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02 Jun. 2016 | Comments (0)

In his essay on pressing issues facing U.S. foundation leaders and boards, Phil Buchanan, president of the Center for Effective Philanthropy, recommends that foundations become more relevant in serving society. Corporate foundations are in a strong position to meet this demand, since they are influenced by market forces.

When corporate philanthropy is purposefully designed to support the business mission and goals, it is in the best position to improve the lives of employees, suppliers, customers, and members of the community. Quite simply, it’s bad for business when there’s poverty, violence, and poor education and healthcare in regions where you’re building your workforce, and promoting your business. CEOs understand this.

Public mistrust of the “establishment” can spill over to foundations

Buchanan reports that new West Coast donors who stress innovation and disruption call into question the more traditional “establishment” foundations. He reports that CEP’s research indicates that nonprofit grantees “don’t see foundations as adequately understanding the needs of intended beneficiaries.” Additionally, Buchanan notes criticisms of the imbalance of power and influence exercised by philanthrocapitalists. As a remedy, he suggests that foundations become more relevant by supporting and engaging citizen movements to mobilize change, particularly in helping to address the wide gap between the haves and have-nots.

Buchanan’s concerns about public mistrust relate to corporate foundations as well, but with a slight twist. For businesses that seek to do good, they must be able to show that they are not merely “greenwashing.” People can discern between “show and tell” efforts and meaningful work that has an impact in helping to solve social, economic, and environmental challenges facing communities and the world. The public will only trust businesses that demonstrate the value of their contributions with a high level of accountability and transparency, and true and deep community engagement.

It’s tough to measure success

The path to accountability and transparency involves robust efforts to measure success. But we know that’s a difficult task for efforts that address social, economic, and environmental problems, as Buchanan reminds us, particularly compared to measuring a company’s financial bottom line. Moreover, if you measure the wrong factors, you provide perverse incentives that distort the work of the organization—to the detriment of your clients and the community. It’s vital to be clear about goals, and accurate in how you measure for impact.

Companies that seek to grow their value by solving community and global problems must be particularly careful to measure effectively for true impact. This is an area where a lack of authenticity, accountability, and transparency will backfire when people sense that the company is merely greenwashing. Nonprofits must be highly engaged in this process, and Buchanan’s essay is another warning to foundations that they must provide funds or resources to nonprofits to evaluate and assess their outcomes. Buchanan makes this comment to all foundations, but the relevancy hits home for companies that need to achieve robust measurement to demonstrate accountability and transparency.

Foundations need to collaborate more

Buchanan calls for more “aligned action,” calling out businesses for working alone. He says: “In business, you want your strategy to be yours alone.” However, companies in particular have demonstrated a high level of collaboration for results in the social sphere.

Here again, market forces provide motivation. For example, customers are increasingly rewarding companies that address social issues with their consumption patterns and employment choices. And many social issues cannot be resolved by one actor alone, so companies have started joining forces to have a greater impact together, thereby helping them maintain a reputation for social responsibility. Such issues, among many, include the hundreds of companies that joined together in support of marriage equality, in support of LGBT rights, to find remedies for human rights violations in mining conflict minerals, and collaborate for climate action through Ceres.

Moreover, case studies of dozens of companies demonstrate that businesses are successful in finding innovative solutions to global problems when they partner with nonprofits. Companies value nonprofits for their expertise and relationships with communities. Nonprofits recognize the benefits of collaborating with businesses to access capital—financial, human, and technological.

Foundations need to consider how to support nonprofits more effectively

Buchanan calls on foundations to be more effective, including giving fewer and larger grants. According to Giving in Numbers: 2015 Edition, that is exactly the trend among corporate foundations—larger investments along with the mutual expectation of more significant results. Such investments encourage deeper relationships that allow for better collaboration and understanding, ultimately resulting in a more effective pursuit of social objectives.

Additionally, companies are investing more than simply dollars. Businesses are involving their people in a variety of forms of service. Giving in Numbers: 2015 Edition also found: “From 2012 to 2014, offerings of pro bono and board service had higher growth rates than any other volunteer programs, demonstrating an instinct to infuse societal engagement with employees’ skills.” These forms of service are a win-win for nonprofits and employees. The report notes: “By using their unique talents and business acumen to help build the capacity of nonprofit partners, or to assist with the execution of initiatives, employees serve the community and develop their leadership skills.”

Foundations can help solve global problems

Buchanan’s assertion that foundations have the potential to play a unique role in our society—a role that other actors can’t or won’t play—is particularly valid for corporate foundations. Businesses have the greatest opportunity of all to help solve global problems, given that companies have global reach, the incentives of the marketplace, and vast resources. Some companies are showing the way by improving the lives of employees; educating and preparing future employees, customers, and suppliers; growing economies in promising markets; and halting environmental degradation in order to support business sustainability.

As Buchanan calls for foundations to better serve society, it’s worth noting that corporate foundations often demonstrate exactly the type of leadership positions that he advocates for—the result of companies’ need to be in tune with societal needs to achieve business success. 

  • About the Author:Alex Parkinson

    Alex Parkinson

    Alex Parkinson is Principal of Parky Communications, a communications agency specializing in sustainability and CSR reporting and communications. He serves as the Co-Leader of The Conference Board Cor…

    Full Bio | More from Alex Parkinson

  • About the Author:Alice Korngold

    Alice Korngold

    Alice Korngold advises companies and NGOs on strategy, board governance, sustainability, ESG, and diversity and inclusion. She is the author of  A Better World, Inc.: How Companies Profit by Solv…

    Full Bio | More from Alice Korngold


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