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Company giving needs to be smart

08 September 2014

Let's not get too hung up on how much money is being handed to good causes, what's important is how the cash is used...says Foundation Scotland Chief Executive Giles Ruck.

Contrasting research shows that while on the one hand giving by FTSE 100 companies almost doubled in five years to 2012 (to £2.5billion global giving), on the other hand, analysis of more than 400 top giving UK companies shows that support in the UK has fallen by nearly one quarter from 2012 to 2013 (to the £750million level). Either way, company giving within the UK falls short of the oft-quoted aspiration to reach the magic ‘1% of pre-tax profits’.

The organisation behind this analysis, which also publishes fundraising guides and directories, is on record as being ‘truly horrified’ by the findings. At face value, their reaction seems justified. But hang on, isn’t the money just an input? It tells nothing about what is achieved. A better starting point is ‘how smart is company giving?’

At an extreme end, take a look at Coca-Cola in Africa, which used its incredible distribution networks to tackle HIV and AIDS. Condoms and information materials were supplied from the back of their trucks, along with bottles of Coke. Charity? Yes, it met a need. However, sales of Coke were set to decline, along with the health of the population. Coca-Cola’s goal was arguably more about keeping its customers and employees alive, rather than enhancing its image.

You’d be forgiven for being cynical. However, business guru Michael Porter suggests that the acid test for good corporate philanthropy is ‘whether the desired social change is so beneficial to the company that the organisation would pursue the change even if no-one ever knew about it’. Basically, sensible company giving should seek to create value for the company, in part through supporting its community (however defined) to prosper, regardless of any PR fanfare.

Closer to home, take a look at the William Grant & Sons Youth Opportunities Programme. It focuses on communities where its business is based and where its employees live. In urban Lanarkshire, the programme supports several youth charities which enable young people ‘lost in transition’  to head towards employment, with demonstrable success. The way in which the company gives is smart. After a period of understanding the needs and assets of the community, working out both the gaps and opportunities in provision and then sourcing exceptional charities, the programme continues to invest long-term in several effective organisations. 

The UK analysis mentioned earlier quotes the tendency for companies to give locally, where employees and customers are based, rather than based on need. Surprised? No, it makes sense, given the position that a company and its giving should create shared value (again, after Michael Porter). A criticism levelled at this approach is that it risks ‘desertification’ as companies located in major centres simply boost already prosperous, urban communities. This may be particularly true in a South – North context in England; but, in part Foundation Scotland can point to a different story north of the border.

At a local level, Rio Tinto supports grassroots organisations around Lochaber; while Shell is engaged with charities up and down the Aberdeenshire coastline and in Fife.  On a national level, Baillie Gifford investment managers is headquartered in the capital and supports charities in Edinburgh but is equally proud of its Scotland-wide community awards programme. Meanwhile, ScotRail is supporting communities across the country and in particular those who can demonstrate a connection with their local railway station.

Back to the alternative question, ‘how smart is company giving?’ I believe some of the most thoughtful examples of company giving pay great attention to the connection between their resources and locality with the opportunities and needs within communities. The place which we in Foundation Scotland like to call ‘where philanthropy meets community’.

First published in The Scotsman 28 August 2014.

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