Corporate Philanthropy

Back in Davos, the retiring Bill Gates issued a challenge to all of the world's business and political leaders (and Bono, I guess) to add social entrepreneurship to their corporate agendas. Bill "urged them to pair the self-interest that is the hallmark of capitalism with interest in the welfare of others, which he asserted was a second important force of human nature."

One of my fondest interests, microfinance, is a key mechanism in play to achieve these goals. But this article isn't about microfinance. It's about corporate philanthropy.

The collective geniuses at McKinsey produced a survey recently entitled "The State of Corporate Philanthropy," where they surveyed a wide collection of corporate executives from many different industries.

"In addition to social goals, the vast majority of companies—nearly 90 percent—now seek business benefits from their philanthropy programs as well. When respondents were asked what business goals they try to reach through philanthropy, they most often say their goals include enhancing the corporate reputation or brand (Exhibit 1). And some 80 percent of respondents say finding new business opportunities should have at least some role in determining which philanthropic programs to fund, compared with only 14 percent who say finding new business opportunities should have no weight."

Sometimes, these business practices can indeed get in the way of the greater good. The Bill and Melinda Gates foundation, the largest charitable foundation in the world, has completely shaken up the philanthropy industry, by running things like a real business - a tight ship where things are only funded if a return (in this case, a sound success of the project's goals) is certain. The Bill and Melinda Gates foundation is doing wonderful things, but, as we all know, nothing is ever black and white.

The New York Times reports that Arata Kochi, the chief of the malaria program at the World Health Organization, recently complained to his boss about the Bill and Melinda Gates foundation's influence on the malaria research. The article says:

Many of the world’s leading malaria scientists are now “locked up in a ‘cartel’ with their own research funding being linked to those of others within the group,” Dr. Kochi wrote. Because “each has a vested interest to safeguard the work of the others,” he wrote, getting independent reviews of research proposals “is becoming increasingly difficult.”

Also, he argued, the foundation’s determination to have its favored research used to guide the health organization’s recommendations “could have implicitly dangerous consequences on the policy-making process in world health.”

Again, there is a lot more information than this quote leads on about, and I strongly suggest you read the article before you cast your own opinion. Also, keep in mind that the Bill and Melinda Gates foundation (home page)is not-for-profit, while the McKinsey article was focused on for-profit companies.

As information becomes more ubiquitous, easier to access, and more intuitive to search, largely thanks to the internet, press is becoming more free, and companies more and more transparent. It is clear that companies, more so than ever before, are becoming cognizant of their social and environmental responsibilities.