The difference between corporate philanthropy & corporate social responsibility

Written by ellie williams
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The difference between corporate philanthropy & corporate social responsibility
Many corporations are integrating philanthropy and social responsibility into their business strategies. (corporative business image by breezeart.us from Fotolia.com)

Both corporate philanthropy and corporate social responsibility help define a company's reputation and image and create both goodwill with the community and prospective customers. They're also growing trends in the business community, with many corporations setting up departments dedicated to philanthropy or integrating social responsibility into their overall operating strategies. However, the two strategies differ in everything from what's required to the way they impact the company and the public.

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Who's Involved

Often, corporate philanthropy is strictly an executive decision, with only senior management deciding when and how much to donate, or to whom to award grants. Sometimes, all employees are involved, especially with fundraising events or drives. For corporate social responsibility to succeed, however, every employee and every department must play a role. Corporate social responsibility, often called CSR, is frequently a company-wide effort, involving activities like manufacturing, processing or even marketing. Because of this, every employee must understand the company's CSR strategy and how he or she contributes to the success of the initiative.

Who's Affected

Corporate philanthropy may impact only a small group of people, rather than influencing the way the general public makes purchasing decisions as CSR programs sometimes do. Many philanthropy programs donate to specific charities or award grants to individual non-profit groups. The general public, and even the company's own customers, may not be directly affected. Corporate social responsibility, however, often affects a wider range of people, even those who don't buy from the company. For example, according to the Entrepreneur article "Spotlighting your social responsibility," CSR efforts often target a wider audience, through initiatives such as employee safety programs, public education programs and sustainability efforts. The article cites Ben & Jerry's advocacy of hormone-free milk as an example of social corporate responsibility. Ben & Jerry's not only pledged to use only milk free of bovine growth hormone, it also raised awareness among consumers, helped support family farms and its example encouraged other companies to follow its lead, the article adds.

Impact on Business Strategy

While corporate philanthropy may be used to enhance a company's image, it is generally separate from a corporation's long-term business strategy, and has less effect on the organisation's bottom line and ability to attract customers. Corporate philanthropy's primary benefit may be on creating goodwill among the community it serves. Corporate social responsibility programs attempt to merge two goals: adhering to high ethical standards while also enhancing profits. With CSR programs, companies find a way to integrate the needs of the community with programs and features that also boost its bottom line. For example, a company may donate a portion of every item sold to a specific charity, helping the charity while simultaneously encouraging people to buy its product or service.

Scope of Corporate Philanthropy vs. Corporate Social Responsibility

Corporate philanthropy has a narrower, more limited scope than corporate social responsibility. It refers primarily to donations made to charitable and non-profit groups, whether by the corporation, its employees or both. It might also refer to company wide fundraising efforts or pledge drives, or to toy donation or blood donation drives, for example. Corporate social responsibility, on the other hand, has a much broader scope, referring not just to specific efforts, but to a company's overall attitude toward its neighbours, customers, even the environment. For example, a company might designate a portion of all profits for charitable donations, education programs or even its own non-profit efforts. CSR can include things like the methods a company uses to secure ingredients or materials, the way it conducts business in and with other countries or even its own employee policies.

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