Corporate Philanthropy Changing for Ethical Investors
Corporate Philanthropy Changing to meet Needs of Ethical Investors - Expert
A trend towards greater transparency in company reporting driven by ethical investors and millennial workers is changing the nature of corporate philanthropy, according to the NZ head of one of the world’s largest healthcare companies and a prominent diversity advocate.
GSK NZ’s general manager Anna Stove, who is on the board of Global Women, an organisation which promotes inclusion and diversity, says that as companies begin to respond to demands from stakeholders for greater visibility around their corporate citizenship, charities will need to adapt to the new model to protect their revenue streams.
“Corporate reports are no longer what they were a decade ago. A new generation of ethical investors and the rapidly growing millennial workforce want to see evidence that a company can not only perform on a financial level but also represents a socially responsible investment and employer,” she says.
Stove says while business contributions represent only about three percent of the $2.8 billion donated to charities in New Zealand each year, it is estimated that for every $1 they give in cash they give an estimated $1.43 in sponsorship and $3.27 in goods and services.
“As a nation of individuals we tend to give generously but without the need for recognition. To some extent, this has flowed through into business culture as well. In the past, this has meant many corporates have had a more ‘scattergun’ approach to their donations which was less visible at the end of the financial year,” she says.
Stove says the public outcry last year over Kiwisaver investments in funds which include weapons and tobacco sent a signal to analysts that the market has a need for greater visibility over where their money is held.
“Now, we are seeing companies have a greater need to publicly leverage their charitable partnerships and they are becoming more focused as a result - still spending the same amount overall but maybe just working with two or three organisations more closely,” she says.
Stove says this shift in strategy means some charities may miss out as a result but there may be an opportunity for them to review how they approach these companies and develop a more customised partnership.
“Charities need to look at how their donation can be presented on paper to ethical investors. The company will be looking for a well run charity with a strong board and visibility on how much of the money goes to the recipients, rather than overheads or administrative costs.
“As opposed to the old days of just writing a cheque for general use, the ideal offering might be a specific project with a tangible outcome which a company can own and be proud of.”
Stove says the increase in millennial workers is having also impact on the way corporates and charities interact and means we are seeing a shift away from a transactional interaction to a higher involvement, more strategic, relationship model.
“Millennials (those aged 21-38) are now the largest age group in the NZ workforce and they see their employment as a vehicle to helping make a difference in society.
“Before applying for a role they are proactively researching a potential employer - they want to know the company is responsive to sustainability, cultural and a range of other corporate social responsibility measurements.
“While ethical investors want to see the outcome at the end of the financial year, millennial workers want to have a more hands-on interaction with the process.
“In the past a charity may have
approached us for a cash donation and we were often
supportive of that. However what we found is that our team
were prevented from engaging on a more meaningful
“It was no longer enough for them to say we work for a company that is a good corporate citizen, they wanted to roll up their sleeves and get involved to the point they could walk away and say I made a difference,” says Stove.
Stove says New Zealand charities can leverage the scale of their corporate partners who are often better resourced.
“Corporates often have a well developed sales and marketing function with commercial experts who have a great skill set to bring to offer NZ charities,” she says.
Stove says the example of a recent partnership with KidsCan shows how a corporate can use their skills and resources to build an long term revenue stream for the charity and engage staff at the same time.
The digital cookbook contains a variety of video recipes created by MasterChef Brett McGregor, with proceeds from the app sales going directly to KidsCan. For every 30 downloads KidsCan will be able to support 1 child for 1 year with food at school, a raincoat, shoes, socks, and health and hygiene supplies.
Stove says the app is an example of how corporations can work with charities to provide them with a long term revenue stream as well as engaging their employees.