Corporate Philanthropy: Why Giving Back is a Smart Business Strategy

Corporate Philanthropy: Why Giving Back is a Smart Business Strategy

Corporate philanthropy and philanthropy are the subjects of research interest in many disciplines: economics, sociology, management, marketing, anthropology, etc. Suppose economists and management theorists explain the existence of corporate philanthropy through the premise of rational behavior to maximize economic returns for the company’s immediate shareholders or a more comprehensive range of stakeholders. Business leaders at every level strive to find ways to connect with customers on a deeper level.  Sam Mizrahi has made corporate philanthropy a core principle of his business. Sam Mizrahi and his team at Mizrahi Developments are currently working on building The One, Toronto’s, first supertall residential and commercial skyscraper located on 1 Bloor West in the heart of the city. Mizrahi believes strongly in creating something so distinctive in the city he so appreciates. He also believes it is important to share that appreciation with the community.

Sociologists pay attention to corporate philanthropy’s  social, cultural, and political conditioning. The economic and sociological interest in corporate philanthropy is because the widespread use of altruistic behavior does not fit well into the financial model, calling into question such prerequisites as egoism, atomization, and rationality of agents.

The Benefits via Tax:

Corporate philanthropy is part of the broader concept of corporate responsibility. In Corporate Charity, it has been examined that corporate social responsibility of business from an economic, legal, ethical, and philanthropic point of view. The financial component is the responsibility of the business to its shareholders to maintain the efficiency and profitability of the company. The legal element concerns the compliance of the activity with the legislation, for example, the fulfillment of obligations to pay taxes and the elimination of “gray” schemes. The ethical component implies the compliance of the company’s activities with the norms and values ​​that are not enshrined at the legislative level but are accepted in society.

The philanthropic responsibility of business is divided into charity and philanthropy. Corporate philanthropy is understood as past actions to help those in need, compensating for the shortcomings of state programs in this area, and voluntary funding to create public goods outside the legal responsibility of business to the state refers to corporate philanthropy.

Reputation of an Organization:

The effects of Corporate Philanthropy include an increase in the company’s reputation due to the rise in favorable evaluations of the company from consumers and their loyalty to the goods and services produced by the company, as well as an increase in the company’s attractiveness as for employees who prefer firms with a reputation socially responsible and for investors who make decisions about investing in stocks and other securities issued by such companies. In marketing research, Corporate Philanthropy is viewed both as an advertisement or a PR tool and as a way to gain consumer trust, increase overall well-being, brand loyalty, and market differentiation. 

Social Presence of the Organization:

Through donation, the redistribution of economic benefits within the community took place and the reproduction of social structure and integration. The importance of donation mechanisms to the community was undeniable, so such relationships were usually governed by social, moral, and religious rules.The laws of gift exchange are universal and can be applied in the analysis of modern societies. For example, to explain the existence of Corporate Philanthropy, it can be assumed that companies invest in social projects, guided not only by the logic of purely rational action but also by the existing rules of donation.

To overcome the shortcomings of the existing system, it is necessary to understand the business’s attitude towards it. Perhaps the exchange of loyalty for the privilege is a good relationship system for a business, and it will be tough to change it. Suppose the company is not satisfied with such relations. In that case, it is necessary to search for mechanisms of a partnership based on mutually beneficial exchanges and rooted in reciprocity.


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