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State of Corporate Philanthropy -
Survey - Consider in Financing for Gender Equality
The
State of Corporate Philanthropy
A
McKinsey Global Survey
February 2008
Corporate philanthropy can be an effective tool for companies that are trying to meet consumers’ rising expectations of the role businesses should play in society, say respondents to a McKinsey global survey.1 The survey also suggests, however, that companies aren’t using that tool as well as they could. Executives doubt that their philanthropy programs fully meet their social goals or stakeholders’ expectations for them.
About a fifth of the respondents say their corporate philanthropy programs are very or extremely effective at meeting social goals and stakeholder expectations. Their companies take a somewhat different approach than others do: their programs are more likely to address social and political trends relevant to the business and to be influenced by community and business needs. Executives at these companies expect their programs to become more global and say that efforts are already more likely to involve collaboration with other companies. Finally, these companies are much likelier than others to say they are achieving any business goals they have set for their philanthropy programs in addition to social goals.
A small group of respondents say their companies are reaching beyond traditional corporate goals for philanthropy programs—such as enhancing the company’s reputation or brand—to pursue more concrete business goals, such as gaining information on potential markets. Their approach to focusing the programs also differs from the approach at other companies.
Companies and consumers have long seen corporate philanthropy as a way for companies to benefit the communities where they are located—donating funds to local schools, hospitals, and orchestras, for example. In recent years, however, as society’s expectations of companies have risen2 and as many companies have begun operating in more far-flung locations, they are expected to address a growing list of needs. Companies that 20 years ago were held accountable only for direct, contractually specified, or regulated consequences of their actions today find themselves held to account for the consequences of their actions in areas as disparate as offshoring, obesity, excessive consumer debt, environmental sustainability, and the governance of resource-rich, low-income nations. Although today’s expectations are wide-ranging, three-quarters of the executives who responded to this survey say corporate philanthropy is at least somewhat effective in meeting the expectations.
In addition to social goals, the vast majority of companies—nearly 90 percent—now seek business benefits from their philanthropy programs as well. When respondents were asked what business goals they try to reach through philanthropy, they most often say their goals include enhancing the corporate reputation or brand (Exhibit 1). And some 80 percent of respondents say finding new business opportunities should have at least some role in determining which philanthropic programs to fund, compared with only 14 percent who say finding new business opportunities should have no weight.
It is notable, however, that some 30 percent of the responses to the question asking about business goals indicate that some companies are trying to reach very concrete goals, such as building knowledge about potential new markets and informing areas of innovation. Respondents from companies with these goals are likelier than others to say business concerns should play a role in determining funding for philanthropic programs. Also, their philanthropic programs are much more likely to address at least some of the social and political issues relevant to their businesses; nearly two-thirds say they currently do, compared with just under half of all respondents.
Executives overall say their companies are much likelier to address a broad mix of local issues with their corporate philanthropy programs than to address the social and political issues that they expect will affect shareholder value the most (Exhibit 2). The mix of issues addressed varies across industries and regions, but the overall difference remains.
Whatever the business goals of their philanthropy programs, more than 80 percent of respondents say they are at best only somewhat successful at meeting them. Respondents are slightly more positive about how well their philanthropy efforts meet social goals or stakeholder expectations (Exhibit 5). Further, while just over half of the respondents say their stakeholders give their companies the credit they deserve for their philanthropic programs, one out of four don’t know the answer to that question.
Still, roughly one-fifth of respondents say their companies are very or extremely effective at meeting social goals, addressing stakeholder interests, or both. These executives are also much likelier to say stakeholders are giving their companies the credit they deserve (some three-quarters say so). Yet these companies aren’t addressing a different mix of issues than others, and they, too, are much likelier to address the local community with their philanthropic efforts than the community’s importance as a stakeholder would seem to warrant.
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