Corporate Philanthropy - a component of SCR

The word Philanthropy derives from the Greek term Philanthropos, which means the "love of humanity".

Philanthropy is a broader term when compared to charity.  Charity focuses on solving a current problem, or responding to an immediate need of an individual or a group, whereas philanthropy aims to deal with the problems of society as a whole, by preventing the conditions that created those problems and addressing the root causes of individual or collective needs.

The adage “Teach a man on how to fish that feed him for a life time rather than feeding him with a fish everyday”. This might be the premise for transformation of the charity into philanthropy.

The pressure on required limited natural resources is going on increasing with the increase in global population.   Both investors and customers of the 21st Century have become highly sensitive to societal and environment issues.

Today’s younger generation is more concerned about social, ethical and environmental issues. Markets of today are being driven by these teenagers. As far as India is concerned, 54% of its population comprises the age group of 25 yrs., or less. The young India is more concerned about these considerations.

The industrial establishments consume the natural resources common to all and make profits out of them. Deforestation, polluting the environment and making the people around, prone to diseases are some of the important negative impacts of industrialization besides many other impacts. 

The organizations have the ethical responsibility to neutralize these negative impacts and it’s their duty to pay the society in return for consuming the natural resources.

These new perceptions of the people are driving the organizations to look at these considerations to gain the confidence of the consumer to survive in the competitive environment.

Philanthropy is no longer understood as simple charity. Current philanthropic initiatives are in alignment with current social realities. Contemporary business philanthropy strives to create awareness about environmental issues such as afforestation, water harvesting, global warming etc.

As the charitable impulses of family businesses slowly transformed into sustainable organized philanthropic initiatives, companies started setting up Corporate Social Responsibility (CSR) wings.

Philanthropy is a more common approach of today’s Corporate Social Responsibility.  Philanthropy is one of the four (4) components of CSR. The economic, legal, ethical responsibilities are the other three components of CSR.

On the other hand, philanthropy is benefitable to companies in a number of ways viz.,  it enhances corporate reputation, improves relations with government, the community, and key stakeholder groups, enhances brand recognition, attracts better employees and increases retention, increases employee and customer loyalty, strengthens relationships with customer, clients, and vendors, enlarges sense of community and social obligation, increases pride and responsibility among the employees, improves quality of life for community members, creates healthier communities.

Having found these benefits, corporations are considering the philanthropy as a sound business strategy and it often being included as a part of company’s mission statements.

Right from the inception, TATA’s and Birla’s are known for their philanthropic activities.  Even today Tata’s are contributing 8 to 14% of their profits on these philanthropic activities.  Considering the brand image being enjoyed by TATA’s and Birla’s in India, one can understand that these contributions never gone waste. 

There was uproar on PepsiCo and Coca Cola in recent past, alleging that they are extracting the ground water and causing depletion of water bodies in the country.  Taking a positive note of it, PepsiCo seems to have taken some corrective measures.  PepsiCo claims that “to help save a precious resource that is fast depleting in India. Through rain-water harvesting, community watersheds, and water conservation in agriculture, we at PepsiCo India saved 836 Million litres more water than we consumed in 2009”. They are calling it “Positive Water Balance”. (One can see this claim on the AquaFina water bottles.)  

Some of the Cinema Megastars, Superstars, other heroes, Cricketers and individuals who are also enjoying a brand image on par with corporations, shall also follow this Social Responsibility to make the society healthier and to eradicate economic imbalances of the nation.

When the relationship between an organization and the society is on healthier terms, its beneficial both for the organization and the society as well.