Is

philanthropy

mere a tool of

publicity

Bhuvi Gupta ()

Kritika ()

Divya Barsiwal(754)

Geetika()

Alka(620)

WHAT IS CORPORATE PHILANTHROPY

Corporate Philanthropy is the act of a corporation or business

promoting the welfare of others, generally via charitable

donations of funds or time. means "love of humanity

Monetary donations : Cash

Non monetary : Product/ Services

kind donations: Time/ Talent

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TYPES OF PHILANTHROPY

ADVANTAGES TO THE SOCIETY

Companies donate hugely to education ,art , medical expenses etc.

Citing example of top 3 forbes listed philanthropic companies

Walmart donated 4.5% of its 2011 pre-tax profits, which helped

support about 50,000 different charities.

Chevron Corporation. The California-based multinational

energy company gave $262,430,000 cash to foster economic

growth with a significant focus on health, education and

economic development programs .

Goldman Sachs Group : It gave $262,580,983 share of 2.3% of

2012 pretax profits to Women initiative.

funds allocated for various purposes

Collectively, corporate philanthropy accounts for nearly $15

billion in annual giving to nonprofits

CORPOREAL ADVANTAGE

Without Giving

$30m Profit

-$9m 30% tax

$21m Net

With Giving

$30m Profit

-$2m Gave

$28m Profit After Giving

$5.6m (20% tax, ie ↓ tax

bracket)

$22.4m Net

Even after giving $2m, firm saved 1.4m extra ↑ dividends, EPS

And, according to journalist Richard Rothstein, for every $10 a

philanthropist like Bill Gates gives away, the government loses

about $4 in tax breaks.

IS IT A MEANS TO PUBLICITY

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CaseYearly death by tobacco - 440 000 US , Negative publicity about

the tobacco industry and a recent federal fraud conviction

,affected corporate image, employee morale, and company

financial ratings. To counter these effects, Philip Morris widely

publicized their local and global philanthropy. It was the third

largest US corporate giver in 2005; It has donated more than

$1.5 billion during the past decade.13

Philip Morris use philanthropy strategically to improve company image influence policymakers,

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PHILANTHROPIC SHAMS(PUBLICITY)

1.Tobacco giant Philip Morris, spent $ 75 million on its charitable

contributions in 1999 and then launched a $ 100 million

advertising campaign

2. THE RED LABELED PRODUCTS

In 2006, corporations like Motorola, Armani, Apple, and The Gap

together designed a range of ”Red” labeled products to join a

cause marketing effort to raise money for a British NPO, Global

Fund and promised to donate 50% of their profit from “red

labeled” products .

Added benefits involved company’s free and extensive media

exposure as well as a high public profile as it was promoted in

Oprah Winfrey show. It however raised $18 million for the Global

Fund against the combined promotional budget of $100 million

.The media exposure certainly exceeds the cost of donating a

percent of profits from “Red” product sales to charity.

ARE THEY COMPLEMENTARY ?

Their interdependence led to introduction of new term

“strategic philanthropy”

“strategic philanthropy”

“corporate giving that serves a dual purpose of contributing

needed funds to charitable causes while

simultaneously benefiting the firm’s financial bottom line

and enhancing business’s political legitimacy,”

allowing them to use the tax deductible

donations to expand markets and build public goodwill

Increasingly, philanthropy is used as a form of public

relations or advertising, promoting a company’s image or

brand through cause-related marketing or other high-profile

sponsorships.

Philanthropy

Marketing strategies

(publicity)

Strategic philanthropy

FUTURE OF PHILANTHROPYMany corporations swear their certain amount of their future profits

to philanthropy

Coca-Cola Company said in March that it will commit US$30 million over the

next six years to provide access to safe drinking water to communities

throughout Africa through its Replenish Africa Initiative (RAIN).

The Kellogg Company is donating an entire day's worth of cereal production to

Feeding America, a hunger relief food bank network encompassing more than

200 food banks in the U.S. The donation is worth $10m at retail value prices and

represents 55 million cereal servings

PUBLIC ‘S OPINION ON CORPORATE PHILANTHROPY

Richard Rothstein ( research associate of the Economic Policy Instituteand a former education columnist at The New York Times)On facebook’s donation - Mr. Zuckerberg might keep in mind Maimonides' advice that charity is superior where donors get no recognition and recipients are unaware of the donors' identities.

A Walmart employee- Employees are so poorly paid that they need to obtain taxpayer subsidized welfare assistance to obtain health care while it brags about giving 1.3% of its profits to charity and reaches the top of the list as a "philanthropist". There is something fundamentally wrong, unfair and immoral in the way this accomplishment is being measured. Looking at numbers alone is no way to assess such a situation.

Giving more does not satisfy the critics—the more companies donate, the more is expected of them. And executives find it hard, if not impossible, to justify charitable expenditures in terms of bottom-line benefit.

CONCLUSION

After Microsoft announced its paid employee volunteer

activities in Egypt, customer satisfaction scores grew from 61 to

91 %. Therefore Companies that are more cutting edge and

assertive in their philanthropy can promote their efforts as part

of their brand.

Philanthropy should be practiced by the corporations as a part of

their CSR but it should be taken care that philanthropy is not

used as a mere publicity tool but is also fulfils societal obligations

and meets the company’s objectives too.

Experts argue that companies can and should strategically use

their charitable activities to create win-win opportunities for themselves

and for the beneficiaries of their philanthropy.

BIBLIOGRAPHY

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2636524/

Philanthropy as Public Relations:A Critical Perspective on

Cause Marketing

Wikipedia

Forbes journal