The Business Approach to Philanthropy

I had lunch Thursday at the Silicon Forum, a regular event put on by my pal Auren Hoffman. The topic was "The Business Approach to Philanthropy." Auren interviewed Sheryl Sandberg of Google for 15 minutes, and then about 12 tables of 12 invited guests each discussed the issue among themselves.

I think philanthropy is very important. In my philanthropy posts I’ve advocated for businesses — this includes start-ups — to take integrated philanthropy seriously. By "integrated," I mean weaving volunteerism and donations into the fabric of a corporate culture. Many companies adopt a 1% principle: 1% of profits, equity, and employee time to the company charity. I have also acknowledged the opposing view which says the best way for corporations to maximize social benefit is to maximize return for shareholders. Besides, shouldn’t shareholders decide how to give their money away? This is a fair argument but I still disagree: I think there’s a real self-interest ROI on integrated philanthropy. 1% of profits can easily be made up with higher employee morale (you feel part of something bigger), a positive corporate culture, and then of course all the PR benefits that accrue.

That’s the view I took into the lunch.

Sheryl — who was one of the impressive people, in business or otherwise, I’ve ever seen — said a bunch of interesting things.

  • The vast majority of Americans’ donations go to religious organizations.
  • Higher education — which serves mostly the elite — is in second.
  • Vast majority of our money goes to "visible victims." The tsunami was terrible disaster, but that many people die each week of hunger. Yet, after tsunami, 56% of Americans donated to that cause and donations to the ongoing UN Food program decreased.
  • People want to lever — it’s much easier to get donations for opening a new school versus on-going support for a school.
  • Her big question: how do we get money to the poor, those most in need?

On the drive home I came up with my own list of questions:

  • How do we negotiate in our own minds the need to help the neediest, versus a visible victim in our community? For example, giving money to a cultural institution — like the opera — probably helps those least in need. For me, giving my time and money to organizations like BizWorld (or even Ms. Foundation) means time and money is not going to hunger in Africa. Is this simply a reality of human nature? We want to be charitable, but we also want to be able to touch and feel the fruits of our labor?
  • Why do organizations like Habitat for Humanity exist? The best way to leverage my time and energy is not to give me a hammer and have me start building houses. A carpenter should do that. Then why do educated, well-to-do men and women with no carpentry skills pick up hammers and start building houses? It makes them feel good.
  • Should start-ups be expected to be active philanthropically from their inception? Is this a burden the shareholders and investors should not be expected to bear?
  • There seem to be three kinds of donors — individuals, businesses, governments. Early in our country’s history most charity existed in the private sector. Now, I’m sure government aid trumps all. Given government’s propensity to fuck things up, I’m not supportive of tripling the US AID budget in Africa.

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