The amount of money large companies donate to charitable causes has increased tremendously in the past 30 years. Even after factoring inflation, there has been over 100 percent increase in corporate donations, but percentage wise, the numbers are not impressive.
Three decades ago the average company donated two percent of pretax profits, which is comparable to the standard citizen’s donation. Now, the figure is 0.8 percent. With profits being larger than ever, why aren’t the most profitable companies giving to charity?
1. Business vs. Altruism
Corporations now have many of the same rights as individual citizens. They can own property, sue, be sued and engage in the political process, but they are still meant to function as a machine. A business is designed to make money and reinvest in itself, so putting funds into an organization and receiving nothing in return doesn’t make sense. However, distributing funds that turn into measurable results does. People can afford to be altruists, but businesses must make financially sound decisions to stay alive.
2. Corporate social responsibility redefined
It’s true that consumers still expect corporations to make positive contributions to communities. Furthermore, self-made millionaires know how important it is to keep channels open for innovations and fresh perspectives. CSR now involves business activities that benefit society instead of continuously donations to various non-profits. Large companies will find a charity and work with it for a number of years to achieve a defined social objective. A business focuses on value and needs outcomes more concrete than issuing grants.
3. New methods of social change
With this redefined philosophy, corporations are reworking their philanthropic framework. Donations are not enough anymore. Tangible results such as schools built, texts books distributed, or new jobs created are a must. Large companies are embedding social change into their business models.
They employ local farmers, laborers and townspeople and alter procedural guidelines in tandem with growing environmental and social concerns. For example, car companies are focusing on eco-friendly transport, while other enterprises enforce equal opportunity and payment policies.
To answer the original question, companies are still giving. These corporations are dedicating their philanthropic activities beyond donations and grants. They are moving towards socially conscious practices and mutually beneficial investments. A business is meant to make money, so outright altruism doesn’t usually lead to maintainable actions.
If an objective whether strictly business or charitable can be attained and sustained, it will make sense within the context of a profit-based model. Therefore, companies look for ways to positively impact the community without comprising the innate nature of the corporate entity.
