Corporate Philanthropy

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Welcome to class of
Corporate Philanthropy
in Emerging Markets
Dr. Satyendra Singh
University of Winnipeg
Canada
www.uwinnipeg.ca/~ssingh5
Corporate Social Responsibilities:
in Developing Countries/Emerging Markets
Level of Philanthropy
• Philanthropy
– Do good by giving…
• Individual philanthropy
– Need to save (EM), lack of trust, unstable government
• Corporate philanthropy
– …with the aim to develop
• Business opportunities, Public relations, Employee morale,
Brand image, Cause-related marketing campaign
• Strategic philanthropy
– …with the aim to combine social and economic benefits
to develop distinct competitiveness
Philanthropy: the Context
• Philanthropy is in decline
• Difficult to justify charitable (social) expenditure in
terms of bottom-line (economic) benefits
• Corporate philanthropy is unnecessary
–
–
–
–
No-win situation
Trade-off between the goals
Let employees donate themselves  tax rebate
Individual donor or corporate  same benefit
• We need strategic philanthropy
– Win-win situation
– Context-focus giving  Where to focus; how to contribute
Top 5 Issues for Which Businesses Give
Unrelated
↑ PR, ↑ demand
Lacks credibility
Types of Corporate
Philanthropy
External vs. Internal
Worst of all
Confused
Board member wants it
Eg., Sponsor an event
Grant
25% cash
75% R&D
Consultancy
Use own products
Too little
Not significant
Strategic Philanthropy: Social and Economic
The Logic of Giving
Without Giving
With Giving
$30m  Profit
$30m  Profit
-$9m  30% tax
-$2m  Gave
$21m  Net
$28m  Profit After Giving
$5.6m  (20% tax, ie ↓ tax bracket)
$22.4m  Net
Even after giving $2m, firm saved 1.4m extra  ↑ dividends, EPS
Where to Focus
• Where social and economic benefitsnot in conflict
• Contribute to society
– E.g. trained educated and healthy labour, natural
resources to produce high quality goods and services,
preserving environment, waste management, pollution
reduction, boosting social and economic conditions in EM
• While being different and ↑ business performance
– E.g. Computer company trains students, population
– Travel companies train  restaurants, hotel, booking
– Tour operator sponsors a heritage site, and thus has
preferential access to the site for its tourists
How to Contribute to Value Creation…
How to Contribute to Value Creation
• Selecting the best grantees
– Urgent/overlooked problems, school dropout rates
– Use the grantee’s performance to measure our performance
• Signalling other funders
– Train other funders, offer matching grants…
• Improving the performance of grant recipients
– Capital provider to engaged partner, learn from each other, ↑
effectiveness of organisations as well
• Advancing knowledge
– Set a new research agenda for public or govt policies
– New wheat, rice variety, GMO
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