Gongs for corporate philanthropy. A good thing?

Business in The Community, a UK based charitable organisation dedicated to “mobilising business for good” recently awarded nine companies a “Community Mark” as a sign that they are “best investors in their communities”. The criteria for these awards include philanthropic activities such as corporate giving and the supply of pro-bono work.

Listed companies (there are several in the list) are required to maximise shareholder value. Does corporate philanthropy maximise shareholder value? We wondered, therefore, whether the criteria should additionally include measures concerning the effectiveness of this sort of activity and an assessment of how, for instance, they have enhanced the company’s reputation and brand. This would probably give this sort of award more credibility and encourage companies to think more creatively about why they are doing this sort of activity in the first place.