The days of corporate philanthropy cutting checks for charity dinners and new buildings are over—or if they’re not, they should be, and fast. That was one of the messages at the conference here this week of the Committee Encouraging Corporate Philanthropy, which gathered leaders of company foundations, giving officers, and corporate executives.
The conference’s discussion was influenced, in part, by the release of a report conducted for the nonprofit association by McKinsey & Company, called Shaping the Future: Solving Social Problems Through Business Strategy. The report says companies need to be much more engaged in solving social and environmental problems. Traditional philanthropy is not enough, it says. Corporations need to find opportunities to use their business skills to advance social causes. Doing so can generate financial benefits.
“Part of what we’re arguing is that if you are going to enter into these issues, you should treat them with the same discipline you do any other business issue and bring that full alignment of resources to make a difference,” said Lenny Mendonca, a McKinsey director who produced the report. “If you do that well, it is also good for business.”
One of the examples featured in the report is Our World, Our Family, Western Union Company’s $50-million, five-year program to help migrants and their families through scholarships, job preparedness, training in personal finance and business skills, and other kinds of assistance. The program was designed to take advantage of Western Union’s expertise in financial services and help those people who are the company’s main customers.
In an e-mail exchange with The Chronicle, Christina Gold, Western Union's chief executive, discussed the future direction of her company’s giving and what effect the increasing alignment between business goals and philanthropy will have on nonprofit organizations.
Ten years from now, how will Western Union’s approach to philanthropy and social issues be different than it is today?
In my time at Western Union, we embarked on the company’s first strategic corporate-citizenship initiative. It was an important step toward aligning our community commitment around a focused social issue: fostering global economic opportunity. This more targeted approach to philanthropy is making a difference in the lives of people around the world and aligns with our core business expertise.
I expect that the company will continue to refine this strategy for even greater social impact and to look even more deeply at humanitarian concerns in new and emerging markets.
Today, Western Union operates in 420,000 locations in 200 countries and territories, and I would be surprised if that number weren’t even greater 10 years from now. Our growth and the cross-cultural nature of the work we do undoubtedly will continue to impact the way we see the world and the way we approach philanthropy.
What will nonprofit groups need to do differently in the future to win support from your company and other large businesses?
When I first started out in business, corporate philanthropy meant presenting an oversized check and going home. For the most part, those days are over. From what I have seen at Western Union and heard from my peers at events such as those held by CECP, there is a growing emphasis on multilayered partnerships across sectors. Nonprofits would do well to consider the full range of benefits they can offer their corporate sponsors and present innovative ways to deliver value to the stakeholders companies most want to reach.
Personally, I am a big believer in preparation in any professional situation. Yet nonprofits continue to approach us with requests—such as investments in health programs—that clearly are outside of our priority focus areas. On a personal level, I would love to say yes to every request. Yet that’s not possible. Those NGO’s that clearly have done their homework in advance enable us to have a much more productive conversation.
As a business person, I appreciate it when potential partners respect our time by coming prepared with ideas that clearly resonate with who we are and what we value as a company and a corporate citizen.
Will nonprofit groups that don’t align with your company’s business goals or offer ways to advance your business have less and less opportunity to win support?
We engage in philanthropy because it is the right thing to do and are not looking for a business return in the traditional sense. However, we have aligned our corporate citizenship with our brand and identity as a corporation. As a business, we create tremendous economic opportunity.
We serve as a financial lifeline in many traditionally underserved communities and as an attractive complement to traditional financial services for a growing number of customers who can choose from an array of money-management options. Building on that core capability, Western Union’s five-year, $50-million Our World, Our Family program focuses our corporate-citizenship efforts on fostering economic opportunity.
We prioritize nonprofits that share our interest in this social cause and that provide opportunities for us to offer value beyond monetary contributions alone, for example, by engaging our employees and agents in skills-based volunteerism. The more closely aligned a nonprofit is with the focus of our social programming and our values and geographic reach, the greater the likelihood that we will be able to forge a strong partnership.
Is it realistic to expect that more than a handful of companies will be able to identify ways to simultaneously make money and produce social value?
Absolutely. Some of the strongest business performers over the long run also are among those I most admire as committed corporate citizens. There is no conflict between making money and producing social value.
Western Union is a great example. We are known for enabling remittances, or the money the mobile work force sends home, often to less developed areas. Remittances make up more than 10 percent of the GDP in 47 nations and collectively outstrip all sources of foreign aid combined. As your readers who work in the development field may have noted, remittances underwrite social good, paying for school fees and medical care. That’s just one example of the ways that business value and social value can be powerfully aligned.
If the ranks of groups such as CECP are any indication, a growing number of companies are integrating corporate social responsibility as a core component of their corporate strategy. It may be helpful for nonprofits to respond to the fact that corporate responsibility is much broader than philanthropy alone. It is a business strategy with social benefits.
What role can nonprofit groups play in helping companies do so?
Nonprofits can help by looking beyond traditional grant making. Some of the most innovative partnerships I’ve heard about involve nonprofits collaborating with companies to create programs that link core business practices with the nonprofit’s capabilities in ways that generate even greater shared value.
Working more closely with business brings risks for nonprofit groups, which face the possibility of having their independence compromised and their reputations sullied if their corporate donors get into trouble. What more can be done to ensure that these partnerships don’t end up harming nonprofit groups?
That’s an interesting question, and one that can cut both ways. Few partnerships come with a guarantee, whether in business, philanthropy, or life. Generally speaking, you can minimize risks when you do your homework upfront. We evaluate our nonprofit relationships with the same level of due diligence that we use to assess potential business allies.
In my role as CEO, I have found that it can help if you take your time in getting to know a prospective partner. Where possible, start with smaller projects and build over time. Don’t rush negotiations, and never be afraid to walk away from a deal if it appears that it is not as advertised or isn’t delivering the full value you expected to see.