The philanthropic contract : building social capital through corporate social investment

This study investigates the relationship between profit-making corporations and the not-for-profit sector within Australia. The broad field of corporate social responsibility, or CSR, is discussed, narrowing to the activity of corporate philanthropy and corporate social investment. The latter is defined as being philanthropy with strategic intent, in order to build capacity within the recipient organisation which in most cases will produce beneficial outcomes for the donor as well (Tracey, 2003). The title of this study has used the term ‘philanthropic contract’ (Broadbent, 2001; Kouzmin, 2007) to describe the relationship between commercial organisations and charitable ones and the unwritten societal expectation, that the corporate sector will support the work of members of the not-for-profit sector. This study also uses the term ‘social capital’ (Putnam, 1995) to describe one of the principle areas of benefit for companies who participate. The aspect of the relationship between the two sectors that formed the focus of this study is defined as being the interaction between the two that involves financial contributions and those of goods and services as well as expertise, information and influence flowing from profit-making companies to not-for-profit organisations. The direction of the research is to advance toward an understanding of why corporations engage in this practice and toward a conclusion as to whether corporate social investing is a mutually beneficial exchange. Finally, the study highlights examples of engagement processes, and advice from those participating. The inclusion of these in the study is designed to provide valuable learning for other corporations, and not-for-profit organisations, contemplating entering into their own philanthropic partnerships. Through ten qualitative interviews this inquiry investigated the attitudes toward this relationship of various stakeholders including the management of not-for-profit organisations, representatives of relevant associations and social commentators. It became apparent that the previously well-publicised opposition to publicly listed companies supporting the not-for-profit sector, proffered by organisations such as the Australian Shareholders’ Association, had largely evaporated. Case studies involving five profit-making corporations, operating within Australia, were then undertaken and the views of their senior management sought as regards their motivations, aims, and outcomes. Overwhelmingly their experiences were positive for the corporation, the organisations they were funding, and the members of the community that the recipients were in turn supporting. Corporate benefits reported included increased ability to attract quality staff, enhanced ability to retain staff, significant development for staff that actively participated, improved corporate culture and the building of social capital leading to enhanced reputation which supported the corporations licence to operate, future objectives and long term sustainability. It is hoped that these insights along with the advice offered up by those individuals and organisations that participated in the study will benefit others and promote greater participation in corporate philanthropy and social investment within Australia. vii