The Business of Giving

With the explosion of private enterprise in many parts of the world, there are more wealthy people looking for ways to give back to their communities. Business leaders in areas like Eastern Europe, the former Soviet Union, and China are exploring ways to contribute to society. A new school at Indiana University-Purdue University Indianapolis (IUPUI) will educate those looking to aid philanthropic efforts. The Center on Philanthropy at Indiana University recently received final approval to become the world’s first School of Philanthropy.

In addition to my duties as associate dean and professor of management at IU’s Kelley School of Business, I also serve as professor of philanthropic Studies at our new School of Philanthropy. Over its 25 years, the center has offered an increasing range of academic programs that now include undergraduate, graduate, and doctoral degrees as well as a wide range of certificates.

Some may wonder where business and philanthropy intersect. I believe that a healthy public sector is absolutely essential to a capitalist economy. When more money is invested in areas such as education and public welfare, it generally strengthens the environment in which businesses operate. This can result in a virtuous cycle where a better business environment leads to better profits that can lead to increased philanthropy.

What really excites me is how business has informed the philanthropic sector. Historically, corporate philanthropy was little more than a one-time gift of money that met an immediate need, often totally unrelated to a company’s mission.

Today, however, there is a new area—strategic philanthropy—involving corporations that find ways to link their philanthropy to their business strategy. Companies increasingly are finding synergies between these two areas so that both profit and philanthropic efforts are under the same strategic umbrella.

Many large corporations have embraced strategic philanthropy. Networking technology giant Cisco offers free technology courses and certifications that are taught using Cisco equipment. American Express provides travel agent training online, free of charge. Dannon sells its Danone Dahi, a nutrient-enriched yogurt tailored to the health needs of many of India’s impoverished children, at a low cost.

These philanthropic efforts help society, but they also result in profit for the company. By creating a financial return to the company they can then reinvest these funds to create a sustainable philanthropic effort.  There is an old Chinese proverb that says: “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” Strategic philanthropy is the modern equivalent of teaching someone to fish.

Through strategic philanthropy, firms can enhance their bottom line while helping society. This growing sense of civic duty will support the education, research, and service missions of Indiana University’s new School of Philanthropy.

Philip L. Cochran is associate dean and professor of management at the Indiana University Kelley School of Business Indianapolis, professor of philanthropic studies in the Indiana University School of Philanthropy, and the Thomas Binford Chair in Corporate Citizenship.