“Making CSR integral to business education would be transformative”

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“Making CSR integral to business education would be transformative”

Teaching of corporate philanthropy, otherwise known as CSR, isvirtually absent in northern Europe. But it’s more common in the US, where the Lilly Family School of Philanthropy opened at Indiana University in 2013. Giles Crosse spoke with Cathy Pharoah, Professor of Charitable Giving at Cass Business School about the rapidly changing world of CSR.

SALT: What is the global state of corporate philanthropy?

Cathy Pharoah:

Philanthropy has seen growth inthe UK and in the US – the two global leaders – throughout the recession, although growth rates declined in some sectors in 2012 and 2013. The US and UK growth has tended to be “in-kind” giving, meaning providing services and goods rather than cash.  We’re also seeing more corporate philanthropy in emerging market countries like Latin America and Asia.  

Total giving by the top 300 donor companies listed on the UK stock exchange in 2012-2013 was estimated at £1.3 billion. This was 8% higher in absolute terms than in 2010; an average 0.9% of pre-tax profits.
In the US, corporate philanthropy was worth around US$4.8 billion, with median corporate giving at 1.01% of pre-tax profit.

SALT: Which businesses give the most?

Cathy Pharoah: Trends in corporate giving are strongly correlated with performance. Companies and sectors doing well tend to give more. So, in the UK, the contribution of raw materials to the economy has grown strongly over the last five years, as has its share in corporate giving. A similar trend is seen in the UK’s health and social care sectors. As one might expect, the financial sector has been giving less, reflecting its problems. In the US, the biggest growth in philanthropy has been in the consumer staples sector.

SALT: What do they expect in return?

There are huge debates about what companies expect from community investment. It still only represents a tiny share of their spending, and there is scepticism about whether it affects their bottom lines. But there is a growing awareness of its role in building a company’s reputation, especially in mitigating reputational damage in socially harmful industries.

‘If philanthropy teaching were integral to business education, it would increase awareness of its value to both companies and communities. It could also prompt more sophisticated thinking about social responsibility,’ Cathy Pharoah

SALT: Should governments expect philanthropy to deal with funding gaps?

Cathy Pharoah: No, definitely not.This one is a non-starter, a red herring. The value of corporate philanthropy is tiny in relation to corporate output and government spending. It is light years away from dealing with public funding gaps.

We live in a low-tax environment, and expectations of what governments and citizens can contribute are changing. Wealth is concentrated in fewer hands, and it is increasingly incumbent on the wealthy to address growing inequalities.

SALT: How transparent should donors be about giving?

Cathy Pharoah: If companies are not openly transparent, they risk scepticism about the motives behind their community investment. Feedback is essential, although we have to bear in mind that onerous reporting requirements are not helpful to community organizations with stretched resources.

SALT: What role could business education play in the future of philanthropy?

Cathy Pharoah: If philanthropy teaching were integral to business education, it could be transformative. It would increase awareness of its value to both companies and communities. It could also prompt more sophisticated thinking about social responsibility. Businesses would be forced to reflect about the many ways mainstream business practice can help the environment, or provide opportunities in education, training, culture, health and welfare.

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