Philanthropic misappropriation

I recently read an article from The Motley Fool, Keep Charity out of the Boardroom. It reminded me of Michael Porter's seminal article on corporate philanthropy (see here).

Put in simple terms, corporate philanthropy that is not aligned with the corporation's strategy is a misappropriation of shareholders' funds.

Let me add that:

1. I am not one to promote a selfish and singular corporate drive towards profit. Management's role is to negotiate a sustainable win-win deal between shareholders, customer, staff and all of the corporation's various other stakeholders.
2. I am a great believer in charity, charitable giving and charitable actions.

But, at the end of the day, shareholders entrust executives with their equity investments. They have an expectation that their money will be wisely invested to maximise their return. They do not expect them to simply give their money away. Nor do they expect them or their employees to engage in other activities, no matter how laudable they may be, whilst the clock is ticking.

Michael Porter lists lots of examples of where corporate philanthropy is aligned with the corporation's strategy. These are where it builds the corporations' surrounding communities of present and/or future customers or employees. And there is mounting evidence that some forms of community outreach improves employees' wellbeing, and therefore productivity.

However, much modern corporate philanthropy has no such connection. All too often, it appears to have no end other than the personal aggrandisement of the executive(s) involved. This is no more defensible than my other bug-bear. That is the corporate sponsorship of executives' personal favourite niche sports. Especially where these have little appeal amongst the corporations' target markets.

Executives and employees who:

• give of their own time and money to good causes, or
• raise money from their often extensive networks of wealthy connections

are, of course, to be highly commended.

But they should not extend their personal generosity to give away their shareholders' money. Rather, they should return any excess share capital to shareholders. The shareholder can then decide for themselves what they want to do with it.

See also:

• Strategy talk: What’s the link between strategy and “doing good”?

photo credit: marcoverch Rote quadratische Geschenkpackung mit einem Herzen via photopin (license)

Natural History - Inside Out

Museums, like everyone else, must struggle to remain relevant in the face of rapidly changing consumer preferences. The new Darwin Centre at the Natural History Museum in London does an examplary job by turning the museum inside out. The new exhibit focuses, not on the animals, minerals and vegetables that are the focus of all of its other exhibits, but on the work that the scientists do behind the scenes. The centre contains exhibits describing the scientists' work, but more significantly, windows into working scientific laboratories where you can watch the scientists at work and even interact with them.

I was there today with my parents and my three year old daughter. Imagine her delight when she spoke to the scientist behind the glass window and he answered her in an engaging and enthusiastic manner. Most of what he said would have been lost on her young mind (but not to the rest of the party), but I am sure that this real life and personal exhibit will have made a greater impression on her than all of the other interactive exhibits put together.

As businesses struggle to adapt to an environment where customers are increasingly disinclined to be treated as faceless members of categorised target markets, they could do worse than to study the way in which the Natural History Museum has turned itself inside out and exposed its inner workings to the public.

Oh, and thanks to all involved for a thoroughly informative and enjoyable day out.