Importance of Corporate Philanthropy for Non-profit Organizations

Read this article to learn about the importance of corporate philanthropy for non-profit organizations!

Corporate philanthropy needs to extend beyond giving monetary donations. Corporate can help immensely in making the efforts of the non-profit organizations a success.


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Majority of corporate contribution programmes are diffused and unfocused. Most consist of numerous small cash donations given to aid local civic causes or provide general operating support to charities in the hope of generating goodwill among employees, customers and the local community. Rather than being tied to some social or business objectives, the contributions often reflect the personal beliefs and values of executives or employees.

Corporations can use their contributions to improve the quality of the business environment in the locations where they operate, i.e., to improve their competitive context. This will help in achieving their business goals. The corporation can also leverage its capabilities and relationships in support of charitable causes.

This approach produces social benefits far exceeding those provided by individual donors, foundations and even governments. Context focused corporate philanthropy achieves both social and economic gains. Cisco trains computer network administrators, which provides job opportunities to people, but which also provides trained employees to the company. Companies should focus on social needs that affect its corporate context and should utilize its strengths as corporations to address them.

Why Corporate Philanthropy is Important

i. Economic and social objectives are not distinct. Companies do not function in isolation from the society around them. Their ability to compete depends heavily on the circumstances of the locations where they operate.


Improving education is a social issue, but the educational level of the local workforce affects a company’s potential competitiveness. The more a social improvement relates to a company’s business, the more it leads to economic benefits as well. The most effective method of solving many of the world’s problems may ultimately be to mobilize the corporate sector in ways that benefit both societies and companies.

ii. Competitive context has increased in importance. Companies rely more on worker capabilities, local partnerships, outsourcing and collaboration with customers. The globalization of production and marketing means that context is important for a company not just in its home market but in multiple countries. Philanthropic investments by individual companies or a collection of them can improve the competitive context which will enhance the competitiveness of the companies operating from those locations.

iii. Where to contribute. The more tightly corporate philanthropy is aligned with a company’s unique strategy— increasing skills, technology, or infrastructure on which the firm is especially reliant, or increasing demand within a specialized segment where the company is strongest—the more disproportionately it will benefit through enhancing the context. The acid test of a good corporate philanthropy is whether the desired social change is so beneficial to the company that the organization would pursue the change even if no one ever knew about it.


iv. Selecting the best grantees. Most philanthropic activity involve giving money to other organizations that actually deliver the social benefits. The impact achieved by a donor company is determined by the effectiveness of the recipient. Selecting a more effective grantee or partner organization will lead to greater social impact. Extensive and disciplined research is required to select the charities that will achieve the greatest social impact. Companies are well positioned to undertake such research if their philanthropy is connected to their business because of the technical, financial and managerial capabilities they have and also because through their own operations or those of their suppliers and customers, they often have a presence in many communities across a country or around the world. A company can introduce and support a particularly effective non-profit organization or programme in many locations in which it operates.

v. Signaling other funders. A donor can publicize the most effective non-profit organizations and promote them to other donors, attracting greater funding and thus creating a more effective allocation of overall philanthropic spending. A grantee’s credibility improves when a reputed company associates with it. The company is also able to influence a large number of partners like customers and suppliers.

vi. Improving the performance of the grant recipients. Corporations that can demonstrate a significant impact on a social problem will gain more credibility than those that are merely big donors. They have to ensure that they are contributing more than the money they are donating. Corporations have the ability to work directly with non-profit organizations, to help them become more effective because they have unique assets and capabilities. They can provide a wide range of non-monetary assistance that is less costly and more sophisticated than the services most grantees could purchase for themselves.

The companies make long-term commitments to the communities in which they operate and they can facilitate the transfer of knowledge and operational improvements among non-profits in different regions or countries because they may be operating from many locations. By tying corporate philanthropy to its business and strategy, it can use its specialized assets and expertise in addressing problems related to its particular field. The Cisco Networking Academy utilized the special expertise of Cisco employees.


vii. Advancing knowledge and practice. The most powerful way of creating social value is by developing new means to address social problems and putting them into widespread practice. The expertise, research capacity and reach that companies bring to philanthropy can help non-profits create new solutions that they can never afford to develop on their own. Pfizer developed a cost-effective treatment for the prevention of trachoma, the leading cause of preventable blindness in developing countries.

Corporations can facilitate global knowledge transfer and co-ordinate multi-site implementation of new social initiative, because of the know-how of corporate leaders, their clout and connections, and their presence in the communities around the world.

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