How Corporate Philanthropy Continues to Evolve in 2023
Corporate philanthropy, corporate social responsibility (CSR), and environmental, social and governance (ESG) have all become increasingly important sectors across the economy, within organizations and for a new generation of workers. These initiatives have become an essential ingredient in organizational culture and purpose, appealing to potential customers and serving as a boon for the recruitment, engagement and retention of employees. So what does this shift mean for the current state and near-term future of corporate philanthropy?
Current State of Giving
In one sense, the Giving USA report was bleak. The headline showed that 2022 total giving was down for only the fourth time in the past 40 years. Giving fell 3.4% last year to $499.3 billion, down 10.5% when adjusted for inflation. It’s not yet clear if this is the start of a trend or a natural reaction to inflation and a breather from the record giving during the COVID-19 pandemic.
I personally prefer a more positive focus. While giving by individual donors dropped 6.4%, foundation giving increased 2.5% to $105.21 billion, and corporate giving grew by 3.4% to $29.48 billion. Giving by bequest grew as well, rising 2.3% to $45.6 billion. The lion’s share of giving (64%) comes from individuals, but giving by organizations continues the fantastic run it started in 2017.
Where do things go from here? While the landscape is undergoing constant change, I can use some of today’s hot-button issues to make predictions.
Culture Wars and Social Impact
As polarity becomes prevalent, we’re seeing its effect on social impact. As an example, Florida Gov. Ron DeSantis halted billions of dollars in ESG spending from New York City-based investment firm Blackrock in his state in December 2022 based on the “ideological agenda” of ESG investing. However, the inverse is also prevalent, with certain states, like Maine, increasing their ESG initiatives by divesting public tax dollars from large fossil fuel companies.
The association of ideological agendas and ESG initiatives significantly modifies the landscape, and is the beginning of a new discourse surrounding social impact. That said, I believe that far from halting the movement, it is more likely to result in organizations becoming more selective and targeted in both their programs and communications. Overlooking or divesting from ESG initiatives becomes increasingly risky in the face of high-profile audiences, such as millennials, who are demanding more from organizations when it comes to corporate responsibility.
Millennials and Gen Zers Demand More
By 2025, millennials and Gen-Zers will occupy 75% of the workforce (opens as a pdf). With that majority comes a set of values that will be table stakes for organizations and their corporate giving practices. Millennials have a strong sense of social responsibility and environmental consciousness and are more likely to support companies that demonstrate a similar commitment. Millennials want their work to contribute positively to the world, and they expect the same from organizations they associate with.
Additionally, one of the defining characteristics of millennials is their emphasis on finding purpose and meaning in their work. Unlike previous generations that often prioritized stability and financial security, millennials are drawn to roles that align with their personal values and allow them to make a positive impact on society. They seek out employers who prioritize social and environmental responsibility and make investments into technology and initiatives that enhance both the employee and user experience.
As I mentioned, this groundswell of constituents who care deeply about social responsibility will continue to push organizations in that direction, potentially offsetting any divisive counternarratives.
Giving at Scale
As giving has increased, organizations are finding that traditional manual processes and a proclivity to wing it can’t scale accordingly. In one sense this is a natural market evolution. New initiatives often start with small-scale investments and manual support. Once successful, technology and automation help those initiatives to scale.
Take volunteering for instance. What might start as a grassroots effort soon requires a technology platform to drive communication and coordination for thousands of employees. For donations and grants, this is a hangover from the pandemic, where organizations faced competing mandates to get unprecedented amounts of money out as fast as possible.
This need to scale and operationalize social impact has resulted in significant investments in the associated technology — not only by organizations themselves, but also by investors and vendors in the space. Going forward, expect organizations to continue growing their impact initiatives, and investing brand equity, capital and technology to support that growth at scale. This more intentional approach will allow organizations to proactively plan, manage and amplify these CSR and ESG campaigns.
2023 continues to present exciting new challenges and opportunities for corporate philanthropy — and time will show how much of an impact these trends have on the industry at large.
The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.