How Businesses Can Make a Positive Social Impact with Charitable Contributions

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On June 20, 2023, CNN reported that donations were down by 10.5% once adjusted for inflation. This decrease can be attributed to many factors, including the largest drop in the S&P 500’s value since the 2008 recession and one of the highest inflation rates seen in 40 years.

As companies find themselves sandwiched between critics shouting for ever increasing levels of “corporate social responsibility” and a fiduciary responsibility to stakeholders for maximizing short-term profits, it’s not hard to see why donations are no longer a priority during tough times.

The Reality of Charitable Contributions

Tresca Brothers Concrete notes that giving is generally considered as some form of public relations or advertising, as it usually consists of varied cash donations to create goodwill among consumers, employees, and stakeholders. These are meant to improve company optics rather than to create meaningful social impact.

From a business standpoint, social and economic objectives are seen to be mutually exclusive, meaning the opportunity cost of spending on social objectives comes at the expense of furthering the company’s bottom line. 

Are they truly mutually exclusive?

No Man is an Island

Corporations are, legally, treated as a “person,” and they do not function in a vacuum–they are affected by their surrounding society and environment. Competitiveness is dictated by the productive use of capital, manpower, and natural resources to provide profitable goods and services. 

The productivity of available manpower hinges on workers that are educated, remain healthy, and have ample access to their basic needs, while the quality of natural resources depends on the preservation of the local environment. Meanwhile, raising the social and economic conditions in developing countries increases the availability of skilled labor wihle opening new markets for product and service offerings.

With that said, how can social and economic objectives be married?

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Give, and It Shall Be Given Unto You

In 1997, Cisco started the Networking Academy, “…to enable students around the world to take part in an emerging technology industry.” states Chuck Robbins, Cisco CEO. “This educational program was designed so that any teenager or adult with an Internet connection could participate and pursue meaningful career paths.”

While education is primarily a social issue, by strategically focusing on creating training programs to make network administrators widely available, Cisco simultaneously addressed a social issue and invested in the future competitiveness of their company.

Consider Apple, who routinely donates their computers to educational institutions, particularly for kids. This is a social benefit to both the school and its students, while also exposing the children to Apple products at a young age, influencing their consumer habits as they get older. 

In the short-term, it might seem that social and economic objectives are mutually exclusive, but they are actually integral to each other further down the line. 

The question then shifts from “whether to give” to “who to give to.” By strategically choosing who to give to, companies can set themselves up for success far into the future.

Better Society = Better Company

Once a corporation discovers the right cause and supports it properly, the positive social impact they create will also reflect in how competitive they are in the market. 

Making the world a better place is an investment, not an expense.

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