BLOG: Corporate philanthropy is more than a tool

Dr Lonneke Roza is post-doctoral researcher in the Department of Business-Society Management at Rotterdam School of Management, Erasmus University (RSM). Her work focuses on employee engagement in corporate philanthropy and corporate foundations. In this blog, she responds to an article in the Dutch newspaper De Volkskrant about corporate sponsorship of charities.

De Volkskrant ran the header: ‘Companies bolster large charities by 33 million euros’. Afterwards, independent journalistic website De Dikke Blauwe already highlighted the fact that this amount is only a portion of what companies give in total (around two billion euros, including social sponsoring, which is financial support to non-profit organisations with a direct commercial interest). 

What has not been examined is what the various motives are for companies to donate, and who makes these decisions within the company. These factors affect how much companies donate and what kind of activities they undertake. 

Instrumental motivation

Firstly, the message that companies only get involved with corporate philanthropy on the basis of instrumental considerations, such as marketing or pride of the employee, is one-sided. If companies have this goal, then why is it that we –in our Dutch society- hear so little from these companies about their gifts? Does the average (Dutch) consumer know which company gives to charity Woord en Daad, the greatest recipient in the Netherlands according to the article? The instrumental motivation referred to in the article is only one of the motives for companies to donate.

Stakeholder pressure

A second motivation for companies to donate is because it is expected of them. Various stakeholders apply pressure to donate. This pressure can be exerted by (local) governments, for example by including a section on social engagement in its tenders. But also by consumers or employees who increasingly expect that companies make a proactive contribution to society. Some of the corporate foundations which have been founded in the Netherlands were the idea of employees who wanted to give something back to society, such as the Brunel Foundation

Corporate citizenship

The third motivation given by companies is simply because they consider it to be part of their role in society. This is often from a feeling of corporate citizenship which is comparable to the way individuals feel citizenship. Many family businesses, such as Vebego and Facilicom, have a very broad vision of their role in society – much broader than creating employment and making money. Donating because it belongs to the position of the company in society is often the most important motivation for these types of organisations. In fact, it is increasingly becoming an important motivation when companies are thinking about their purpose. 

Not core business

We must also not forget that for companies – in contrast to donor-advised funds – philanthropy is in the periphery and not a ‘core business’. Corporate philanthropy, or managing corporate giving is not yet a profession you can study at a university of applied sciences or university, and there are very few vacancies for people with knowledge of philanthropy who are not already working in the company. 

So we must also take into account who is responsible for corporate philanthropy. Large companies are increasingly devising policies related to corporate giving and people are allocated this responsibility. Sometimes that may be only one person, sometimes it is a department or corporate foundation. Just as large grant-making foundations, these large corporations increasingly devise Theories of Change or Logframes and progressively measure the impact of their activities. 

When we look at the small and midsize business sector, philanthropy is not allocated to one specific person to manage. It is too marginal for that. In addition it is often decided by a director or major shareholder as naturally it affects their own wallets. Perhaps even more fundamental is that when it comes to philantropy, companies always work together with non-profit organisations as companies are aware that they are not experts in the field of social innovation. Or at any rate, in the proper implementation of philanthropy, the value of the non-profit organisation is acknowledged.

Public debate

What is very interesting about the investigation by De Volkskrant is that they carried it out on the basis of annual reports of the receiving party and not on what we refer to ‘self-reported data’; companies who give the figures on their donations themselves. In the latter approach there is of course always a chance that they overestimate corporate giving. Also, De Volkskrant makes the issue of corporate philanthropy part of the public debate as, up until now, corporate philanthropy was very much below the radar. A mature subsector requires a public debate; so let’s encourage this.

For more information about Lonneke Roza ‘s work:

Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s top 10 business schools. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who can become a force for positive change by carrying their innovative mindset into a sustainable future. Our first-class range of bachelor, master, MBA, PhD and executive programmes encourage them to become critical, creative, caring and collaborative thinkers and doers. Study information and activities for future students, executives and alumni are also organised from the RSM office in Chengdu, China.

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