CORPORATE PHILANTHROPY The New Paradigm:...

© Copyright Forbes 2011 1

CORPORATE PHILANTHROPY

The New Paradigm: Volunteerism. Competence. Results.

IN ASSOCIATION WITH:

© Copyright Forbes 20112

Table of Contents

Key Findings 3

Introduction 5

Motivation 6

Case Study: Eli Lilly 8

Areas of Philanthropic Focus 12

Case Study: MasterCard 14

Philanthropic Methods 16

Case Study: Hewlett-Packard 17

Conclusion: The Shape of Future Giving 20

Methodology 21


• Achieving business goals via philanthropy is closely tied to volunteerism. Seventy-eight percent of

respondents from companies that consider themselves successful at achieving their business goals via

philanthropy say that their involvement in corporate volunteerism is more important now than three years ago.

• While the concept of volunteerism stays the same, its shape is evolving and influencing other areas of

corporate philanthropy. Over two-thirds of respondents state that volunteerism is evolving from being

hands-on to skill-based, and that they now look to make financial donations primarily to causes that will allow

employees to volunteer.

• To meet business goals through philanthropy, it helps to have the CEO on board. More respondents

who believe their companies have been successful at this report that their chief executives are actively involved in

several aspects of corporate philanthropy.

• The motivation behind corporate philanthropy has an impact on giving and volunteering. More

respondents from corporations that are motivated by social benefits in their philanthropy—the latter defined

as betterment of the community and world—report giving and volunteering, as compared with respondents

from corporations motivated by a commercial benefit, defined here as betterment of the company’s brand

and bottom line.

• Social and health services, community development, and the environment are the issues most

respondents say are addressed by corporate philanthropy. Over the next three years, the biggest increases

in priorities should come in fostering entrepreneurship, higher education and K-12 education.

Key Findings


• Respondents from Europe, the Middle East, and Africa (EMEA) seem to be the most commercially

minded when it comes to the primary motivation for corporate philanthropy and community involvement.

• In terms of amount of money or value per grant, the Asia-Pacific region had the largest percentage of

respondents (67%) who reported increases over the past two years, and they expect more increases in

the next 12 months. In other regions of the world, roughly a third of respondents indicated past and future

increases in the amount of money or value per grant.

• Smaller companies—with less than $1 billion in revenue—seem to be using philanthropy less than

larger companies—over $10 billion—for focused business goals, such as learning about potential markets

and opportunities, or managing current or potential risk.

• Volunteerism is a common denominator among companies of all sizes, as more than two-thirds of all

companies, irrespective of their revenues, say that they believe their focus on volunteerism will increase over the

next three years and that volunteerism is an essential part of their company’s leadership development strategy.


The data drive home this point: in a time of dwindling natural resource bases across the globe, newly globalized business models, and ever-rising expectations of corpora-tions’ labor relations, no company can afford not to address social and environmental responsibility. But whether the immediate impetus comes from an activist CEO or from external pressures, CSR is not an exercise in pure altruism. Companies see a strong business case for social responsi-bility—93% say “our company can create economic value by creating societal value.” Employers are also heeding the message that employees, more than ever, care about their employer’s commitment to the environment, volunteerism, and what they are doing for the local community. CSR plays a large role in how many companies attract and retain talent. Moreover, CSR can be a vital component of corpo-rate brand management and helps companies to reach out to consumers, securing their loyalty.

The shape of corporate philanthropy is evolving world-wide: It has become more than just giving away money. Corporations now underscore volunteerism and social innovation in their philanthropic endeavors. Through vol-unteering programs, companies motivate their employees to follow passions and support causes, resulting in increased

Introduction

employee loyalty. Moreover, the knowledge gained during hands-on volunteering enriches creativity in product and market development, while the showcasing of companies’ capabilities in skill-based philanthropic efforts brings new business prospects. The belief in the effectiveness of volun-teerism is a common denominator among companies of all sizes and regions of the world.

This report also looks under the hood to understand how corporations engage in CSR—what spheres tend to receive the most attention, how management makes CSR decisions, and what underlies motivations to engage in CSR. Forbes Insights’ research suggests that environmental stewardship, community development, promotion of entrepreneurship, and employee volunteerism stand out as focal points. CSR, far from being a check-the-box exercise, has spawned a cre-ative and dynamic sector of corporate growth that marries marketing, business development, community relations, human resources, and ethics. The direction of corporate responsibility—and even specific policies—is often deter-mined by senior management. CSR decisions are becoming in every respect tantamount to investments: vetted for integ-rity, consistency with corporate strategy, and potential to drive business growth.

Corporate philanthropy, social innovation, and corporate citizenship are no longer merely buzz-

words for companies. Giving back to the community has now established itself within corporate

DNA. To get a handle on how companies are approaching corporate social responsibility (CSR),

why they do it, what they perceive the benefits are, and how they are allocating their resources,

Forbes Insights surveyed top-level management at consumer, financial services, technology,

energy, and healthcare companies. In addition, this report spotlights CSR programs at three

companies—Hewlett-Packard, Eli Lilly, and MasterCard—to showcase the way three industry

leaders are engaging this issue.


MOTIVATIONCompanies’ motivations to engage in CSR are as diverse as corporate cultures. Forbes Insights’ research, however, sug-gests that there are a number of recurring themes, and that corporations tend to break into two camps. Andy Wilson, vice president of corporate relations at Conservation International’s Center for Environmental Leadership in Business, sees companies as either proactive or reactive. “I think there are a lot of companies out there reacting to the increasing pressure from various stakeholders to be more responsible. In the U.S. and Europe, many leading con-sumer-facing companies have gone beyond a reactive state and are being very proactive,” says Wilson. Companies are now in sync with what studies on this subject consistently find: companies with high levels of CSR have higher stock values and corporate valuations. This finding isn’t lost on them. Seventy-nine percent agree with the statement “demonstrating our social purpose is

FIgurE 1: Demonstrating our social purpose is crucial to shareholder value.

• Strongly agree• Agree• Disagree• Strongly disagree• Don’t know

31%

48%

14%

3%

4%

crucial to shareholder value.” The takeaway: it’s not suffi-cient anymore to produce a product or offer a service, sell it, and turn a profit. While this idea is now pretty mainstream, a minority begs to differ. Almost a fifth of survey respondents disagree (14%) or strongly disagree (3%) with this statement.

The most widely valued business goal, by far, that com-panies say they are trying to achieve with their philanthropy and community involvement is employee motivation—two-thirds (64%) say this is important. This is particularly true for Gen Y, the generation born between 1980 and 1995. (While Gen Y’ers still compose a minority of corporate employees, as the first wave of Baby Boomers retires, competition for young Gen Y talent to be groomed for corporate middle manage-ment is skyrocketing.) A study by AMP Agency, a brand management firm, found that 61% of Gen Y’ers feel person-ally responsible for making a difference in the world, and over half of them say that they wouldn’t work for an irresponsible corporation. Companies are responding to that ethos. Case in

FIgurE 2: In addition to a social benefit, what business goals are you trying to reach via your company’s philanthropy and community involvement programs?

Improve employee motivation

64

Increase employee skills/leadership

Differentiate us from competitors

Learn more about potential markets/opportunities

Manage current or potential risk

Meet competitive pressures

Other (please specify)

59

53

47

43

41

1

0% 50% 100%


point: 72% of respondents say volunteerism and philanthropy are critical for recruiting younger qualified employees.

Companies use CSR not only to motivate their employ-ees, but also to train them and build skill sets. Fifty-nine percent of survey respondents say they want to increase their employees’ skills and leadership through corporate philan-thropy. That’s another incentive for companies—47% say learning more about potential markets and opportunities is a motivator for CSR.

FIgurE 3: Philanthropy and volunteerism are critical for recruiting younger qualified employees (i.e., Millennials/Gen Y).

41%

20%

4%4%

31%• Strongly agree• Agree• Disagree• Strongly disagree• Don’t know


ElI lIlly ANd COMpANy

Big Problems, Big Solutions

Krista Brantly is an executive assistant in the talent manage-

ment group at Eli Lilly and Company. she is also an ambassador

to Tanzania.

Brantly is part of an international volunteer program called

“Connecting Hearts Abroad,” launched by the company earlier

this year, that pays for 200 volunteers to go to developing nations

like Ghana and Tanzania to work with and for the local popula-

tion. Making its people the company’s ambassadors to the world is

one of the ways in which Lilly promotes its ethos of corporate social

responsibility. Lilly is committed to encouraging its employees to

give back.

But this is more than a do-gooder mission. “It’s important

for our cultural IQ. The more we understand about different cul-

tures, the more effective we can be in a global marketplace,” says

Rob smith, Eli Lilly’s senior director of corporate responsibility. By

turning its employees into ambassadors to many countries, Lilly is

putting out feelers that the company thinks could spark “the next

big thing” in pharmaceuticals. “we aren’t going to come up with

the next breakthrough innovation by reading another PowerPoint

presentation,” smith explains. “we hope it will come from a dia-

logue one of our employees has when he or she is abroad about

health concerns in that country.”

“we don’t want to write a few checks and walk away,” says

smith while discussing Lilly’s approach to fighting diabetes—one of

the diseases it has taken on as part of the company’s commitment

to social responsibility. while Lilly will certainly write checks for a

number of causes, it will also be testing different models for how

to fight—and prevent—diabetes. That research will then be pub-

lished in reports and one day, Lilly hopes, the successful approaches

will be replicated across the globe. Lilly is thinking big and setting

its sights on leaving a legacy as a company that solves problems. “This

is much more than passive philanthropy,” smith says.

solving major global health problems takes not only huge

resources but also dedication, which is why Lilly thinks about

its programs in increments of years, not months. “You can’t just

blow in and blow out,” says smith. “These are not the kinds of

issues that lend themselves to short-term investments.” Case in

point: the Lilly MDR-TB Partnership—which focuses on prevent-

ing, diagnosing, and treating multi-drug-resistant tuberculosis—is

a public-private initiative that mobilizes more than 20 partners on

five continents and has been around for eight years.

The big vision at Lilly, however, goes beyond treating just one dis-

ease. The company’s CsR mission is about finding the intersection of

social needs and business opportunities. In other words, Lilly wants

to use its expertise in developing drugs to address some of the worst

non-communicable diseases in the world, including cancer and dia-

betes. In the process, it’ll develop markets across the world for its

products. “That might be the future of capitalism,” says smith.

Lilly won’t limit its philanthropy efforts to health. It is

involved in many of the pressing issues of the 21st century. For

one thing, Lilly is working on promoting education in the sTEM

subjects—science, Technology, Math, and Engineering.

Lilly also has set aggressive goals regarding environmental


sustainability—and not just because it’s politically correct. Like many

companies, it’s reading the tea leaves and seeing that this is a neces-

sity. “we use a lot of water in our manufacturing process, so we

have to be thinking about it, especially because of the UN projections

about water shortages,” says smith. Last year the company used 9

billion liters of water less than three years before, or enough to supply

household water for about 65,000 people every year, based on the

U.s. Environmental Protection Agency’s watersense program data.

That’s a key tenet of Lilly’s CsR—being nimble and respond-

ing to changing dynamics in everything from the environment to

the economy. In fact, during the recent economic downturn, Lilly

relaxed its income guidelines for its patient assistance program,

which helps underinsured and uninsured patients pay for their med-

ication. Under the new guidelines, a family of four making $67,000

can now qualify for these programs. To date, Lilly says it has helped

225,000 people obtain their medications.

Doing good is good business for Lilly, both inside and outside

the country. “It makes me want to work that much harder to make

my company succeed, because I know that it cares about people,”

says Lilly’s ambassador to Tanzania, Krista Brantly. “I always knew

that, but this [helping people in need in Tanzania] is a very tangible

way to understand that.”


FIgurE 4: Our community and philanthropic efforts are critical to the way our company differentiates itself in the marketplace.


47%

17%

3% 2%

31%

As one of the most visible and defining components of corporate culture, CSR has become a way for companies to tell both their employees and consumers who they are. In fact, over half (54%) say one of the goals of CSR is to differentiate themselves from other companies. Whether it’s sponsoring trips to Haiti to help with disaster relief, matching charitable donations, or paying for carbon offsets, companies are striving to carve out a unique space in CSR.

Still, not everyone views CSR as a way to stand apart in the marketplace. There’s a small pocket of disagreement, with 20% saying that CSR isn’t useful in creating a unique brand identity. One interpretation here is that these compa-nies either haven’t found the right approach to CSR or are still searching for their identity. Alternatively, the dissenters may believe—like anonymous charitable givers—that CSR should be a private rather than a public imperative. For cer-tain companies without a significant consumer base among the general public, for example, such as raw goods suppliers and processors, brand management may be as simple as keep-ing a few corporate customers happy, not requiring much public CSR.

While corporate philanthropy strategies most often seem to be internally driven, a quarter of companies surveyed say they want to use it as a way to create a closer bond with customers. CSR provides corporate marketers with a unique toolkit for the holy grail of connection with consumers. For example, Snickers conducts the “Bar Hunger” campaign to provide millions of meals for the hungry; Mars provides a donation to charities each time a consumer enters a unique product code printed on candy bar wrappers at the Snickers’ website; the National Football League (NFL) proudly fea-tures the Susan Komen “Race for the Cure” pink ribbon on products and storefronts to indicate its support for the battle against breast cancer. Many organic and eco-friendly pro-ducers trumpet the fact that a share of all sales goes toward environmental causes. This cohort of companies realizes that the savvy consumer feels better about—and perhaps more loyal to—a brand that gives back.

Breaking the data down by region—the Americas; Europe, the Middle East, and Africa (EMEA); and Asia-Pacific—we can see differences in what motivates companies to engage in CSR. In the Americas over three-quarters of respondents (77%) say they do it for “the betterment of the community and world.” Asia-Pacific trails slightly, with 70% saying that’s what drives them. In EMEA, however, only 58% say that’s their incentive—indicating that compa-nies in that region are more driven by commercial benefit and what they believe CSR can do for their bottom line.

When we look at how the benefits derived from CSR activities vary by the size of the company, it seems that smaller companies focus less on increasing employee leader-ship skills and on learning more about potential markets and opportunities than do larger companies.


FIgurE 6: What is your primary motivation for corporate philanthropy and community involvement?

social benefit - betterment of the community and world

Commercial benefit - betterment of the company’s brand and bottom line

0% 50% 100%

77

70

58

23

30

42

• Americas • Asia- Pacific • Europe, Middle East, Africa

FIgurE 7: In addition to social benefit, what business goals are you trying to reach via CSr?

Improve employee motivation

Differentiate us from competitors

Meet competitive pressures

Increase employee skills/leadership

Learn more about potential markets/opportunities

Manage current or potential risk

0% 50% 100%

• Less than $1 billion • $1 billion to $10 billion • $10 billion and greater

57

64

50

29

53

52

41

44

47

62

67

57

33

46

50

29

40

50

0% 50% 100%

40

Demonstrates good corporate citizenship

38

Demonstrates a commitment to social responsibility

20

shows alignment with customer priorities

16

Provides a topic of “conversation” with customers

27

Communicates the moral purpose of the corporation

24

Creates a closer bond between the company/product and customers

32

Distinguishes our company in a positive way

13

Ensures support of the U.N.’s millennium development goals

28

Enhances our employment brand for employee recruiting and retention

13

Meeting stakeholders expectations

0


FIgurE 5: In which ways do you believe your company’s philanthropy/community involvement/social innovation programs enhance your reputation or brand?


FIgurE 8: What issues does your company currently address through its philanthropy/community involvement program?

Community development

40

Education (higher)

32

Education (K-12)

34

Economic development

39

Fostering entrepreneurship

20

Health services

40

social services

45

Civic and public affairs

32

The military and their families

17

Environment

44

Arts and culture

25

Disaster relief

37

Local needs

37

Religion

12


1

0% 50% 100%

ArEAS OF pHIlANTHrOpIC FOCuSWhether companies are being proactive or reactive, the vast majority of them are weighing the business benefit of a cause before committing to a donation. More than two-thirds of companies say this is their calculus. For those on the non-profit and charity side, the lesson here is to make the business case to companies. Additionally, corporations overwhelmingly favor a tried-and-true set of core thematic areas: environ-mental stewardship; community relations; and, increasingly, promotion of entrepreneurship and employee volunteerism.

Companies are dispersing their money far and wide to do everything from training entrepreneurs to finding a cure for diabetes. But some issues emerged as more salient than others. Among the top issues is the environment—44% of companies say that’s what they are addressing through their CSR programs and partnerships. For any company that depends on natural resources, as most do, green initia-tives are key to their survival. Conservation International’s Wilson says companies are grasping the magnitude of the environmental issues. “We are living on a planet where the population is going to grow to 9.2 billion, and it is going to double the amount of food and energy we need. Figuring out how to promote economic growth and job creation and preserve the natural capital to generate food and water is a really critical issue, and many companies are rising to that challenge.”

Community development is another important area, with four in ten companies saying that’s how they are spend-ing their money. Whether you are a mining company in Chile, a tobacco company in Central Asia, or a Target open-ing in Harlem, companies know they have to show the local community that they are invested.

Looking three years out, companies aren’t on track to change their giving patterns significantly. The one area, however, where there is a modest uptick is entrepreneurship. Right now, two in ten say it’s an issue they are focusing on, but when asked about where they’ll be focusing their efforts in 2014, three in ten say entrepreneurship. In this economy, more companies may be shifting their focus to thinking


FIgurE 9: Three years from now, what issues do you anticipate your company will address through its philanthropy/community involvement program?

Education (K-12)

41


1

0% 50% 100%

Community development

45

Education (higher)

41

Economic development

41

Health services

42

47

social services

Civic and public affairs

30

17

The military and their families

Environment

43

23

Arts and culture

Disaster relief

32

Local needs

32

8

Religion

Fostering entrepreneurship

27

FIgurE 10: We now look to make financial donations primarily to causes that will also allow our employees to volunteer.

44%

18%

5%4%

28%


about how they can be key players in creating jobs. Companies also anticipate that volunteer hours will

increase over the next year, highlighting the crucial part manpower plays in CSR. In fact, 72% say that they primarily make donations to causes that will allow their employees to volunteer. In general, companies are finding creative ways to enable this, from allowing employees to donate their work time to causes, to paying for travel, to sponsoring a corpo-rate service corp.


“Corporate social responsibility isn’t just about writing checks any-

more; it’s making important ties with what is going on in your

community,” says Patricia Devereux, group head of Corporate

Philanthropy & Citizenship at MasterCard worldwide. In practice,

MasterCard’s CsR work stretches across geographic and cultural

boundaries, centering on the goal of financial inclusion, some-

thing Devereux says is more than just extending credit. “Financial

inclusion is about giving people the skills to manage their lives in

a responsible way and giving them the financial tools to navigate

their world and community. For us, it encompasses financial liter-

acy, business literacy, providing access to financial services, and

training entrepreneurs, the people who make innovation happen.”

Devereux says the corporate responsibility programs at

MasterCard are blossoming, both in manpower hours and dollars.

“The commitment from senior management is strong, our employ-

ees worldwide are increasing their volunteer hours, and all of us

can see firsthand the impact we are having in our communities.”

At its core, MasterCard is an information and technology com-

pany that creates and deploys intelligent payment innovations. It’s

a world class payments network combining the financial expertise

and relationships that make a difference every day by creating com-

merce that is faster, more secure, and more accessible for everyone.

In 2010, the company codified its citizenship strategy to

focus its assets on making a positive social impact. MasterCard’s

strategy engages the company’s entire network—monetary

MASTErCArd

Leveraging Its Strengthsresources, employee time and expertise and cardholders— to

create social value.

steering MasterCard’s assets for social good can look some-

thing like this: a partnership with Grameen Foundation—a

non-profit that focuses on using microfinance and mobile technol-

ogy to lift people out of poverty—in Colombia for an eight-month

leadership development program for a group of MasterCard employ-

ees. The partnership benefited both organizations, says Devereux.

“sharing each group’s expertise gave Grameen Foundation a rep-

licable framework for developing market entry strategies in other

countries, and it gave our employees a lot of information about the

financial reality of those most in need.” This year, MasterCard and

Grameen Foundation will team up again to use mobile technology

to deliver information and financial services to farmers in Colombia.

Like many companies, MasterCard’s philanthropic activities

provide employees with a way to give back to their communi-

ties through skills-based and hands-on volunteering. Through the

Network for Teaching Entrepreneurship (NFTE), MasterCard

employees routinely visit classrooms to give advice on what it takes

to create and run a business. Those employees also provide one-on-

one coaching and mentoring to aspiring young entrepreneurs. “It is

encouraging to see so many of the students start businesses as a result

of their learning and experience with NFTE,” says Devereux.

with a global base of more than 5,500 employees, MasterCard

is thinking, and acting, globally. Employees, such as Pilar

Aurrecoechea, general manager of MasterCard in spain and

Portugal, see the local impact. writing on MasterCard’s Heart of

Commerce blog about her participation in Junior Achievement,


a non-profit that teaches K-12 students about business and

economics, Aurrecoechea says that through the partnership,

“MasterCard was helping to build the future entrepreneurs

of Europe.”

That progress is one metric MasterCard uses to measure

the success of its partnerships, both with NFTE and with Junior

Achievement. How many of the students went to college? How

many of them started businesses? “Those are long-term metrics, of

course, but that’s what we are interested in – long-term, sustainable

improvements,” says Devereux.

MasterCard’s focus on financial inclusion takes shape through

economic empowerment initiatives around the world. In the

Philippines, MasterCard is working with the Global Fund for

women to provide training, technology, and seed capital to help

women start their own businesses. In China, MasterCard works

with the All-China women’s Federation to promote women’s

employment and entrepreneurship. In India, MasterCard is launch-

ing a youth entrepreneurship program with the International

Youth Foundation to provide training, mentors, technology, and

access to capital to help young people create and grow their

own businesses.

On the consumer side, MasterCard is finding creative ways

to engage its millions of cardholders in philanthropy. The corner-

stone of the consumer engagement is “Purchase with Purpose,”

which partners with places like Hotel de la Paix in Cambodia—dur-

ing a three-month long campaign, every time a guest settled a bill

there with a MasterCard, $50 was donated to buy school uniforms

for children in the nearby siem Reap area. Last June, MasterCard

teamed up with the singapore Retail Association: For every pur-

chase made with a MasterCard at a retail outlet in singapore

during the Great singapore sale, it donated money to the singapore

Children’s society.

By channeling the energy of its cardholders and employees and

the power of its payment network, MasterCard is working to create

a positive impact globally and locally, promoting financial inclusion

and education for those who need it most.


pHIlANTHrOpIC METHOdS The days of merely writing a check are gone. The current thinking is that companies need to move beyond simply giving money to broader social innovation—84% of respon-dents agree that’s the future of CSR. Companies have to commit to some big vision, such as curing a disease or reforming education.

FIgurE 11: Companies need to evolve their giving programs from simply giving money to broader social innovation.

48%

11%

3% 2%

36% • Strongly agree• Agree• Disagree• Strongly disagree• Don’t know

Companies seem particularly interested in buttressing their matching donations. Of all the areas surveyed, match-ing donations had the highest percentage (21%) of companies planning on “increasing significantly.” Matching dona-tions—when corporations will equal donations to charities made by employees—has widespread appeal because it is a relatively easy and tax-friendly policy. Matching donations is also appealing because it empowers employees to choose their own charities and leverage their employers’ deep pock-ets. Companies are also likely to ramp up in the area of product/service grants. This is a smart move to leverage their existing talent and resources into CSR initiatives. Product/service grants also give great bang for the buck: the company provides the goods and services at cost, while legitimately claiming for its contribution the full retail value.

Forty-two percent say that the overall direction of their CSR programs is set by their CEOs. Not only that—a significant proportion of CEOs (39%) are also involved in making specific funding decisions. The upshot? For compa-nies to have successful CSR programs, the mandate needs to come from the C-Suite, says Wilson of Conservation International, who has worked with dozens of CEOs all over the world. “The most lasting and effective programs are where you have a commitment from the top,” he says. Wilson adds: “Walmart is a tremendous example of this. Then-CEO Lee Scott made a deep, bold commitment to major environmental initiatives and greening their supply chain. They got their entire workforce involved because of Scott’s leadership.”

FIgurE 12: In what areas of corporate philanthropy and community involvement is your CEO directly involved?

Making specific funding decisions

39

setting overall direction

42

serving as the public face of our giving strategy

38

Communicating internally

38

Communicating externally

37

Acting as a role model

40

Facilitating and making sure resources are in place

32

Executing individual programs

28

CEO is not involved in philanthropy program

2

0% 50% 100%


In Africa, it provides a text-message service allowing consumers to

check whether a drug is counterfeit. It implements an initiative to

speed up lab work, a sluggish process in most of Africa: this can

mean the difference between life and death for many newborns.

No, this isn’t some cutting-edge health foundation; it’s the social

innovation arm of Hewlett-Packard, the largest technology company

in the world, with more than 320,000 employees and offices in over

170 countries.

welcome to the new concept of social innovation that Gabi

Zedlmayer, vice president of HP’s office of Global social Innovation,

and her team developed almost two years ago. “Our work isn’t just

about giving dollars,” says Zedlmayer. “It’s about mobilizing HP’s

people and our technology and collaborating with leading organi-

zations, governments, and NGOs (non-governmental organizations)

to provide solutions to some of the world’s biggest problems in global

health, education, and entrepreneurship. This enables us to create

shared-value and connect economic progress with societal needs.”

There is, of course, a business case to be made for social inno-

vation. Doing good is good for the bottom line. showcasing HP’s

technology capability led to an invitation from a health ministry in

Africa to compete for a cloud-computing project. And the U.s. state

Department asked HP to join an anti-counterfeit-drug task force.

HP is building reference cases that illustrate how the world’s big-

gest technology company can also be a strategic partner in solving

some of our biggest social problems. The company is leveraging key

HEwlETT-pACkArd

Shared-Value: The HP Wayrelationships with its global customers and engaging its worldwide

workforce as well as its entire portfolio, which includes smart-

phones, laptops, servers, storage, software, printing, networking,

and services, to provide unique innovations that are helping NGOs

around the world.

This may well save more than a few lives. Malaria causes

700,000 deaths in Africa every year, many of them precipitated by

consumption of low-quality counterfeit drugs. In fact, the world

Health Organization estimates that 30% of drugs in developing

nations are fake, a situation that often triggers crises. HP has part-

nered with the Ghana-based nonprofit mPedigree to develop a

text-message service that is run through an HP-enabled cloud solu-

tion in Nigeria and Ghana. This service will tell people, in a matter

of seconds, if their medicine is safe.

In Kenya, HP is teaming up with the Clinton Health Access

Initiative (CHAI) to set up the Early Infant Diagnosis project, which

will speed up the diagnosis of HIV in infants. By the end of this

year, five data centers will be up and running, dramatically cut-

ting the time it takes to get lab results back to patients so they

can begin treatment. “we are developing a system where results

can even be transferred to places with no Internet access via sMs,”

explains Zedlmayer. “we really want to demonstrate our leadership

in the cloud and mobility space.” within the project’s first year, HP

and CHAI expect to process EID HIV test results for approximately

70,000 infants and provide real-time medical data to doctors and

nurses throughout Kenya.

The existence of these specific programs is no accident. They

are the result of careful, deliberate thinking, guided by questions


such as: Is this a breakthrough? Is this an efficient use of resources?

But as any NGO will tell you, setting up successful health ini-

tiatives in Africa is tricky. HP checked any pre-existing hubris at

the door, realizing early on that it couldn’t carry through these

efforts on its own. “we had to start from scratch with health,” says

Zedlmayer. so HP teamed up with the Clinton Global Initiative and

sought strategic guidance from the firm Volans Consulting as well

as from Michael Porter’s consultancy, FsG.

Even with the best partnerships, technology, and funding,

money can be squandered or not used effectively. so how does HP

make sure its programs are working? It has a scorecard with key

metrics that are routinely assessed. In its entrepreneurship training

programs for young unemployed graduates, which HP runs in 48

countries, one of the measurements is: how many of these young

people become an entrepreneur and stick with it over time? with

the medical tests, one of the metrics is the number administered

every year. This is a hallmark of shared-value. “In the old model, com-

panies were giving cash and not really following up with any further

evaluation or involvement,” says Zedlmayer.

The measurement of success occasionally prompts outside recog-

nition. HP LIFE (Learning Initiative for Entrepreneurs), which provides

training and online tools to students, reached 500,000 entrepre-

neurs between 2007 and 2010, creating 20,000 jobs, according to

HP. That caught the attention of the white House. In January 2011,

HP joined the Obama administration’s startup America Partnership, a

private-sector alliance to accelerate entrepreneurship in the U.s.

Another facet of shared-value is recognizing—and empow-

ering—local innovators in their communities through grants and

awards that leverage technology to help solve problems. with the

HP EdTech Innovator award, HP is helping to fund a simulated mul-

timedia company at a school in Brazil; bringing laptops to students

in Chennai, India, who normally wouldn’t have access to comput-

ers; and funding a program in south Africa that helps students

strengthen their science-learning skills by studying physics texts on

HP tablets.

Zedlmayer states, “Driving economic success and at the same

time creating social value is not only a responsibility but also an

opportunity to rethink the way we are doing business and driving

sustainable economic growth.”


FIgurE 13: Does your company measure the success or impact of your philanthropic and community involvement efforts?

22%

31%

9%

39%

• Yes, the philanthropic/ community impact• Yes, the business impact• Yes, both the philanthropic and business impact• No

FIgurE 14: We are concerned that our philanthropic or community involvement efforts could create conflict with our customers.

34%

20%

18%

2%

26%


Part of the new model for CSR includes vetting causes and foundations more carefully. “In the U.S., there is a trend that companies want to be tracking their investments. They are holding their partners accountable,” says Wilson of Conservation International. To that point, over three-quarters say they are doing more due diligence than in the past. Seventy-eight percent say they are even going as far as tracking volunteer hours and the impact they are hav-ing. Companies don’t want merely to give; they want to give effectively. Even with the large amount of enthusiasm and resources that companies are devoting to CSR, there’s often still some hesitation. For one thing, 60% say they are concerned that their philanthropic efforts could create conflicts with their customers. In other words, there are certain causes—climate change and reproductive rights come to mind—that are viewed as controversial. With CSR so embedded in many companies, consumers can’t disentangle the brand from what causes it chooses to support. The bottom line? As companies map out their CSR strategies, they’ll have to be sensitive to the fact that CSR can be political and balance that against their desire to support certain issues and organizations. This is also an opportunity for companies to determine which causes and issues are non-controversial.


People who pull the levers on CSR programs say that it is here to stay—and it’s also not the first thing to go. Even during this economic downturn, companies are turning up the dial on their CSR efforts. Almost half (48%) say that their involvement with CSR has increased over the past 12 months. In other words, CSR is not expendable even when cash flow gets tight. The phenomenon of growing CSR budgets underscores how seriously companies are taking their commitment to corporate citizenship. When it comes to what companies will support in the future, respondents are split on whether they’ll add more causes to their CSR portfolio. Half say they will beef up, and 40% say they will stay the same. The more telling finding is

that seven in ten say they would rather support fewer causes with a deeper relationship than a broad range of causes with less engagement: less is more in CSR, and companies want to be specialized in a few areas as opposed to doing a little bit of everything. In deepening their ties to their CSR part-ners, corporations are linking their fate to the reputation of the charities and causes they patronize. This trend presents challenges to both the corporate and social partners in the relationship, increasing the pressure to professionalize and to produce results. But for those companies, foundations, and community groups that reap the synergies between good business and good citizenship, the rewards should continue to be plentiful.

FIgurE 15: Over the past 12 months, how have your efforts changed in the following areas of corporate philanthropy, community involvement, and social innovation?

30%40%

6%

3%

18%• Increased significantly (>10%)• Increased• Stayed the same• Decreased• Decreased significantly (>10%)• Don’t know/NA

3%

past efforts - Number of causes supported

FIgurE 16: Over the next 12 months, how do you anticipate your efforts will change in the following areas of corporate philanthropy, community involvement, and social innovation?

29%40%

6%

4%

19%• Increased significantly (>10%)• Increased• Stayed the same• Decreased• Decreased significantly (>10%)• Don’t know/NA

2%

Future efforts - Number of causes supported

Conclusion: The Shape of Future Giving


METHOdOlOgy

The information in this report is based on the results of a survey and one-on-one interviews conducted by Forbes Insights.

Forbes Insights surveyed 311 executives who worked for large companies with annual revenues of more than Us$500 million. Nearly two-thirds (63%)

worked for companies with revenues of Us$5 billion or more.

More than half of the respondents (54%) had C-level titles or were board members. Another 31% had titles of director or above. In terms of function, 37%

were involved in corporate management, 29% were in finance, 14% were in HR or talent management, and 14% were involved in community

relations or philanthropy.

Geographically, 48% of the respondents were located in the Americas, 32% in Asia-Pacific, and 19% in Europe/Middle East/Africa.

bruCE rOgErS CHIEF INsIGHTs OFFICER

brENNA SNIdErMAN sENIOR DIRECTOR

CHrISTIAAN rIzy DIRECTOR

kASIA MOrENO EDITORIAL DIRECTOR

HANNAH SElIgSON REPORT AUTHOR

60 Fifth Avenue, New York, NY 10011 | 212-367-2662www.forbes.com/forbesinsights

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