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Let's Keep the Heart in Corporate Social Responsibility

September 4, 2012

Recently, I heard a panelist at a social innovation summit refer to corporate philanthropy as "left over money" and corporate volunteerism as "left over time." Ouch.

This certainly isn't the way that corporate philanthropy began. In fact, many of the U.S. companies that have been around for a century or longer were founded by individuals who held strong social values and philanthropic impulses, and they brought these attributes to the companies they founded.

Alexander Graham Bell worked with the hearing impaired, and this led directly to the invention of the telephone and the Bell Telephone Company – now AT&T. J. Pierpont Morgan, founder of J.P. Morgan, was said to value trust and integrity over wealth and power when measuring his colleagues. My own company, American Express, made its first grant to aid victims of the Boston fire in 1872.

After the Second World War, a number of companies created charitable foundations to aid with their giving. The Ford Motor Company Fund was created in 1949, the Western Electric Fund in 1953, and the American Express Foundation in 1954.

For some, this was the golden age of corporate philanthropy. Grants were often spread among many organizations in small amounts – often for unrestricted operating support. The emphasis was on how much companies gave rather than how they did it or who they gave to.

This approach was not without its critics, however, and in the 1980s corporate philanthropy shifted to be more about what causes companies gave to rather than just how much they gave. The concept of "strategic philanthropy" -- marrying the societal need with the business interests of the company – took hold. Companies wanted to focus their resources on a small number of priorities – those most closely aligned with their business interests – rather than spreading grants around to numerous organizations.

Somewhere around the 1990s, companies started paying more attention to what they do rather than just what they give, and the corporate social responsibility movement was born. Called "corporate citizenship" or "sustainability" by some, socially responsible companies began embracing responsibility for their actions and trying to achieve a positive impact on the environment, consumers, employees, communities and other stakeholders.

Lately, the field of corporate social responsibility has been confronted by a new concept called "shared value" or "sustainable value" creation. First espoused by Michael Porter and Mark Kramer in a Harvard Business Review article in 2006, shared value creation recognizes that the competitiveness of a company and the health of communities around it are mutually dependent.

Taken at face value, the concepts of shared value creation, strategic philanthropy and corporate social responsibility are not all that different. All attempt to marry the business interests of the company with the needs of communities in order to make a positive impact on both.

But, like many ideas, shared value creation can be taken too far. Last year, the Committee Encouraging Corporate Philanthropy published a report entitled, Business at its Best: Driving Sustainable Value Creation. This report defined "sustainable value creation" as "a core business strategy focused on addressing fundamental societal issues by identifying new, scalable sources of competitive advantage that generate measurable profit and community benefits (italics mine)."

After this report came out, I heard some of my CSR colleagues say that their companies had shifted – or were in the process of shifting – their way of conducting, and talking about, their CSR programs to be more in keeping with the "shared value" or "sustainable value" approach. I've even heard colleagues say that they never use the word "philanthropy" or "social responsibility" any more.

I think this is an unfortunate trend.

While I firmly believe that CSR and corporate philanthropy are not sustainable without an intense focus on advancing business interests, achieving true shared value creation is impractical for most companies and exceedingly difficult for others. Many companies have tried, few have succeeded.

An unintended consequence of focusing exclusively on the goal of generating measurable profits with socially responsible behavior may be throwing the baby out with the bath water – ending the practice of corporate philanthropy and social responsibility because of its inability to achieve profitable results.

In our rush to be more business oriented with our work, let's not lose sight of the idea that giving something back to the community – be it through grantmaking or volunteering or advocating on behalf of workable solutions to society issues – is an important in and of itself.

A few years ago, Kent C. Nelson, former CEO of UPS, made a speech at a Council on Foundations conference where he said that all giving –even corporate giving – should come from the heart. Now, I admit that sometimes it's hard to find a corporation's real heart, but the idea of corporations giving back to their communities isn't new, and shouldn't be so easily discarded.

Those of us who are engaged in corporate philanthropy, corporate social responsibility -- and even shared value creation -- and the millions of our employees who readily volunteer their time and resources in their communities, are not engaged in spending "left over" time and money. We think of ourselves as contributing to the sustainability of both our businesses and to the communities where we live and work.

So, let's stay focused on our business interests, but let's have a heart too. Or, as they say in "Friday Night Lights" football: "Clear Eyes, Full Hearts, Can't Lose."

(These remarks are excerpted from a recent keynote speech at a Better Business Bureau Forum on Corporate Responsibility in New York City.)

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