State of Corporate Philanthropy – Survey – Consider in Financing for Gender Equality

Corporate philanthropy can be an effective tool for
companies that are trying to meet consumers’ rising expectations of the role
businesses should play in society, say respondents to a McKinsey global survey.¹ The survey also suggests, however, that
companies aren’t using that tool as well as they could. Executives doubt that
their philanthropy programs fully meet their social goals or stakeholders’
expectations for them.

About a fifth of the respondents say their corporate philanthropy programs
are very or extremely effective at meeting social goals and stakeholder
expectations. Their companies take a somewhat different approach than others
do: their programs are more likely to address social and political trends
relevant to the business and to be influenced by community and business needs.
Executives at these companies expect their programs to become more global and
say that efforts are already more likely to involve collaboration with other
companies. Finally, these companies are much likelier than others to say they
are achieving any business goals they have set for their philanthropy programs in
addition to social goals.

A small group of respondents say their companies are reaching beyond
traditional corporate goals for philanthropy programs—such as enhancing the
company’s reputation or brand—to pursue more concrete business goals, such as
gaining information on potential markets. Their approach to focusing the
programs also differs from the approach at other companies.

Why give?

Companies and consumers have long seen corporate philanthropy as a way for
companies to benefit the communities where they are located—donating funds to
local schools, hospitals, and orchestras, for example. In recent years,
however, as society’s expectations of companies have risen² and as many companies have begun operating
in more far-flung locations, they are expected to address a growing list of
needs. Companies that 20 years ago were held accountable only for direct,
contractually specified, or regulated consequences of their actions today find
themselves held to account for the consequences of their actions in areas as
disparate as offshoring, obesity, excessive consumer debt, environmental
sustainability, and the governance of resource-rich, low-income nations.
Although today’s expectations are wide-ranging, three-quarters of the
executives who responded to this survey say corporate philanthropy is at least
somewhat effective in meeting the expectations.

In addition to social goals, the vast majority of companies—nearly 90
percent—now seek business benefits from their philanthropy programs as well.
When respondents were asked what business goals they try to reach through
philanthropy, they most often say their goals include enhancing the corporate
reputation or brand (Exhibit 1). And some 80 percent of respondents say finding
new business opportunities should have at least some role in determining which
philanthropic programs to fund, compared with only 14 percent who say finding
new business opportunities should have no weight.

It is notable, however, that some 30 percent of the responses to the
question asking about business goals indicate that some companies are trying to
reach very concrete goals, such as building knowledge about potential new
markets and informing areas of innovation. Respondents from companies with
these goals are likelier than others to say business concerns should play a
role in determining funding for philanthropic programs. Also, their
philanthropic programs are much more likely to address at least some of the
social and political issues relevant to their businesses; nearly two-thirds say
they currently do, compared with just under half of all respondents.

What matters, who
matters, and where companies are giving instead

Executives overall say their companies are much likelier to address a broad
mix of local issues with their corporate philanthropy programs than to address
the social and political issues that they expect will affect shareholder value
the most (Exhibit 2). The mix of issues addressed varies across industries and
regions, but the overall difference remains.

What effective
companies do differently

Whatever the business goals of their philanthropy programs, more than 80
percent of respondents say they are at best only somewhat successful at meeting
them. Respondents are slightly more positive about how well their philanthropy
efforts meet social goals or stakeholder expectations (Exhibit 5). Further,
while just over half of the respondents say their stakeholders give their companies
the credit they deserve for their philanthropic programs, one out of four don’t
know the answer to that question.

Still, roughly one-fifth of respondents say their companies are very or
extremely effective at meeting social goals, addressing stakeholder interests,
or both. These executives are also much likelier to say stakeholders are giving
their companies the credit they deserve (some three-quarters say so). Yet these
companies aren’t addressing a different mix of issues than others, and they, too,
are much likelier to address the local community with their philanthropic
efforts than the community’s importance as a stakeholder would seem to warrant.