The Coming End of Corporate Charity, and How Companies Should Prepare

KleinPaul Klein, Founder and president of Impakt

The end of corporations giving money to charities and getting nothing in return is close at hand.

As the pressure to quantify all results intensifies, businesses are finding that the most meaningful social change happens when they stick to the business of business. This is evident in the way corporate social responsibility has evolved. Once primarily a vehicle for corporate philanthropy, CSR as it is practiced today usually consists of measurable business activities that are also good for society. In this context, traditional corporate philanthropy is considered an inappropriate use of capital, a distraction of time and resources from business activities that will accomplish more.

The fact is that corporations have no imperative to support the work of nonprofits, and they actually give very little away as a portion of all charitable giving. In Britain the NCVO and Charity Commission found corporate contributions to amount to only about 6% of total donations and gifts to voluntary organizations in 2011-12. According to the National Philanthropic Trust, U.S. corporations accounted for only approximately 5% of total giving to charities in 2011.

Executives have started to ask how their companies can stop giving money away and getting nothing in return, but putting an end to corporate philanthropy isn’t easy. The reputational risk of leaving worthy charitable organizations out in the cold is considerable, making leaders reluctant to take decisive action. However, new approaches are possible, since the end of giving for nothing may not be far away.

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