To define what corporate philanthropy is, let’s first look at the word “philanthropy.” The origin of the word is Greek and translates to “love for mankind.” It’s similar to charity in that it involves investing one’s time, money, or other resources into a cause they believe in. But while charity aims to provide short-term relief, philanthropy is about creating long-term solutions to a problem.
Corporate philanthropy, then, is when a company or business decides to donate money or resources to a cause. Since corporations often have more resources than individuals, they can help nonprofits and charities without draining their resources.
There are seven types of corporate philanthropy:
Matching gifts are when a company makes a donation that matches what their employees have given, effectively doubling the amount.
Volunteer grants are when a company makes a monetary gift to an organization where its employees regularly volunteer.
Employee and board grant stipends are when corporations award employees or public boards monetary grants to donate to the nonprofit of their choice.
Community grants are when a company awards nonprofits that apply for grants and meet a predetermined set of criteria.
Volunteer support initiatives are when a company’s employees volunteer their time to a nonprofit organization.
Corporate sponsorships are when a company supports a nonprofit in return for advertisement from the nonprofit.
Corporate scholarships are when corporations provide scholarship money to universities, promoting education for their students.
Corporate philanthropy is often confused with corporate responsibility, and while the two do have some overlap, they are two different concepts. While corporate philanthropy is a corporation’s donation to a cause, corporate responsibility directly involves a corporation’s business model and practices. For example, a mining company has a duty to clean up after its mining operations for the good of the environment and the community’s health. That’s corporate responsibility. The same mining company may also donate to a local food bank, which would be considered corporate philanthropy because feeding the hungry has nothing to do with its business. The government does not enforce corporate responsibility, but a corporation could suffer from bad publicity if it is not responsible.