As part of our discussion “The Case for Corporate Citizenship,” NCoC is highlighting some ways corporations are engaging employees, giving back to communities, and integrating civically responsible business practices into their operations. This article features corporate philanthropy, which encompasses both direct cash and corporate foundation donations.

Corporate philanthropy is a common practice in today's business industry. A majority of companies either offer direct cash donations to specific causes, or set up foundations to facilitate this process and effectively allocate the company's philanthropic funds. In fact, according to a Committee for Encouraging Corporate Philanthropy (CECP) study, about 86 percent of corporations had foundations in 2008.

The popularity of corporate philanthropy has been steadily rising; there was a 7 percent increase in this method of corporate giving in 2008, according to “Giving in Numbers.” It has become a significant factor in the non–profit landscape because it amounts for 4 percent of the total contributions made. A recent study by Giving USA showed that companies donated a total of $14.10 billion dollars in philanthropic funds during 2009, about a third of which was from corporate foundations ($4.42 billion).

Companies have been turning to corporate philanthropy because it gives corporations the unique ability to truly integrate their business goals with their service goals. Corporate philanthropy allows corporations to direct exactly where their contributions go, ensuring that they can align their contributions with their unique business goals. As a result, about two–thirds of corporations' philanthropic programs address at least some of the social and political issues relevant to their industry, according to the McKinsey & Company global study “The State of Corporate Philanthropy”. Microsoft, for example, has donated over $350 million to create over 40,000 technology centers in more than 100 countries. These technology centers provide individuals free or low–cost training in computers and the Internet, and ultimately help them develop job–related technology skills. Companies that donate to their relevant industries are coincidentally more likely to consider their efforts successful. The same survey indicated that up to 90 percent of companies seek business benefits from their philanthropic programs.

Company stakeholders generally believe that corporate philanthropy is seemingly more CEO–driven than other corporate giving strategies; 45 percent of respondents who participated in the McKinsey & Company global survey believed the CEO or board members controlled the general direction of the corporation's philanthropic efforts. Only 37 percent believed the direction was based on employee interest, or local community needs. In fact, only 6 percent of respondents believed CEO was not involved in corporate philanthropy.

Regardless of the purpose, direction, and leadership behind corporate philanthropy, a majority of corporations (56 percent) believe that cash contributions have the greatest potential for social change when compared to other corporate citizenship strategies. While CECP reports non–cash giving has significantly increased in light of the economic downturn, (29 percent rise, versus 7 percent in direct corporate giving), corporate philanthropy does still remain an integral part of most companies' civic strategies.

Next in our Corporate Citizenship Highlight: B–Corps