Corporate giving needs better metrics

By Todd Cohen

Corporate philanthropy plays a key role in society and business but needs to be a better job showing it is worth the cost and in sync with the corporate bottom line.

That is the conclusion of a new report from the Committee Encouraging Corporate Philanthropy.

The report, Measuring the Value of Corporate Philanthropy, looks at practices and measurement trends in corporate giving, at demands for evidence about its impact, and at new ways of gauging its social and business benefit.

“To realize meaningful benefits, corporate philanthropy must be managed no less professionally, proactively and strategically than any other core business activity,” the report says.

“Systematic measurement of the value of giving,” it says, can make “a more persuasive case for why companies should engage in philanthropic initiatives.”

And it says corporate CEO’s, the investor community and giving professionals “need to understand more comprehensively the many mechanisms by which philanthropic investments can be measured and managed to achieve long-term business value and solve critical societal problems.”

In talking with the investor community, for example, CEOs have a chance to distinguish themselves “through disclosures about their philanthropic strategies” and by leading the charge for stronger standards, the report says.

And in making the case to CEOs for corporate giving, it says, corporate giving officers need to show not only its social impact but also its business impact.

“Philanthropy can provide novel pathways towards meeting strategic business needs, such as improving employee engagement, customer loyalty, reputational risk, and opportunities for innovation,” it says.

And in demanding that grant recipients show whether they are achieving intended results with corporate support, metrics that measure only output “offer little indication whether social improvement actually is occurring – or, for that matter, whether unintentional harm is being caused,” the report says.

“Developing a theory of change and explaining how the program will achieve its intended impact,” it says, “are critical preparatory elements of measurement.

To celebrate International Corporate Philanthropy Day on Feb. 22, President Barack Obama sent a letter to business leaders saying current challenges “demand solutions that come not only from government, but also from entrepreneurs and business leaders around the world.”

Through their “skills, ingenuity, financial support and dedication,” the letter says, “corporate philanthropists and their employees have answered the call to serve, giving back in meaningful ways that help those in need and improve our communities.”

Corporate giving plays an essential role in helping to address both the symptoms and causes of social and global problems.

At a time of unprecedented financial stress, corporations must develop better metrics to track the impact of corporate giving and to show its value to their businesses and to the communities they serve.