About CECP | Message from a Director

JOHN C. WHITEHEAD on corporate philanthropy and the economy

In light of the current state of the U.S. economy, the press and corporate leaders alike are asking many questions regarding corporate philanthropy — how will a weakened economy be reflected in companies' charitable endeavors?

At the close of the Committee Encouraging Corporate Philanthropy's annual 'Board of Boards' conference in February, we asked the forty CEO participants about the projected impact of the economy on their corporate giving programs. The results were quite encouraging:

• 83% of attendees felt the economy should range from neutral to having no impact on corporate cash contributions.
• 89% agreed that companies should have mechanisms in place to sustain contributions during periods of weak financial performance.
• And 72% affirmed that their companies do indeed have mechanisms in place for such a purpose.

CEOs have long discussed the benefits of corporate philanthropy for both their communities and their businesses. And these rewards grow over time with long-term investments and sustained giving programs. Alongside a company's commitment to philanthropy comes a healthy cycle of positive reinforcement in that community: increased services for the nonprofits and their constituents, goodwill for the company, and advances in corporate employee engagement, recruitment and retention efforts. Ultimately, this positive cycle creates tremendous bottom-line business value. In fact, 100% of the CEOs participating in CECP's conference agreed that philanthropy is important to creating long-term shareholder value.

I argue that when the markets are weakened, there is even greater demand by the nonprofit community for companies to step up their giving. In softer economies, businesses must deepen community relationships, committing to programs that showcase the company's values and build better social equity with customers, employees, business partners and other stakeholders.

Downgrading corporate philanthropy would not only erase the positive momentum built through community investment efforts, but could also create a negative impact on the branding and goodwill that the company worked so hard to establish. Considering the competitive context surrounding philanthropy, customers and employees alike look to corporate leaders to stay engaged in community affairs even when economic performance has slackened.

As many studies show, public trust in corporate America is quite low. However, sustained corporate philanthropy, spanning strong and weak economic periods alike, allows the business community to better connect with constituents and build robust community relationships.

Corporate leaders must seize this opportunity and maintain their philanthropic commitments that do so much to strengthen our society.

John C. Whitehead

April 2008