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Context-Focused Giving, Part 2

Business & Communities Philanthropic Partners

In part 1, we introduced context-focused giving as corporate philanthropy and strategy combining to achieve both social and economic gains, examining how this can be done by analyzing various factors, based on the Harvard Business Review publication, "The Competitive Advantage of Corporate Philanthropy," by Michael E. Porter and Mark R. Kramer, last time including factor conditions and demand conditions. Here, we continue on with the other two elements: context for strategy and rivalry and related and supporting industries.

Context for strategy and rivalry has to do with the rules of business engagement in which a company operates. A context-focused giving strategy that works to open local markets to trade, that is governed by policies that reward fair competition and deter corruption, has a clear and widespread social impact that benefits communities and citizens as well as the economic benefit of operating in an amenable business environment. Twenty-six U.S. corporations have engaged in giving targeted toward improving their context for strategy and rivalry by joining forces with Transparency International in their fight to end corruption and create an intersection of business, government and society that places a high value on transparency and accountability. Their work and corporate partnerships has a significant and far-reaching impact on society and the economy.

Companies rely on other related and supporting industries to operate. Philanthropy that is focused on generating benefits and improvements for related businesses or local suppliers allows for corporate growth and partnership opportunities, along with a better use of time and resources: "Proximity enhances responsiveness, exchange of information, and innovation, in addition to lowering transportation and inventory costs" (Porter and Kramer, 5). American Express has used context-focused giving to identify the travel industry as an important related industry where efforts and resources could be used to generate social benefits and economic gains for American Express. They have provided significant funding to Travel and Tourism Academies that train students for careers with travel-related companies such as airlines, hotels, and restaurants. Their program has improved educational and job opportunities for people in communities served, as well as a competitive advantage for local travel clusters. Because American Express relies heavily on travel-spending, their global brand is also a part of local travel clusters, and they have a stake in these clusters' success.

Shifting your corporate giving strategy to context-focused giving is a rigorous process that should seek and consider input from management throughout your company in identifying a corporate giving strategy aimed toward improving competitive context. One question to ask when examining your company's competitive context is, "What constraints, tangible or intangible, prevent or limit our productivity and growth?" The more specific you can get when identifying areas for improved context, the better foundation you will have for beginning to research, plan and implement a successful context-focused giving strategy. Porter and Kramer stress the importance of rigorously tracking and recording the results of your initiative, both socially and economically, to provide a framework for creating evidence-based improvements and modifications in your initiative. They also encourage forming partnerships with other stakeholders, the benefits of collective action being enhanced efficacy and shared costs.

Businesses thrive from good strategy; there is no reason why the extensive research and planning that goes into other areas of corporate strategy should not be applied to corporate philanthropy. Corporations have more financial and intellectual resources than most non-profits that can provide unique perspectives and solutions to societal issues. Corporate Social Responsibility does not have to be separate from Corporate Strategy; context-focused giving is a framework for developing philanthropic initiatives with clear social and economic benefits.