CEOs roundtable discussion: Does giving pay?

How so?

HASSENFELD: First of all, I firmly believe that if you want to be part of the 21st century, you must be socially responsible or you won't exist. Because being corporately responsible, and giving, does a lot of incredible things for your company, but most importantly, it's also the right thing to do. All over the world, even in China, all the people are talking about corporate social responsibility. It's not so much philanthropy, but the overall package of CSR. And the reason for it has been the corruption, the greed, and corporations saying they care when, in fact, they can do a lot more to make a difference—like a company that can be very philanthropic but which can also be a terrible environmental polluter. Okay, are those kinds of companies good companies, or not?

FORRESTER: My company is Payne, Forrester, and were privately held and we have an advantage in that regard. We don't have to get up in front of shareholders and other people and explain ourselves. I've been in the philanthropic business for 37 years, and I actually started as a director of corporate relations in Hartford, Conn. The company had, at that time, close to 30 corporate headquarters, and they were enormously philanthropic because the chief executive took the leadership. But back in those days, the notion of one's community was different. Back then, you could actually see your community, you could walk down the streets of your community, and if you weren't participating in the community, then you were supporting somebody who did, someone you probably knew personally. Today, though, when you have 130,000, 200,000 employees spread around the world, it's much more difficult to know the impact of your philanthropic programs. Who are your shareholders? How do you really understand the impact of what you're doing? What I've seen more recently are companies applying philanthropic principles in much broader ways. They're doing it because of their employees, or because of their market positioning, or maybe to solve a problem specific to company interests. The companies that give, in other words, are being more strategic about it.

ROTH: My company, Interpublic, is in the business of branding and communications, and certainly we have clients who are looking to establish and enhance their brand. Clearly, the reputational aspects of a brand are critical in the market place. But philanthropic initiatives have to start from the top. If they don't come from the top, they're not going to permeate throughout the organization.

How tough of a sell is corporate philanthropy outside this circle? You all, by virtue of being on the CECP Board, are already enrolled in the view that business needs to do more. Why aren't more of your peers coming to the table on this?

Dan Demetriad / Contribute magazine Jean-Paul Garnier

GARNIER: Sometimes I talk to CEOs who say they want to do philanthropy, but they don't know what to do. The difficulty sometimes is to find a program that is really exciting; at the end of the day, philanthropy is no longer sporting a few dollars at the local theaters or the local library or the Boy Scouts. It's not that at all. It has changed enormously. I think people like Bill Gates and others have reinvented philanthropy. It's become positioned for some, perhaps, as being this kind of totally can-do adventure where you can solve a major problem. We're in health care, so we can create the possibility of making disease disappear from the face of the Earth. I mean, it doesn't get much better than that, right? So companies stuck around the vision of philanthropy have to see it as something exciting, visible, and key to creating new communities for business along the way. When I go to Egypt and I meet the Minister of Health or the Prime Minister, for example, he knows that we're doing in the south of his country a program to eliminate a serious disease free of charge. Well, that helps in the discussions we have on other topics.

There are companies which aren't involved much at all. Why not?

GARNIER: There's no question that if every company could find a big (philanthropic) idea that they could own, I think they would be even more committed to do philanthropy and publicize it and get some kind of a feedback from the public. I also believe strongly that corporate philanthropy is much more important today than it was in the past. It used to be that the public inherently trusted business. They trusted their government. And then Watergate happened and a few other things, and Enron and a few other things. And then the trust of the public in large institutions—I don't care if they are business institutions, international organizations, or governments—that trust has gone down, and in a way philanthropy gets us on the right side of the ledger.

Philanthropy does help restore some of that trust. It's not going to help you if you misbehave in other ways, but it does bring you back to the public attention in a favorable light. It does create an opportunity for the public to say, Okay, well, I don't trust these people here doing business, but they are doing something good. So it's a matter of doing more.

The number of nonprofits has nearly doubled since 9/11. Can corporations help charities better manage donor dollars so they have more impact?

Dan Demetriad / Contribute magazine Peter L. Malkin

MALKIN: There is expertise that comes from the corporate environment that is necessary in order for the mission of the nonprofit to be successful. With some of the nonprofit boards that I'm sitting on, they look at you and they say, Let's not forget the mission. Okay, got it. But if the mission is not economically viable, it doesn't go anywhere. Bringing a corporate discipline to a nonprofit, I think, is important for sustainability.

FORRESTER: One of the things we have to be careful about is how vulnerable nonprofits are today [to funding pressures]. A nonprofit will change right before your eyes if you're not careful, to be what you want it to be rather than what it should be.

ROTH: Many of them don't have funds to invest in strategy or technology, people, and so forth. The result is that a lot of people, wonderful people, end up chasing money to put into a mission that is not very effective. That's why some nonprofits are going out of business. Some companies are now becoming more involved in capacity-building. Bank of America, for one, is a good example. For every dollar it invests in a nonprofit, there is also some money invested into capacity-building. Nonprofits won't be as effective if they don't have capacity.

FORRESTER: One of the worries I have is that some people are really doing stuff for a business return and calling it philanthropy and it's getting in the way of real philanthropy. The nonprofit community really needs business know-how. And the business community has to understand why nonprofits can't operate exactly like a business after a certain point. There's a point where you don't want to have all your theaters in America making a profit. If that happened, you'd no longer have new plays and experimental theater and research and other things. So there has to be a tolerance for something less efficient, but at the same time that's not an excuse for nonprofits being as inefficient as they are. And, by the way, nonprofits tend to die a very slow death. They don't tend to merge as often; they don't sell themselves, and they leave when the last penny's spent.

Should there be more public-private partnerships? Is it time to change the tax code to encourage more corporate giving? What about the idea of venture philanthropy, or the idea of creating global business coalitions to help tackle social problems in new markets overseas?

FORRESTER: The last thing that I'd want anybody to try to reinvent is the tax code. Please, stay away from that. Efforts to change the tax code, particularly when those efforts get near philanthropy, tend to make matters worse. I've been around this subject of philanthropy for so long, that I think I've become even boring to myself (laughter) but I believe issues like venture philanthropy have been around for a long time. Our great university hospital was built by business people, people who were venture philanthropists who were not only putting their money out but were putting their wisdom out, too. And, by the way, wisdom takes a long time to accumulate. It's not just that you get very wealthy. You also get wise.

Having said that, though, I'm all for new models, and I think we have to keep trying. The system is not broken. But the system needs people helping it, using their wisdom, using their resources. One of the wonderful things about corporations now that I see and I agree with Jean-Paul Garnier here is how they can look at a larger issue and bring both money and capacity to bear on a problem—their human resources, their expertise, their reach, and so forth. I'm not sure I even understand this new model of mixing philanthropy with the core business as part of a company's for-profit activity. I do know that in my experience, when philanthropy and business get too close, it doesn't work. When you're going out to raise venture money, the investor wants 25 percent. That's not philanthropy. There are, of course, program-related investments to which you can apply the sample principles of venture capital. But with philanthropy, you're investing at a different rate of return. The return may never actually be there.

MALKIN: I have a taxation background, so let me just comment on the tax code: I don't see anything wrong with it as is. Our Internal Revenue Code, as it's currently structured, helps nonprofit organizations, and in certain areas, it's necessary. Tax credits that are available for low-income housing, for example, are a very important aspect of creating housing for the poor. That's an example of how we can use the tax code to help a whole bunch of people as well as provide a return to those investors who utilize it. It's a lower return, but it's still a return.

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