baptista Nunes, Lihong Zhou, Guo Chao Peng, (2011),"Expanding the concept of requirements traceability: The role
of electronic records management in gathering evidence of crucial communications and negotiations", Aslib Proceedings, Vol. 63
Iss: 2 pp. 168 - 187
http://dx.doi.org/10.1108/00012531111135646

Access to this document was granted through an Emerald subscription provided by UNIVERSITY OF GUELPH

For Authors:
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service.
Information about how to choose which publication to write for and submission guidelines are available for all. Please visit
www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
With over forty years' experience, Emerald Group Publishing is a leading independent publisher of global research with impact in
business, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, as
well as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization is
a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive
preservation.
*Related content and download information correct at time of download.
 The research register for this journal is available at The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/researchregisters http://www.emeraldinsight.com/0309-0566.htm

The role of strategic Strategic

philanthropy in
philanthropy in marketing marketing

strategy
Debbie Thorne McAlister 689
College of Business Administration, Southwest Texas State University,
San Marcos, Texas, USA, and
Linda Ferrell
Monfort College of Business, University of Northern Colorado, Greeley,
Colorado, USA
Keywords Philanthropy, Cause marketing, Corporate strategy, Marketing strategy
Abstract Outlines the concept of strategic philanthropy, assesses its development and evolution,
gives examples of the stakeholder focus, discusses marketing issues and addresses elements to
consider in implementation. Organizations have long realized the benefits of benevolent
philanthropy in supporting community, employees and the interests of investors. It has only been
in recent years that organizations have formalized and integrated the philanthropic decisions with
corporate citizenship and other key strategic organizational performance-related decisions.
Organizations in the twenty-first century are increasingly concerned about managing societal
issues in marketing to benefit key stakeholder interests. A new definition of strategic philanthropy
is developed and contrasted with other initiatives that link marketing and society. Finally,
suggestions for future research are provided.

In the 1980s, strategic philanthropy emerged as a management and marketing

practice to support social responsibility in organizations in the USA. AT&T
was one of the first organizations to formally use strategic philanthropy in
appointing Reynold Levy to head its foundation to provide leadership in this
area. Levy's ideas changed the linkage between organizational and societal
needs by tying AT&T's foundation activities directly to business goals and
objectives and emphasizing that such activities could advance business
interests (Smith, 1994). Other organizations have followed AT&T's leadership
in the philanthropic area. General Motors' approach to strategic philanthropy
linked stakeholder values and to balance ``altruistic giving with strategic
donations'' (Weld, 1998, p. 5). Former Coca-Cola CEO, Roberto Goizueta, noted
that ``By embracing a strategic approach to philanthropy, corporations fulfill
their responsibility to their shareholders, and their commitment to the
community'' (Saporta, 1997, p. 1).
For several reasons, large corporations are fundamentally responsible for
shaping our understanding of strategic philanthropy in practice. First, large
corporations have developed formal organizational units or structures to
manage this dimension of their social responsibilities. These structures include
corporate foundations, employee committees to oversee corporate giving, and European Journal of Marketing,
staff functions devoted to the effort. Second, large firms often have significant Vol. 36 No. 5/6, 2002, pp. 689-705.
# MCB UP Limited, 0309-0566
budgets on which to base philanthropic decisions. Since their inception, for DOI 10.1108/03090560210422952
European example, the Bank of America Foundation has contributed more than $90
Journal of million and the Ford Motor Company Fund has made grants and gifts in excess
Marketing of $97 million (The Foundation Center, 2000). Over $9 billion was contributed to
various causes and charities by US firms in 1998, an increase of 9.3 percent
36,5/6 over the previous year (American Association of Fund-Raising Counsel, 1999).
Five companies ± Bank of America, General Motors, Johnson & Johnson, Philip
690 Morris, and General Electric ± gave a combined $1.8 billion, thus attesting to
the large budgets of some US corporations.
Finally, many firms have discovered the performance benefits of
philanthropy, including increased customer loyalty, enhanced company
reputation, and strengthened employee commitment and productivity
(Business for Social Responsibility, 1999). Smith (1994, p. 105) addressed this
potential for corporate philanthropy, noting that:
. . . philanthropic and business units have joined forces to develop giving strategies that
increase their name recognition among consumers, boost employee productivity, reduce
research and development costs, overcome regulatory obstacles, and foster synergy among
business units.

In order to reap these benefits, corporations are starting to view philanthropy-

related expenses as no different from budget allocations for advertising, human
resources, raw materials and other traditional expenditures. Thus,
philanthropy is increasingly integrated within the corporate strategic plan
(Garone, 1999; Drumwright and Murphy, 2001).
The purpose of this paper is to explore the potential role of marketing within
the emerging corporate practice in strategic philanthropy. First, strategic
philanthropy is defined and integrated with other elements of social
responsibility. Second, examples of strategic philanthropy are provided to
address companies' ability to address stakeholder interests, while managing
social obligations and economic expectations. Third, directions for future
research, along with potential linkages between marketing and strategic
philanthropy, are examined.

Strategic philanthropy defined

We define strategic philanthropy as the synergistic use of organizational core
competencies and resources to address key stakeholders' interests and to
achieve both organizational and social benefits. Beyond traditional benevolent
philanthropy (e.g. percentage of sales donations or flat donations to social
causes), strategic philanthropy involves employees (i.e. understanding their
needs and core skills), organizational expertise (e.g. equipment, knowledge and
financial resources), and the ability to link employees, customers, suppliers and
societal needs with these key assets. John Damonti, President of the Bristol-
Myers Squibb Foundation, reflected, ``When you align your contributions with
your business focus, you then can draw on the greater wealth of the
corporation's people, information and resources'' (Lindquist, 1998).
In the philanthropic context, the traditional approach is characterized by
corporate giving and related activities that are not purposely aligned with the
strategic goals and resources of the organization. For example, employees may Strategic
be encouraged to volunteer but receive little direction on where to spend their philanthropy in
time. Specific cases of companies supporting community involvement are marketing
numerous, such as: some Xerox employees in Stamford, Connecticut are given
from one month to one year off work to pursue social responsibility projects;
employees at the Body Shop in Littlehampton, UK must spend one hour per
week supporting public service projects; and Tandem Computers in Cupertino, 691
California offers employees paid public service sabbaticals to pursue
community service (Nelson, 1997). Or most contributions may be made to non-
profits, for which top management has a personal interest. For example, Ben &
Jerry's Home-made gave 1 percent of its pre-tax profits to programs supporting
peace initiatives (Nelson, 1997). In this type of corporate philanthropy, firms
have a collection of well-intentioned practices but there is no true integration
throughout operations and strategic decision processes.
In the emerging model, philanthropy becomes one focal point under a
corporate vision that includes both firm welfare and benefits to stakeholders.
This requires top management support, including a reward and incentive
structure that incorporates stakeholder concerns and benefits. Corporate
giving, volunteer efforts and other contributions are considered and designed
in tandem with corporate strategy. The shift from benevolent to strategic
philanthropy has come about, as organizations have struggled in the 1980s and
1990s to redefine their mission, alliances and scope.
Down-sizing, growing international competition, divestitures and investor
demands have caused many organizations to reassess their business practices
and outcomes. As a result, organizations utilizing strategic philanthropy now
blend organizational and social needs. Under this approach, neither
philanthropy nor business objectives have a dominant role, as each
collaborates to benefit and inform the other. Table I provides information on
the evolution of corporate philanthropy in the USA.

Philanthropy and social responsibility

It is important to place strategic philanthropy in the context of social
responsibility, the recognition that business operates with accountabilities
beyond the profit-and-loss statement. For example, Carroll's (1979, 1991) classic
four-part model of corporate social responsibility includes economic, legal,
ethical and discretionary responsibilities. Most firms understand the need to be
economically successful and the importance of complying with laws
established within society. In addition, through the establishment of core
values and an ethical culture, most firms are recognizing the many benefits of
good ethics. Evidence is evolving that there is a positive relationship between
ethics and employee commitment, customer loyalty and profits (e.g. Maignan et
al., 1999). Normally, ethics enhances the bottom line rather than diminishing it.
Ethics can reduce the cost of business transactions, establish trust among
stakeholders, improve teamwork and preserve the social capital necessary for
an effective infrastructure for conducting business (Bowie, 1998).
European Time frame General characteristics of philanthropy
Journal of
Marketing Through 1950s Federal law prohibits corporate donations
1960s and 1970s Public begins to believe that companies should donate some of
36,5/6 their profits to societal causes
Large corporations set up foundations
Few criteria for choosing philanthropic projects
692 1970s and 1980s Stagnant economy slows corporate philanthropy
Public and government lower expectations of business
Merger and acquisition strategies leave little room for
philanthropic effort and donations
Early 1990s Pressure to formalize corporate governance and accountability
Public reacts to ``greed'' of 1980s by raising expectations of
business
Companies take more active role in community and societal
causes
Mid-1990s and beyond Expansion of philanthropy model to include time and human
resources
Recognition of relationship between philanthropy and corporate
benefits with customers, employees, business partners and
community
Collaboration between business and other groups to resolve
social problems
Table I. Focus on aligning business goals with philanthropic activity
Evolution of corporate through overall corporate vision
philanthropy in the
USA Sources: Smith (1994); Svendsen (1998)

A 1998 study by the American Productivity and Quality Center (APQC)

indicates that the definition of corporate success is slowly transforming to
include four equal and complementary goals. Corporations are seeking to
become the supplier and provider of choice, employer of choice, investment of
choice, and neighbor of choice. Progressive organizations are investigating
ways to tie corporate objectives to social responsibility activities, especially
through the development of citizen advisory panels, public hearings, meetings
with community service organizations and participation in community events.
These practices are intended to create ``corporate equity with communities and
stakeholders'' (APQC, 1998, p. 9), with much of the activity involving corporate
donations of time and money.
Philanthropy is located at the most voluntary and discretionary dimension
of corporate responsibility and has not always been linked to profits or the
ethical culture of the firm. In fact, the historical approach to philanthropy
separated giving to society from business performance and other elements of
the firm, including employees, customers and corporate culture. Recent studies
have begun to show organizations' formalization of philanthropic activities and
their attempt to integrate philanthropic goals with other business strategy and
implementation. A Conference Board Survey of 463 US companies found that
those taking a more businesslike approach to philanthropy resulted in a better
image, increased employee loyalty and improved customer ties (Schwartz and Strategic
Smart, 1995). philanthropy in
In sum, organizations are best suited to deal with societal issues in areas
with which they have some experience, knowledge or expertise. From a
marketing
business point of view, organizations wish to reinforce competency within core
areas and develop synergy between business and philanthropic acts. Thus,
strategic philanthropy involves the purposeful alignment of broad 693
organizational resources with social causes and needs. This philosophy also
creates expectations for some type of return or value for the company's
philanthropic ``investment'' (Deutsch, 1997).

Strategic philanthropy versus sponsorships and cause-related

marketing
There are many methods by which firms seek to affect societal welfare in a
positive way. Drumwright and Murphy (2001) discuss ten different types of
initiatives that organizations may undertake for this purpose. In this section,
we compare sponsorships and cause-related marketing with strategic
philanthropy. These two initiatives specifically link economic and social goals,
but differ from strategic philanthropy in terms of employee involvement and
the source of budget dollars. Whereas strategic philanthropy seeks to tie
overall corporate assets and knowledge to address social problems or needs,
CRM and sponsorships are associated with marketing resources and objectives.
Sponsorships involve money and in-kind gifts in return for recognition with
a particular cause or event. For example, a business may sponsor a youth
soccer team by providing funds for uniforms and equipment. The company's
name and logo are placed on uniforms, stadium signs and other tangibles
associated with the soccer team, with the expectation that greater brand
awareness and target market affinity will develop. Sponsorships are paid
through the marketing and promotions budget and usually involve relatively
little employee participation and time.
Cause-related marketing (CRM) usually links an organization's product(s)
directly to a social cause through the firm's marketing plan. Avon, in their
``Breast cancer awareness crusade'', generates proceeds from the sale of
products featuring the ``pink ribbon.'' Donations are made as grants to non-
profit and university-based programs through its partner the National Alliance
of Breast Cancer Organizations. Avon has raised over $25 million through this
program (Avon Corporation, 1999). Generally, as is the case with Avon,
organizations prefer to support causes that are of interest to their target
market. In a single year, more than $500 million was paid by organizations for
the rights to support various social programs, ultimately raising roughly $2.5
billion for these causes (Kadlec and Voorst, 1997).
While there is a philanthropic motive to cause-related marketing, these
efforts tend to produce relatively short-term, product-related outcomes.
Although some CRM campaigns, like the Avon ``pink ribbon'' effort, may run
for a number of years, the majority of these programs do not extend indefinitely
and focus on achieving more immediate objectives, such as an increase in sales.
European Sponsorships may be of longer duration, but are still closely tied to the values
Journal of and beliefs of a target audience in an effort to improve brand perceptions
Marketing (Crimmins and Horn, 1996). Thus, cause-related marketing and sponsorships
are aligned with a specific and tactical element of the firm, not its overall
36,5/6 mission or vision (Drumwright and Murphy, 2001). The development and
implementation of these initiatives are not typically based on overall
694 organizational capabilities and objectives.
Several studies on sponsorships and cause-related marketing found that
such activities have the potential to affect buying patterns (i.e. Adkins and
Kowalska, 1997; New Zealand Marketing Magazine, 2000). A vast majority of
consumers (86 percent) felt that, given equal price and quality in products, they
would be more likely to buy a product associated with a charitable cause.
Nearly three-quarters of consumers (74 percent) said that they were prepared to
switch brands, if a similar brand was associated with a worthy cause. One
study also noted that 70 percent of marketing directors felt that cause-related
marketing would increase in importance over the coming years. Through
cause-related marketing and sponsorships companies first become aware that
supporting social causes such as environmental awareness, health and human
services, education and the arts can support business goals (Mullen, 1997). One
of the main weaknesses with these initiatives, however, is that 90 percent of
consumers cannot link specific philanthropic efforts with companies (Friedman
and Kouns, 1997). Because strategic philanthropy is more pervasive and relates
to company attributes and skills, such alliances should have greater consumer
recognition. Table II provides a comparison of cause-related marketing,
sponsorships and strategic philanthropy.

Strategic Cause-related
philanthropy Sponsorships marketing

Primary focus Organization Product and/or Product

organization
Time frame Ongoing Traditionally of Traditionally of
limited duration limited duration
Organizational Potentially all Marketing Marketing
members involved organizational department and department and
employees related personnel related personnel
Goals Improve Increase brand Increase product sales
organizational awareness and target
competencies and tie market affiliation
competencies to social
need or cause
Table II.
Strategic philanthropy Costs Moderate ± requires Minimal ± alliance Minimal ± alliance
versus cause-related alignment with development and development and
marketing and organizational promotion promotion
sponsorships strategy and mission
Institutionalization of corporate social responsibility Strategic
A number of factors have affected the institutionalization of social philanthropy in
responsibility concerns into corporate strategy and decision making. First, marketing
federal governments have formalized expectations of organizations'
responsibility for ethical compliance. Second, social and ethical criteria are
being used by customers and business partners in evaluating those with whom
they conduct business. Third, corporate governance issues are receiving 695
greater attention. The following section describes these factors and provides
insight on their relationship to strategic philanthropy.
First, the United States Federal Sentencing Guidelines for Organizations,
Australian Standard on Compliance Programs, and Canadian Competition Act
all provide incentives for organizations to develop, implement and
continuously improve programs to detect and prevent violations of law.
Effective programs are based on the unique risk areas and corporate values of
an individual organization, although there are common program elements
across firms, industries and cultures. Programs that are effective normally
include these elements:
. code of ethics/conduct;
. upper management oversight;
. ongoing training and communications;
. care in delegating substantial authority;
. equitable and consistent enforcement of standards and punishment;
. safe and confidential reporting mechanism; and
. continuous improvement processes.
This type of federal legislation creates a favorable climate for self-regulation, not
increased governmental restrictions. Given the promise and unique opportunity
for self-regulation, many businesses have surpassed these seven requirements by
incorporating ethical standards into the compliance initiative. Organizations and
industries are proactively pursuing ``ethical compliance'' initiatives to
demonstrate their commitment to standards that go beyond legal requirements
(Thorne LeClair et al., 1997). Through this commitment, corporations have
heightened expectations of themselves and, by extension, expectations of other
firms. Pompa and Petry (1999) report that some organizations are beginning to
assess the commitment of the extended organization to ethics and compliance. A
major concern is the effect of vendor and customer interactions on ethical
practices and corporate reputation, since many risks exist within business
partnerships. The area of ethical compliance will continue to mature in this
manner, with the trend toward finding a strategic relationship between ethics,
compliance and stakeholder relationships. At a workshop on the future of
business ethics, participants discussed the nexus between ethical compliance
programs and corporate social responsibility (Ethics Resource Center, 1997).
This connection is found when top management is committed to concerns that go
European beyond financial outcomes, coupled with the integration of stakeholder benefits
Journal of in organizational strategy.
Marketing Second, customers and other business partners are considering an
organization's ethical and social performance as choice criteria in economic
36,5/6 decisions. A Walker Research survey of 1,037 consumers determined that 47
percent would be more likely to buy from a ``good'' company, if quality, price
696 and service were equal. In contrast, 70 percent would not buy from a company
that was not socially responsible (Sato Stodder, 1998). The Social Investment
Forum estimates that over $1 trillion are invested in mutual funds, where
investments are screened on social criteria. The forum also suggests that the
amount of money in these funds increased by 85 percent during 1996 and 1997
(Business for Social Responsibility, 1999). Common screening criteria include
environmental responsibility, human rights practices, community participation,
and human resource policies.
Progressive organizations use social accounting and auditing processes to
measure performance on these types of criteria, report it to stakeholders and
develop plans for improvement. As Zadek et al. (1997) indicate, social audits
can serve as both management (i.e. account and control) and accountability (i.e.
report and respond) mechanisms. At this level of commitment, most
organizations have gone through the long process of effectively integrating
stakeholder concerns into corporate strategy and decisions. In 1992, Vancouver
City Savings and Credit Union of Canada (VanCity) initiated the process of
increasing its social accountability to various stakeholders. The process started
when the organization's executives and Board of Directors recognized that
VanCity's level of disclosure, not necessarily its social responsibility, was
below many financial institutions in Canada (Brisbois, 1997). By increasing its
disclosure and reporting, VanCity improved awareness of its commitment to
social responsibility and ultimately refined its corporate strategy to meet other
stakeholder concerns.
Third, the area of corporate governance received increasing attention in the
late 1990s. Corporate governance traditionally concerned management's
responsibility to be accountable for the utilization of company assets, with a
focus on generating shareholder returns. Recently, the discussion of corporate
governance has broadened to include a stakeholder perspective and disclosure
of data not required by law (OECD, 1999). The transparency movement
involves the disclosure of non-financial information including environmental
impact, affirmative action, vendor and customer relations, union relations, role
of board of directors and existence of ethics and compliance programs. In
relation to corporate governance, investors are also beginning to use
shareholder resolutions to increase corporate disclosure and change policies
and practices relative to social responsibility (Business for Social
Responsibility, 1999). For example, the California Public Employees Retirement
System challenged all 300 companies in its portfolio to re-examine corporate
governance procedures, including the quality, organization and composition of
their board of directors (OECD, 1999).
 Although these factors may not have immediate import to volunteerism and Strategic
corporate contributions, they suggest a general trend toward greater corporate philanthropy in
accountability for social responsibility concerns. Ethical compliance, choice marketing
criteria and corporate governance are related to strategic philanthropy through
the organization's increasing focus on its role as a responsive and responsible
member of society. These factors also point to the increasing power that
various stakeholders have in making organizations accountable for their 697
policies and practices. In the following section, we provide insights on
philanthropic collaborations designed to strategically align organizational
resources and competencies with social issues or causes.

Strategic philanthropy and marketing strategy

A strong market orientation is the result of the following: continuous market
intelligence and its integration in organizational strategic planning, cross-
functional efforts to address customer needs, quick response to changing
external factors, and a longer-term perspective in strategic planning (Kohli and
Jaworski, 1990; Narver and Slater, 1990; Slater and Narver, 1994). Companies
with strong market orientations have increased profitability and higher growth
rates. A strategic, external orientation with sensitivity to changing customer
needs is key to developing a strong market orientation and to the
implementation of a well-designed strategic philanthropy program. Thus, the
best practices associated with market orientation are also central to the design
and implementation of corporate contributions, volunteerism and other efforts.
Strategic philanthropy initiatives, just like market orientation, inherently
operate with a longer-term perspective toward the strategic planning process
and corporate outcomes. Investing in strategic philanthropy will not
necessarily generate short-term returns on the organization's investment.
Unlike cause-related marketing, which has immediate ramifications for sales
and profitability, strategic philanthropy is a long-term investment, often
without short-term, bottom line benefits. Despite these practical and theoretical
linkages between success in marketing and philanthropy, they have been
rarely explored.
Although some business firms are moving toward the strategic philanthropy
model, other organizations are still considering the needs of individual
stakeholders. In the following sections, we provide examples of corporate
implementation of strategic philanthropy programs that are often integrated
with marketing goals and objectives. These examples are organized around
stakeholders, including employees, customers, business partners and the
community and society. Such activities serve as examples of best practices in
implementing and managing strategic philanthropy initiatives. Arnold Hiatt,
former CEO of Stride Rite Corporation, noted, ``Look at a well-run company and
you will see the needs of its stakeholders, its employees and the community at
large being served simultaneously'' (Nelson, 1997, p. 204).
European Employees
Journal of In 1996, United Airlines Foundation adopted four focus areas for its
Marketing philanthropic strategy. One of the focus areas is education and careers, with a
global emphasis. Using the professional expertise of United Airlines
36,5/6 employees, the foundation helped develop the Virtual Trade Mission
collaboration between the US federal government, labor groups and private
698 companies. This educational program was designed to teach high school and
middle school students the importance of the USA's export economy. The
Virtual Trade Mission utilized multimedia technology to simulate a trade
mission and has been implemented in more than 30 communities around the
world. United Airlines employees contributed expertise on world geography,
global economic conditions and cross-cultural communication (Otterbourg,
1999). These elements not only were effective for student learning but mirror
the skills and knowledge needed for the airline to operate effectively on a daily
basis. United Airlines' core competencies include the ability to transfer
knowledge and best practices between countries in which it operates.
3M is concerned about taking care of employee needs, while balancing the
interests of other stakeholders. 3M has been very aggressive in implementing
environmentally-friendly processes and procedures in its manufacturing
processes. The company provides van transportation for its employees to work
within a 15-mile radius of the office. If the van has only a few riders, each pays
a minimal monthly fee to help offset some of the costs of the program. If the
number using the program increases to a specified level, the monthly fee is
dropped. 3M has found that employees participating in the van transport
program are less likely to use sick-leave and more likely to manage their time
well while at work. In addition, pollution levels are minimized because of the
van-pooling initiative (Reder, 1995).

Customers
As marketing practice and thought move from a focus on customer satisfaction
to customer loyalty (Oliver, 1999), strategic philanthropy becomes increasingly
more important. Customer loyalty and trust go hand-in-hand. Cone/Roper's
``Cause-related trends report: evolution of cause branding'' reveals that eight out
of ten Americans are more favorable towards a company supporting a cause in
which they have an interest. In addition, roughly two-thirds of those surveyed
said that they felt greater trust toward companies associated with social causes
(PR Newswire, 2000). Other studies have demonstrated positive benefits of its
corporate citizenship, including higher customer satisfaction, stronger
employee commitment, reduced regulatory and legal interventions, increased
productivity and quality, and profitability (i.e. Business for Social Responsibility,
1999; Maignan, 1997). Strategic philanthropy efforts systematically attempt to
consider customer and other relevant stakeholder interests and concerns in
developing alliances and providing resources. In the face of increasing
competition, finding ways to enhance trust and consumer acceptability could
relate directly to competitive advantage and customer loyalty.
 Home Depot has been progressive in its approach to philanthropy. The Strategic
company has skillfully aligned its expertise and material provision ability to philanthropy in
addressing social needs. Home Depot's relationship with Habitat for the marketing
Humanities allows the company to provide a service in an area where they have
enormous expertise and ability. This alliance gives their employees a chance to
improve their skills and bring direct knowledge back into the workplace to
benefit customers. It also enhances Home Depot's image of expertise as the ``do 699
it yourself'' center. Home Depot also responded to customers' needs when
Hurricane Andrew hit the Miami area. Many home-building supply and
hardware stores were taking advantage of customers by inflating prices on
emergency materials. Home Depot opened their stores 24 hours each day and
made materials available at reduced costs to assist customers in surviving the
disaster.
GTE, through its foundation, distributed more than $30 million nation-wide
in 1999. Literacy and technology education are two of GTE's greatest concerns.
GTE's family literacy program funds 44 technology learning centers nation-
wide. With an estimated 40 million US citizens classified as illiterate, GTE feels
that they can influence the quality of life of customers with such a broad-based
initiative. Other education programs include growth initiatives for teachers,
$12,000 grants for innovation in the classroom with math and science projects
and support for the United Negro College Fund (Cohen-Hager, 1999).

Business partners
Investors are using philanthropic goals and social concerns when choosing
business partners. The Freeplay Group, based in South Africa, is an example of
a company founded on the principle of ``making money and making a
difference'' (Dahle, 1999). The company manufactures and markets self-
powered radios (i.e. wind-up) that were originally intended for poor nations
where electricity and batteries are scarce. For example, these radios are used to
transmit elementary school lessons in South Africa and election results in
Ghana. The radios now sell in many countries at retailers such as the Sharper
Image, RadioShack and Harrods. Freeplay's investors include the General
Electric Pension Trust and Liberty Life, a South African insurance firm. Rotary
International and other community organizations are using the radios to
implement programs that benefit society and communities. These investors
and customers have chosen Freeplay for its solid business plan founded on
broader social goals.
BJC Health System is working with other area health systems to make health
insurance available to St Louis area residents who cannot afford it. BJC
manages Care Partners and ConnectCare. Care Partners offers 24-hour
emergency care facilities and primary care facilities to anyone in need ±
whether insured or not. ConnectCare was launched by city officials and
community leaders with the same goal of providing health services to all
citizens. BJC has won praise for its ability to work with insurers, other systems
European and the public in supporting health insurance initiatives with the collective
Journal of goal of improving people's lives (Babwin, 1998).
Marketing
Community and society
36,5/6 Coca-Cola takes a strategic view of its role in society by linking company
resources and operating practices to stakeholder issues. For example, while
700 acknowledging the myriad problems in today's world, Coca-Cola has chosen to
focus its energies and resources on environmental issues, where the company
has an impact and relevant expertise. For this global beverage manufacturing
and marketing firm, water quality, water conservation and waste reduction are
key considerations in its packaging and operational decisions (The Coca-Cola
Company, 1999). Coca-Cola has provided funds and expertise around the world
to support collaborations that respond to these environmental concerns. These
projects involve bottlers, employees, suppliers, regulators, customers and other
corporations interested in building strategies for environmental excellence.
Merck developed a drug to combat ``river blindness'', a blinding disease
affecting over 18 million people world-wide. Merck's expertise as a
pharmaceutical laboratory allowed them to develop the drug and their
humanitarian orientation caused them to donate Invermectin to over 23 million
people. A Merck scientist who worked on the project noted:
I've received more mail based on this decision than anything else we've done as a company. Not
only was it positive; more important than our shareholders, I thought, was the effect on the
people at Merck . . . about what a fantastic move this was for the company (Reder, 1995, p. 183).

The benefits of the decision to develop the drug, predominantly for countries
which could not afford it, then to donate the medication to heavily afflicted
areas, represent Merck's understanding of strategic philanthropy and the
positive effects upon society, first and foremost, employees, investors, and even
customers.
In line with their core competence, PrimeCo Personal Communications,
provider of a digital wireless service, recently donated massive air time and
more than $30,000 worth of digital wireless phones to Big Brothers Big Sisters
(BBBS). When PrimeCo customers pledge an hour of time to a volunteer effort
in their community, the company donates an additional hour of free time to
BBBS. The program is expected to donate two million minutes or up to two
years of service for BBBS (PrimeCo Personal Communications, 1999).
LensCrafters has pledged to give one million pairs of glasses to the needy by
2003. Not wanting their motives questioned, CEO Dave Brown has given
employees directives not to seek publicity. He states, ``I do not want anyone
thinking that the company is doing this for any reason other than that it's the
right thing to do'' (Jones, 1997). Brown also noted that employees could engage
in other philanthropy, but this makes more sense in that it leverages their eye
care provision skills (Jones, 1997).
Finally, industry associations are also working to extend the philanthropic
efforts of their member companies. The American Apparel Manufacturers
Association assists manufacturers in donating surplus apparel to the needy, Strategic
homeless and disaster victims. More than $54 million of surplus has been philanthropy in
donated to over 250 charitable organizations in 16 countries (American Society marketing
of Association Executives, 1999). Table III provides additional examples of
strategic philanthropy programs supporting societal issues.

Implementation of strategic philanthropy 701

As these examples demonstrate, there are a variety of approaches for aligning
corporate goals with social concerns. Notwithstanding the importance of
marketing planning within the cause-related marketing framework, neither
marketing practice nor marketing thought have been thoroughly integrated with
respect to strategic philanthropy. Some organizations and leaders see beyond
economic concerns, whereas other firms are much less progressive and
collaborative in nature. So to the extent that corporate leaders and others
advocate strategic philanthropy, evaluation protocol must incorporate not only
programmatic success but also the contribution of philanthropic activity to
organizational performance. Several evaluation considerations are offered below.
First, evaluating corporate philanthropy must begin with a clear
understanding of how these efforts are linked to the company's vision, mission,
resources and strategies. As our definition suggests, philanthropy can only be
``strategic'', if it is fully aligned with the values, core competencies and long-
term plans of an organization. Thus, the development of philanthropic
programs should be part of the strategic marketing-planning process, relate to
market orientation commitments and attempt to draw greater linkages with
customers-interests and loyalty.
Second, assuming that key stakeholders have been identified, organizations
will need to conduct research to understand stakeholder expectations and their
willingness to collaborate for mutual benefit. Although many companies have
invested time and resources to understand the needs of employees, customers

Organization (core business/expertise) Social cause supported

Kraft (Food) Feed the hungry

Nation's Bank (Financial Services)
LensCrafters (Vision Care)
Bell Atlantic Mobile (Wireless Phone Service) Donated mobile phones and service to
Microsoft (Software and E-Business Support)
ADT (Security Systems)
Barnes & Noble (Bookstore)
Economic development and revitalization of
Charlotte, NC down-town
Donation of eyeglasses to low income
families
victims of domestic violence
Assistance in educating the disadvantaged
for information technology jobs
Donated personal security systems to Table III.
battered women Corporate strategic
Literacy initiatives philanthropy initiatives
European and investors, fewer have examined other stakeholders or the potential for
Journal of aligning stakeholders and company resources for philanthropic reasons. The
Marketing role of trust in fostering competitive advantage is not fully understood or
leveraged in most organizations. Philanthropic efforts should be evaluated for
36,5/6 their effects on and benefits to various groups.
Third, evaluation protocol should include an assessment of how
702 philanthropic and corporate citizenship initiatives are communicated to
stakeholders. As the VanCity example suggested, the reporting mechanism not
only improves stakeholder knowledge but leads to improvements and
refinements. Although critics may deride organizations for communicating
their philanthropic efforts, the strategic philanthropy model is dependent on
feedback and learning to create greater value for the organization and its
stakeholders. If organizations are clearly making good strategic business
decisions in their strategic philanthropy alignments, this should be promoted
and communicated to relevant stakeholders.
Finally, strategic philanthropy is based on organizational learning, which
includes corporate history, collective vision and other processes for thinking,
doing, evaluating and reflecting (Senge, 1990). Just like the organizational
learning paradigm, both market orientation and strategic philanthropy depend
on the systemic interplay between corporate principles (i.e. guiding ideas and
values) and practices (i.e. what is done).

Conclusions and future research

While organizations have casually realized the benefits of philanthropy in
supporting employees, the community and often stockholders, the concept of
strategic philanthropy suggests that organizations use their core competencies
and resources to benefit stakeholders in a planned manner. From this
perspective, strategic philanthropy is an integrated part of a broader
philosophy that recognizes how participation in corporate citizenship can help
an organization improve its overall performance.
Cause-related marketing and sponsorships opened the door to link
philanthropic goals to other business objectives and stakeholder interests. By
linking products with charities and social causes, organizations acknowledged
the opportunity to align philanthropy to economic goals, and to acknowledge
stakeholders' interests in organizational benevolence. A social responsibility
approach to managing the organization has been the result of many influences,
including the federal government's formalized expectations for legal compliance,
social and ethical criteria emerging as evaluative tools for customers and
business partners, and the increased influence of corporate governance issues.
Many organizations have skillfully used their resources and core
competencies to address the needs of employees, customers, business partners,
as well as the community and society. In turn, these actions have been found to
positively influence financial performance. To successfully integrate strategic
philanthropy into the organization, the efforts must first fit with the company's
mission, values and resources. Organizations must also understand
stakeholder expectations and propensity to support such activities for mutual Strategic
benefit. Such a process is self-renewing and relies on the feedback of philanthropy in
stakeholders in improving and learning how to better integrate the strategic marketing
philanthropy objectives with other organizational goals.
Research is needed to assist in understanding how strategic philanthropy
can be developed and integrated to support an organization's core
competencies. Like the examples presented here, the collection of descriptive 703
information about strategic philanthropy programs and benefits can enhance a
firm's ability to engage in successful involvement. Organizations that have
successful strategic philanthropy programs need to survey employees and
other key stakeholders to determine their knowledge and attitudes toward the
firm's strategic philanthropy efforts. A determination of the firm's strategic
advantage should be assessed, much as traditional market and customer
research is used to determine sources of differentiation and loyalty.
Research is needed to determine how organizations develop a fit between
core competencies and strategic philanthropy. Best practices that have resulted
in strategic integration in overall corporate citizenship and business
performance need to be analyzed to determine normative managerial practices.
This type of research should examine different industries and corporate
cultures to explore how the strategic philanthropy component of corporate
citizenship can be a driving force in the success of the business. Finally, more
evidence needs to be provided that determines the relationship between
strategic philanthropy and various variables that influence organizational
success. Variables, such as employee commitment, customer loyalty, investor
attitudes and commitment, and reputation, could assist in assessing the success
of strategic philanthropy. Smith (1999) discusses ethics as a consumer value,
where purchasing behavior is based on altruistic motives, ethical concerns or
other moral judgments. The motivations and outcomes of this type of consumer
behavior are also in need of additional research.
In conclusion, the areas of marketing and strategic philanthropy are
currently practiced and studied as relatively distinct and different phenomena.
However, as the examples in this paper demonstrate, the resources and
outcomes associated with philanthropic efforts are similar to those sought
within a marketing context. The potential for marketing constructs and
theories to assist philanthropy, and vice versa, has not been adequately
explored. Several areas at the intersection between marketing and strategic
philanthropy need future exploration, including customer loyalty, corporate
reputation and organizational learning.

References
Adkins, S. and Kowalska, N. (1997), ``Consumers put `causes' on the shopping list'', M2
PressWire, November 17.
American Association of Association Executives (1999), ``How associations advance America,''
available at: www.asaenet.org/AAA/.
European American Association of Fund-Raising Counsel (1999), Giving USA, AAFRC Trust for
Philanthropy. New York, NY.
Journal of APQC (1998), Community Relations: Unleashing the Power of Corporate Citizenship, American
Marketing Productivity and Quality Center, Houston, TX.
36,5/6 Avon Corporation (1999), ``Avon's breast cancer awareness crusade'', available at:
www.avoncrusade.com/
704 Babwin, D. (1998), ``Gateway to good health'', Hospital and Health Networks, Vol. 72 No. 22,
November 20, p. 20.
Bowie, N. (1998), ``Companies are discovering the value of ethics'', USA Today Magazine, No. 126,
January 1.
Brisbois, C. (1997), ``Ranking disclosure: VanCity Savings & Credit Union, Canada'', Building
Corporate Accountability: Emerging Practices in Social and Ethical Accounting, Auditing,
and Reporting, Earthscan Publications Limited, London.
Business for Social Responsibility (BSR) (1999), Introduction to Corporate Social Responsibility,
San Francisco, CA, available at: www.bsr.org
Carroll, A. (1979), ``A three-dimensional conceptual model of corporate social performance'',
Academy of Management Review, Vol. 4, pp. 497-505.
Carroll, A. (1991), ``The pyramid of social responsibility'', Business Horizons, No. 34, July/August,
pp. 39-48.
(The) Coca-Cola Company (1999), ``Environment'', Atlanta, GA, available at: www.thecoca-
colacompany.com/environment/ main.html
Cohen-Hagar, S. (1999), ``GTE Foundation increases 1999 contributions budget to $30 million to
support education, literacy, and community programs'', Business Wire, February 17.
Crimmins, J. and Horn, M. (1996), ``From management ego trip to marketing success'', Journal of
Advertising Research, July-August, pp. 11-21.
Dahle, C. (1999), ``Social justice: the freeplay group'', Fast Company, April, pp. 166-82.
Deutsch, C.H. (1997), ``Corporations adopt a different attitude: show us the value'', New York
Times, December 9, p. G12.
Drumwright, M.E. and Murphy, P.E. (2001), ``Corporate societal marketing'', in Bloom, P.N. and
Gundlach, G.T. (Eds), Handbook of Marketing and Society, Sage, Thousand Oaks, CA,
pp. 162-83.
Ethics Resource Center (1997), Visioning the Future of Business Ethics: Infinite in All Directions,
Ethics Resource Center, Washington, DC.
(The) Foundation Center (2000), ``Fifty largest corporate foundations by total giving'', available
at: www.fdncenter.org/grantmaker/trends/ (accessed January 10, 2001).
Friedman, S. and Kouns, C. (1997), ``Charitable contribution: reinventing cause marketing'', Brand
Week, October 27.
Garone, S. (1999), The Link between Corporate Citizenship and Financial Performance, The
Conference Board, New York, NY.
Jones, D. (1997), ``Good works, good business'', USA Today, April 25, p. B1.
Kadlec, D. and Voorst, B. (1997), ``Business: the new world of giving companies are doing more
good, and demanding more back'', Time, May 5, pp. 62-6.
Kohli, A.K. and Jaworski, B.J. (1990), ``Market orientation: the construct, research propositions
and managerial implications'', Journal of Marketing, Vol. 54, pp. 1-18.
Lindquist, D. (1998), ``Drug companies' Rx for the bottom line'', Industry Week, September 7, p. 25.
Maignan, I. (1997), ``Antecedents and benefits of corporate citizenship: a comparison of US and
French businesses'', unpublished dissertation, The University of Memphis, Memphis, TN.
Maignan, I., Ferrell, O.C. and Hult, G.T.M. (1999), ``Corporate citizenship: cultural antecedents and Strategic
business benefits'', Journal of the Academy of Marketing Science, Vol. 27, Fall, pp. 455-69.
Mullen, J. (1997), ``Performance-based corporate philanthropy: how `giving smart' can further
philanthropy in
corporate goals'', Public Relations Quarterly, Vol. 42 June 22, p. 42. marketing
Narver, J.C. and Slater, S.F. (1990), ``The effect of market orientation on business profitability'',
Journal of Marketing, Vol. 54, pp. 20-35.
Nelson, B. (1997), 1001 Ways to Energize Employees, Workman Publishing, New York, NY. 705
New Zealand Marketing Magazine (2000), ``Good is gold'', No. 19 November, p. 4.
OECD (1999), ``Background and issues paper for the OECD symposium on the role of disclosure
in strengthening corporate governance'', Organisation for Economic Cooperation and
Development, Washington, DC, available at: www.oecd.org/OECD
Oliver, R.L. (1999), ``Whence consumer loyalty?'', Journal of Marketing, Vol. 63, October, pp. 33-44.
Otterbourg, S.D. (1999), ``Prepping the next generation: research round-up, business-education
partnerships'', Across the Board, Vol. 36, February 1, p. 55.
Pompa, V. and Petry, E. (1999), ``More companies are looking at ethics in the `extended
organization''', Ethikos, Vol. 12, March/April, pp. 7-9.
PR Newswire (2000), ``Philanthropy, reputation go hand-in-hand'', p. 56.
PrimeCo Personal Communications (1999), press release ``Calling all volunteers: PrimeCo moves
to mobilize a million during national volunteer month'', March 30, available at:
news.primeco.com
Reder, A. (1995), Seventy-five Best Business Practices for Socially Responsible Companies, G. P.
Putnam & Sons, New York, NY.
Saporta, M. (1997), ``Coca-Cola, other companies offer `strategic philanthropy''', Atlanta Journal
and Constitution April 26, p. E3.
Sato Stodder, G. (1998), ``Goodwill hunting'', Entrepreneur Magazine, No. 26, July 8, p. 118.
Schwartz, N. and Smart, T. (1995), ``Giving ± and getting something back'', Business Week,
August 28, p. 81.
Senge, P. (1990), The Fifth Discipline: The Art and Practice of The Learning Organization,
Currency Doubleday, New York, NY.
Slater, S.F. and Narver, J.C. (1994), ``Does competitive environment moderate the market
orientation-performance relationship?'', Journal of Marketing, Vol. 58, pp. 46-55.
Smith, C.N. (1994), ``The new corporate philanthropy'', Harvard Business Review, May/June,
pp. 105-15.
Smith, C.N. (1999), ``Ethics and the typology of consumer value'', in Holbrook, M.B. (Ed.),
Consumer Value: A Framework for Analysis and Research, Routledge, London, pp. 147-58.
Svendsen, A. (1998), The Stakeholder Strategy: Profiting from Collaborative Business
Relationships, Berrett Koehler Publishers, San Francisco, CA.
Thorne LeClair, D., Ferrell, O.C. and Ferrell, L. (1997), ``The federal sentencing guidelines for
organizations: implications for international marketing'', Journal of Public Policy and
Marketing, Vol. 16, spring, pp. 26-37.
Weld, R. (1998), ``The art of giving'', Industry Week, No. 247, September 7, p. 17.
Zadek, S., Pruzan, P. and Evans, R. (1997), Building Corporate Accountability: Emerging Practices
in Social and Ethical Accounting, Auditing, and Reporting, Earthscan Publications
Limited, London.