The Big Shift in Philanthropy

If there is one underlying dynamic that describes the change going on in philanthropy it is a shift of focus from “The Gift” to “The Impact”. A shift of attention from the act of giving to the change the gift achieves. This of course has huge ramifications since we know that the percentage of GDP that goes to philanthropy has remained constant for decades so the only real way to increase the impact of philanthropy is to enhance the effectiveness of the money that is given.

Institutional foundations have been making this shift for some time now. Individual donors have only recently become more focused on thinking about the impact of their giving. The media have just begun to cover this shift. But corporate giving seems to have only barely been involved. This makes sense because it is hard to see the benefit to a corporation to focus on impact rather than on the higher profile nature of the gifts that they make.

So I read with interest an article in Advertising Age (note this is a advertising industry publication, not a philanthropy journal) examining how corporations can benefit from focusing on impact rather than on their giving (hat tip @bsttrach).

The author, Eric Henderson, writes:

What would happen if a brand were consciously identified with creating [a] level of change? Sales. On the strength of the kind of residual awareness and engagement that do not rely on a given campaign… If I felt and understood that a brand were truly the force behind significant community development where I live, then I’d buy the toothbrush, the shoes and the fizzy drink — all in one bundle.

…The equation can only begin with doing what’s right for the brand — i.e., putting your oxygen mask on before trying to help others. Doing right for the brand in this case means recognizing the business value of engaging consumers on genuine terms that are also recognized as such. Be (and be seen as) committed, long-term players in the cities and neighborhoods where you do business.

Note that Henderson is not just arguing for corporations to give back to the communities in which they operate. He is calling on them to make a difference in those communities and arguing that doing so is good for their bottom line.

It seems to me that this approach can be used to break down the natural suspicion we have of corporate giving. Consumers appreciate the fact that companies are charitable, but there is the lingering assumption that they do it only to help their bottom line. But what if a company didn’t just give, but actually made a difference? Actually had an impact on their community? Does it matter anymore to the consumer why they give? If a company gives 2% of income, a consumer might think they do it because on a net basis it actually increases profit and so the “net giving” is actually zero. But if a company’s corporate giving program was focused on achieving impact (and actually achieves it) does the consumer care anymore about how much they gave or why?

It may be that shifting the focus from corporate giving to corporate impact can revolutionize corporate philanthropy in the same way it is changing foundation and individual giving.