Tuesday, 2 April 2013

The Benefits of Strategic Philanthropy

Most businesses are aware of community expectations to engage in some kind of philanthropy. As a start up, or just a company trying to run a sustainable model, this can seem like another hurdle that is best avoided, or put off for a time when business is running smoothly. What CSR becomes at this point is a strategy of reducing the negative impacts of the business upon stakeholders, and this is a hard selling point for customers as well as being a practice that appears too normalised within the market.

Strategic philanthropy presents itself as a more attractive, and often more effective, option to conventional CSR strategies. Strategic philanthropy involves targeting a particular social or environmental issue that holds strategic links with the operations and capacities of a company, so that the mission’s design and implementation can result in positive impact for sustainable solutions.

Rather than money, social impact becomes the deliverable that a firm engaging in strategic philanthropy is assessed on– effectively, outputs are prioritised over inputs. What results is perhaps the strongest point going for strategic philanthropy: it allows the focus of CSR to switch from money to meaningful social transformations. A focus on deliverables not only makes philanthropy a more intelligent and efficient activity, but it also naturally inclines towards a collaborative partnership with local communities – the kind of strategy that holds potential for wide-spread buy-in and is proving itself to be most successful.

The first step in the process of strategic philanthropy is to identify an appropriate cause with which the company can engage – one that is closely related to the core business of the firm will mean that partners and clients are either aware of, or a beneficiary of the firm’s positivity in its CSR practice. An example would be a sports team having an innate connection with the issues of youth development and health issues, or of an automotive retailer being connected to road safety awareness.

There is however, no limit to the applications and usefulness of strategic philanthropy by the size and type of firm engaging in it, as it is possible to visualise an effective strategy for any firm. An IT business, for example, would not appear to be imbued with an obvious CSR initiative outcome set, yet it could well make great leverage on a multitude of social issues. The IT business, the service provider, or the accountancy firm are given a special freedom in their strategic philanthropy, which can be very empowering. A case study in point is MTS Airtel’s involvement in a vaccination program, whereby Airtel provided awareness that immensely improved the reach of the on-ground effort.

After identifying a cause, a path of action must be outlined that is considerate of both a) the degrees of inputs the firm will be willing to make and b) the outcomes that are desired to result from then program. The degrees of inputs include financial contribution, as well as expertise, and access to consumers for marketing purposes, and will determine the possible outcomes.

Outcomes in strategic philanthropy are matched to targets, and are best kept simple so that they can be effectively communicated, e.g. ‘this program educated x amount of farmers correct herbicide use’ or ‘this program delivered an education to 100 rural children’.  The power of these messages are much greater than telling an increasingly cynical market base that an amount of lac or crore have been signed over to a cause

Strategic philanthropy is CSR, where the company is empowered to create real impacts that are core to the nature of the business itself. Positive externalities result in goodwill in the marketplace, which in turn can be a driving factor behind positive business relationships, between the firm and the whole range of stakeholders, and the best way of developing goodwill is through strategic philanthropy.

For companies, ranging from small start-ups to large corporations, strategic philanthropy represents a great opportunity to exert personality in the immediate market through CSR, in a manner that speaks for itself. Effective strategic philanthropy, as it develops the stakeholders, builds social capital and can be integral to a business’ core enterprise as it grows and achieves sustainability within the market.

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