Philanthropy v’s CSR

While both have the potential to be very effective and indeed are relied upon by those in the charity or not for profit sector, they are very different.

The differences between the two can be measured in the return that flows back to the giver in both instances.  Businesses who engage with the charity sector like to believe that they are doing more than just donating a portion of their net profit to their chosen charity and in effect have a corporate social responsibility program in place.  Truth be known, many businesses who believe they are engaged in CSR, really are just engaged in corporate philanthropy.

So what is the difference between the two?

Philanthropy is often defined as using wealth to bring about social change.  A “philanthropist” can be a bit like a venture capitalist in the not for profit sector.  They will make a decision to invest a portion of their wealth to bring about social change in something they believe in.  There may be an investment of their time and knowledge but more often than not, the support is in the form of a financial commitment.  

The philanthropists desire to participate beyond that can vary but often they are happy, once the decision has been made, to support from an at arms length position.  They will look to the charity to report on the outcome and impact their funds have achieved but usually will not be involved beyond that.

A “philanthropist” can be a bit like a venture capitalist in the not for profit sector.

For companies and businesses, of all sizes as this domain is not limited to corporate as the name might suggest, that engage in Corporate Social Responsibility it is in their interest for them to be involved well beyond just the giving of money.  If a business can turn their CSR into a profit centre then they are more likely to deepen their engagement, stay strong during hard economic times and as they see their CSR have a positive impact upon their own business, they are likely to give more. 

A CSR program that is built on the back of a shared experience, wherein the opportunity to engage beyond the handing over of a cheque, is likely to return business benefits such as improved morale, increased staff retention, becoming more attractive as an employer, bring new business and additionally it can be a differentiator between competitors.  These benefits are seldom achieved through the donation of money and money alone. 

If your CSR program is limited to the CEO or someone similar handing over a cheque at a coffee and cake ceremony and that is the sum total of your engagement then I would suggest you in fact don’t have a CSR program but you are engaging in corporate philanthropy.  Neither are wrong and one is not better than the other, but if a business engages in a more engaged form of giving with clear measures in place on the KPI’s and ROI from the program, all of those involved will benefit and therein lies the magic. 

The best thing for the charity sector is for business to benefit in a measurable way from the relationship.

If business can, and they should, benefit from their CSR program, then profits will increase and this will increase the size of the pie that they then have to carve up and give away.  In effect the best thing for the charity sector is for business to benefit in a measurable way from the relationship.