Today being National Corporate Philanthropy Day in the US (the first I had heard of it, I have to admit), I went to a gathering of chief executives whose companies give money to good causes or encourage employees to volunteer.
I had a chance to quiz three of the CEOs there – Jim Rohr of PNC Financial Services, Ivan Seidenberg of Verizon and Sidney Taurel of Eli Lilly – about their companies’ involvement in something that, on the face of it, does not benefit shareholders.
Famously, Milton Friedman argued that “the social responsibility of business is to increase its profits” and that a lot of corporate philanthropy was at best misguided, although some could be justified if it served other corporate purposes, such as increasing the loyalty of customers.
From chatting to the CEOs, I drew the conclusion that businesses have a lot of motives for getting their companies and employees involved in philanthropy, from wanting to do good for others, to improving their images with customers and persuading young recruits that they are worthwhile enterprises.
Mr Rohr, whose bank supports early childhood education in Pittsburgh, Philadelphia and elsewhere, pointed out that 20 per cent of customers signing up for new accounts said they were aware of its education efforts.
Each of the CEOs noted that young employees in particular expect their companies to be active in philanthropic and environmental efforts. “Young people have a high expectation of both doing well and doing good. They want to become Bill Gates the businessman and Bill Gates the philanthropist,” said Mr Seidenberg.
Mr Taurel emphasised that Eli Lilly’s involvement in programmes such as an initiative in developing countries to combat drug-resistant tuberculosis, gave it a “credible voice” in debates over drug pricing and patent rights.
In the end, I suspect that the pure Friedmanite view that companies should steer clear of social responsibility is a lost cause. They have so many self-interested reasons to become involved these days that few shareholders are likely to object.
