The Best Cause of All
Private companies in the U.S. are incredibly generous, but all that business largess has little to do with the spirit of charitable giving. That's the gist of the Grant Thornton International Business Report, a survey on corporate social responsibility commissioned by the Chicago-based accounting firm and conducted by Experian Business Strategies, a research firm based in London.
The report looked at whether private companies in 34 countries participated in a variety of do-gooder activities, including recycling, supporting local community groups, and sourcing materials based on local or ethical trade standards.
Researchers concluded that companies in the United States led the way when it came to giving back. Ninety-four percent of U.S. respondents said they had donated money to community groups or charitable causes, compared with only 65 percent of companies in other countries. And 82 percent of U.S. businesses took part in activities related to community service, compared with 55 percent of companies elsewhere.
When the survey asked businesses why they gave back, both U.S. and non-U.S. companies responded that their main motivation was to promote recruitment and retention. But U.S. companies stood apart on one critical point. Given a list of reasons for engaging in corporate social responsibility, Americans were by far the least likely to cite "saving the earth" as a motivator. In fact, only 21 percent said their efforts were motivated by this sort of idealism, compared with 40 percent worldwide.
Are Americans really only motivated by the cold, hard business case for doing good deeds? Well, it may not be that bad. "When I talk to these privately held companies, many of which are family businesses, I get the sense that they do charitable things because they want to be good citizens and build their reputation in the community," says Mike Hall, a managing partner at Grant Thornton who oversaw the survey. "So there's some altruism underlying this. Still, I thought saving the planet would be ranked higher."
Hall speculates that at many private companies, employees are behind the push for a lot of the charitable giving and community service. That helps explain why the companies that took part in the survey cited recruitment and retention most highly as the reason they give back.
Younger workers in particular are extremely vocal about asking companies to put in place policies that encourage ethnic diversity and environmental stewardship, says Tom Darrow, the founder and principal of Talent Connections, an executive recruiting firm in Atlanta that ranked No. 86 on the 2007 Inc. 500. Older baby boomers, often sensitive to the values of their employers, are also asking more questions. Because both of these demographic groups are large, their attitudes carry weight with employers, says Darrow, whose company supports the local chapter of Big Brothers Big Sisters and Atlanta's Partnership Against Domestic Violence.
The Grant Thornton survey also shows just how successful advocates of social responsibility have been in making the business case for charitable giving. "Over the past 30 years, the rhetoric fostered by free-market economists like Milton Friedman has convinced everyone that management's only goal is to create more profit, and anything else is a waste of shareholders' money," says Sandra Waddock, a Boston College professor who studies corporate giving. To bolster their case, advocates of corporate social responsibility have made a winning effort to link good behavior to financial performance. However, she says, academic research in recent years indicates that there is at best a neutral relationship between giving and profit. Still, the link has been made in many business owners' minds. Whether it's true or not, they want to believe.
Charitable giving and community service "have become something companies have to do," Waddock says. "There may be a business case and there may not be. I think, sure, there's some altruism there, and people hope that maybe there's a business benefit. People think, Why not do this?"