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The End of Philanthropy
Corporate leaders must answer to the communities in which they operate, says Marc Benioff. An integrated approach to doing business can show the way |
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Marc Benioff is chairman, president and chief executive of Salesforce.com and a 2002 Global Leader for Tomorrow
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Anti-globalists around the world are convinced that globalization is destroying the native cultures, economies and environments of the poor and under-represented. Sadly, this view is supported by numerous examples of companies acting without a sense of corporate responsibility. In a business culture that values shareholder profit above all else, the typical global corporation is completely disenfranchised from the communities in which it operates.
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It wasn’t always this way. Local companies used to serve local communities, and the value they produced stayed in the community. Profits were reinvested locally, and business owners heard and responded to local feedback. As firms prospered and expanded, stakeholders throughout the community benefited. The system was hardly perfect, but it was far more equitable than in our era of global corporations.
The questions facing today’s corporate leaders are: how can we address the valid issues raised by anti-globalists while still doing business? How can we establish that the corporation is not disenfranchised from its community, but rather a vital member? How can we develop a model that integrates a commitment to all our stakeholders, not solely our shareholders? And how can we accomplish all this while preserving the concept and the economic benefits of a global corporation?
The problem is that corporate acts of goodwill typically occur in isolation, separate from the forces that created them, and that they are the exception rather than the rule. A new architecture for globalisation needs to be developed with full awareness of the constraints of the current system – what Fortune magazine’s David Kirkpatrick has called the end of philanthropy.
For example, what if a high-quality venture-capital firm required the companies in which it invested to place 1% of their equity into a public charity serving the communities in which they do business? Many successful Silicon Valley companies would thus create one of the largest public charities in the world. This simple idea points to a powerful new way to make "doing good" an integral part of doing business.
The Integrated Corporation
The integrated corporation creates value for its shareholders and its stakeholders alike. Its size and the location of its headquarters do not dictate a centralised return of its value; rather, its value is fully distributed not only to its leadership, but to the communities in which it operates and the global community as a whole.
Under this architecture, global corporations can leverage employees, equity, products, alliances and relationships to support stakeholders in a way that smaller, local companies could not, demonstrating the company’s value to the community.
A chief executive can ask: "Where do I have the most leverage to serve?" Four areas are immediately apparent: corporate value, corporate profits and products, corporate time and government influence. Accordingly, four models have emerged :
- Place a percentage of corporate equity into a public charity;
- Return a percentage of profits to the global communities served;
- Encourage employees to dedicate a percentage of their time for community-service activities;
- Use influence with government to positively affect policies for global communities
Forward-looking companies have already implemented these models, validating the concept while demonstrating the dramatic results that this new architecture of globalisation can achieve.
Role Models
Research verifies time and again that companies can make a major difference with relatively small investments. Salesforce.com/foundation, a 501c3 public charity, was launched concurrently with its mother company. It is independently financed, its mission to bridge the digital divide in the communities that Salesforce.com serves. Alongside private funding sources, Salesforce.com placed more than 1% of the new corporation’s shares into this foundation.
Since its launch in July 2000, Salesforce.com/foundation has built 17 technology centres in San Francisco, a mobile computer lab in Hawaii and 20 centres internationally. It also encouraged employees to donate their personal time to these projects. So far, employees have performed 1,700 hours of community service – well on the way to the goal of donating 1% of company time. In serving over 10,000 young people and adults worldwide, the foundation has leveraged the corporation’s relationships with AOL Time Warner, Gateway, Cisco and other global companies to provide many of the technical and social aspects beyond its own resources.
The problem is that corporate acts of goodwill typically occur in isolation, separate from the forces that created them, and that they are the exception rather than the rule
The impact on both employees and the communities has been highly enriching for all involved. One IT staffer spends every Monday at a Salesforce.com/foundation technology lab, sharing his professional skills with the local youths he mentors. A volunteer from sales support gives time to a tutoring programme, providing support, a positive influence and communication to an at-risk student. Groups from foundation centres regularly visit the Salesforce.com offices for career days; some even sign on as interns to help with everything from finance to marketing and sales.
Alan Hassenfeld, chairman and chief executive of Hasbro, has pioneered many of the concepts of the integrated corporation. One of his goals is to have 1% of corporate time dedicated to local community service. He offers employees four hours of paid time-off a month to volunteer with children. Staff simply log on to the company’s website, which is a resource for both employees and a posting site for non-profit agencies to announce their needs.
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| Past Model |
Present Model |
Future Model |
| Proprietors |
Shareholders |
Stakeholders |
| Local supporters |
Global protesters |
Corporate advocates |
| Charities |
Corporate philanthropy |
Integrated corporation |
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In 1992, Timberland, one of the world’s largest outdoor-clothing companies, created its Path of Service programme. Through this special project, each employee dedicates 16 hours of paid service to serve in his community. The fully integrated programme has now grown to volunteer more than 200,000 hours of service through more than 200 social-service agencies in communities in 73 American cities spanning 30 states, as well as in 18 foreign countries.
Ben and Jerry’s, an ice-cream maker, has taken the idea of integrated service furthest of all by fully integrating philanthropy into its products, marketing and human-resource practices. Donating 7.5% of its pre-tax earnings, Ben and Jerry’s delivers funds through the Ben & Jerry’s Foundation, employee community-action teams at five Vermont sites and corporate grants made by the director of social mission development. No other company has such an explicit programme for donating profits and time.
Merck, one of the world’s most successful pharmaceutical companies, decided several years ago to donate to African villages mectizan, the medicine used to control river blindness. Working with the World Health Organisation, the World Bank, dozens of NGOs and local ministries, Merck provides a valuable resource to more than 25 million people annually.
WIN - WIN
Kofi Annan, the UN secretary-general, has said: "Those who have the power and means, governments and businesses, must show that economics, properly applied, and profits, wisely invested, can bring social benefits within reach not only for the few, but for the many and eventually for all." While we will be able to witness the benefit of programmes like these on society, we should also be conscious of the effect it will have on the companies providing the service. Employees seeking greater levels of fulfilment in their own lives will have to look no further than their workplace. As corporate leaders, we can come forward and use our leadership skills for a higher purpose: to fully integrate our global companies into the systems of which we are a part.
Courtesy: WorldLink - Magazine of World Economic Forum
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