The terms Business Philanthropy and Corporate Social Responsibility are heard frequently and there is still a lot of confusion between them and even in their definitions. Are all the charitable actions of a company the example of social responsibility? Is business, philanthropy, and corporate social responsibility the same? Business philanthropy and corporate social responsibility (CSR) are not the same. However, there are some similarities. Below we will define both in a simple way and with some examples so that as consumers we can be more attentive to the actions carried out by the companies from which we buy goods and/or services and therefore better understand the philosophy behind each action.
Philanthropy is a concept coined by the Roman Emperor Flavio Claudio Juliano, at the end of the 3rd century. He, in his attempt to restore the paganism that prevailed in the empire before the arrival of Christianity, looked for substitutes for Christian concepts, giving them a meaning away from the Catholic religion. Thus, he encouraged the use of philanthropy for charity. Therefore, businesses get involved and use charity as a way of connecting with the community, building their brand, and giving back to the community; all in one context. An investment of this type does not expect benefits nor is it aligned with the company’s strategy. That is what differentiates it from social responsibility or socially responsible investing.
Corporate Social Responsibility
Corporate social responsibility or business philanthropy are concepts that are closely related. It could be said that philanthropy is a piece of the CSR cake. CSR is an active and voluntary contribution with social, economic, and environmental axes, which, if integrated into the mission of the organization, has the objective of improving its competitive situation, adding value to the company, benefiting its workers and the communities that are within the area of influence.
Positive Impact On Community
It is important, and this is a big difference, that this project financing is related to the company’s business line and generates a positive impact on the communities where the company operates, on the environment, and on its sustainability. For example, a publishing house could focus on donating books, promoting education, and reducing the number of illiterates in the region; or a chain of hair salons could commit to making wigs for women who have lost their hair to cancer treatment. In both examples, companies align their social and environmental programs to their business line.
Are Companies Doing It Right?
Until a few years ago, corporate social responsibility was a differentiating element for brands. Today, more and more companies seek to integrate it into their operations and communication. The growth of this trend has resulted in the evolution of this management system, the adoption of a purpose by the most advanced companies, and the birth of human brands. Unfortunately, the understanding of social responsibility has not evolved in the same way. The growth has taken place amidst an environment full of confusion. Many companies want to get it up and running, but almost none seem to understand it in depth.
Dozens of companies believe they are doing CSR, but how many of them are doing it well? The key to knowing that a company is truly committed to corporate social responsibility is its ability to generate value from the integration of best practices into its business model.
Finally, it is important that companies are clear if the actions they are carrying out are mainly corporate philanthropy, corporate social responsibility, and/or both since they are not mutually exclusive. However, if it is not clear, it may be that they are allocating resources to not obtain the desired results. You can learn more about this topic from Cane Bay Partners CEO.