Stanford Social Innovation Review

America’s Least Philanthropic Companies

PERLA NI on why we should put together a list.

It feels like Apple has been on the cover of every newspaper and magazine this month. People gush about how much they love their iPod and admire Steve Jobs and his company.  Yet very few people ever talk about the fact that Apple is one of the least philanthropic companies in America. To my knowledge, there is not one nonprofit that has received any kind of Apple product discount or donation. Apple doesn’t give out any grants to nonprofits and, as far as I know, its participation in Bono’s Red campaign is its first nonprofit partnership.

Apple’s stock soared 26 percent last month, its gross profit margin reached 35.1 percent, and it ended the second quarter of this year with $12.6 billion in cash. It is doing so well. Why isn’t it giving anything back?

And it’s not just tech companies who don’t do anything for their communities. Companies that you and I buy from frequently are also guilty. Costco, the 32nd largest company in the U.S., with 1.1 billion in profits last year, is nowhere to be seen on the philanthropic landscape. Lowes Home Improvement, number 45 on the Fortune 500 list, with 46 billion in revenues and 3.1 billion in profits, also has no philanthropy program, to my knowledge.

Who else belongs on a list of “Least Philanthropic Companies in America”? Can you guys all chime in, and add your nominations? Can we can put together a list and see if we can’t put these companies on alert that their refusal to give back to the community is not going unnoticed.

Perla Ni, founder and former publisher of Stanford Social Innovation Review, is the founder and CEO of GreatNonprofits. She is also a co-founder of Grassroots.com.

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The Patina of Philanthropy

MARK ROSENMAN on the costs of Product (RED).

The Product (RED) campaign tells us that by shopping, we can help Africa cope with HIV/AIDS. In reality, it’s just one more example of the corporate world aligning its operations with its central purpose of increasing shareholder profit, except this time it is being cloaked in the patina of philanthropy. Buy a (RED) product and a portion of the purchase price goes to charity. But there is a question about what charities will lose in the long term.

Over the past decades, we have seen the demise of independent corporate foundations as business leaders bring them in-house, merge them with marketing and communications departments, and shut them down. Today’s corporate philanthropic activities are guided less by what is good and necessary for local communities and larger societies and more by the corporation’s own interests. So, too, is cause-related marketing: It ties consumers’ desires to see a social good with the corporations’ desires to see higher profits. Corporate altruism has shrunk as corporate avarice has grown. 

According to the pro-business Conference Board, although the dollar value of corporate contributions to charity increased in the post-Katrina year (the last for which we have data) – including funds generated by cause-related marketing – the percentage of pretax revenue donated to worthy groups and causes actually declined.  Based on their income, corporations are becoming stingier. 

Many profits are up, in part, because of businesses’ association with charities. Studies show that people (about 89% of them) are more likely to buy from companies with cause-related arrangements. That’s why corporations spent more than $100 million advertising their association with (RED) while raising under $18 million for charity.  In fact last year, in the U.S. alone, corporations spent over $1.34 billion generally on cause-related schemes (a figure equivalent to about 25 percent of their 2005 U.S. cash donations). 

What’s wrong with all of this ostensible “corporate generosity”?  First, it is self-serving, further diminishing true altruism in the corporate world. We live in a society where values are threatened, and avarice and greed need to be better balanced by a sense of the greater good – the commonweal. If values erode further in the market, nonprofits and the rest of us are all in deeper trouble.  Second, all of us need to understand that, in the words of Buy(Less), shopping is not a solution.  We cannot consume our way to charity and to a better world.  Doing good sometimes requires sacrifice, and we ought not allow ourselves to be convinced that we’ve done our part because of the color of what we use.  Third, we generally don’t know how much goes to the cause and how much goes to profit for each sale or in the aggregate; there is no true transparency or accountability.  What do direct and secondary benefits add up to for the corporation?  Are charities being fairly compensated for those benefits?  Fourth and last, we need to remember that there really is a profound difference between doing well and doing good.  To the degree that we confuse the two, we substitute ourselves for the other and are diminished rather than enriched. 

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Field Notes: Social Venture Network Conference

Social Venture Network has figured out how to hold a great conference: Bring together 250 people passionate about creating social change through business; plan long full days of stimulating presentations interspersed with yoga, men’s and women’s circles, and live music; and locate the conference in the beautiful desert foothills overlooking Tucson. Going to SVN for the first time, I felt right away that it was no ordinary “business” conference.

The attendees were entrepreneurs with an intense personal and professional commitment to building a just and sustainable world through business. (Think Aveda, New Leaf Paper, Calvert, Eileen Fisher.) This year’s conference theme was Economic Justice, so many presentations focused on addressing the growing gap between rich and poor through a variety of business approaches such as employee ownership, limiting CEO wages to a multiple of the lowest employee’s wage, and committing to a living wage. The triple bottom line–people, planet, and profits–came up repeatedly in sessions.

One of the most inspirational talks was by Julius Walls Jr. from Greyston Bakery, in Yonkers, N.Y., who told an extraordinary story of building a profitable company based on hiring “chronically unemployable” workers. Greyston practices an unusual policy of “open hiring”—hiring the first person to apply for a job opening—rather than interviewing and then selecting the most qualified candidate. This approach, coupled with Greyston’s commitment to treating employees with “clarity of communication, consistency, and compassion” has worked very well. Walls said that open hiring sends an important message to staff from the very beginning that the company has confidence that every employee can be successful if he or she wants to be.

As I sat outside by the pool in the perfect warm evening weather, enjoying the evening guitar strumming and group singing, it was hard not to compare this event with one I’ll be attending in New York City in two weeks, the Business for Social Responsibility Conference. (It’s hard to imagine singing Motown tunes in the lobby of the Grand Hyatt).

BSR was one of several groups that evolved out of SVN. (SVN was founded in 1987, BSR in 1992). Now, BSR is seen as an organization comprising mostly larger companies incorporating socially responsible behaviors as part of their overall business strategy. SVN’s mission is to “inspire a community of business and social leaders to build a just economy and sustainable planet;” while BSR “seeks to create a just and sustainable world by working with companies to promote more responsible business practices, innovation and collaboration.”

I don’t understand why there weren’t more representatives from larger companies at SVN, and I look forward to gaining a better understanding of the differences between the two organizations when I attend the upcoming BSR conference. Although the culture of the events will be different—I know I won’t spend evenings gazing up at a star-studded western sky—I am hoping to find the same passion and commitment to social change through business in NYC that I found in Tucson.

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Regina Starr Ridley is the publishing director of the Stanford Social Innovation Review.

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The Bottom Line on Corporate Giving

Many companies devote substantial resources to their philanthropy, and they work hard to publicize their giving.  Some give generously because it’s simply the right thing to do, but many corporations also use their giving programs to enhance their bottom lines.

In a recent Conference Board survey, 51 out of 77 large North American corporations surveyed said that using their philanthropy to further business goals was one of their top three priorities this year.* These business goals include enhancement of overall corporate image and reputation, positive consumer purchasing and investment decisions, and customer loyalty.

But a new survey from the National Consumers League and Fleishman-Hillard calls into question the bottom line effects of corporate philanthropy:

The survey found that 76 percent of American consumers agree that to be socially responsible, companies should place employee salary and wage increases above making charitable contributions.  Similarly, the survey found that 76 percent believe that a company’s treatment of its employees plays a big role in consumer purchasing decisions.

The survey was conducted with 800 adults nationwide through telephone interviews.  Only three percent of survey respondents identified charitable donations as the chief determinant of a company’s degree of social responsibility.

As in other domains, it doesn’t help us to be angels abroad if we’re fireside devils.

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* “Linking Charity to Company’s Bottom Line Is Top Concern” by Ian Wilhelm, in the June 1, 2006 issue of the Chronicle of Philanthropy.

Albert Ruesga blogs on foundations and nonprofits at White Courtesy Telephone.

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