Philanthropy is not synonymous with Social Responsibility

The concept of corporate social responsibility is closely linked with the theory of stakeholders, an English neologism translatable as publics involved in the activity of a company. The term was coined by Edward Freeman, who in 1984 published Strategic Management: A stakeholder Approach.

While in the traditional approach, the company owes itself uniquely and unequivocally to its shareholders (shareholders) being its sole responsibility towards them, a reflection of this belief, an authentic dogma in the last years of economic growth, the realization of the business objective in the creation of value for shareholders, contemporary approaches take into account all those interest groups that constitute the relational sphere of organizations. These are the so-called stakeholders.

In the multistakeholder approach, a contribution from Justo Villafañe, a prestigious professor at the Complutense University, an expert in corporate reputation, an organization must be accountable not only to its shareholders but also to all publics that affect and are affected by the company’s activity, including customers, workers, administration and regulators, local communities, society in general, suppliers, the media, etc. All these groups have an interest in the company operating under not only economic but social criteria, understood as complementary and not exclusive; workers to keep or improve their employment, the Administration to collect taxes, customers to obtain better products or services, etc. And all of them also have their expectations and needs.

At first, companies that exclusively donate to social causes were considered socially responsible, but little by little corporate social responsibility has become an integral concept.

Philanthropy puts the emphasis on one idea: return to society a part of the profits obtained. Objectively it is a well-intentioned practice but free of any kind of commitment. The balance, from a reputational point of view, is very simple: philanthropy turns out to be a positive practice but does not imply any degree of responsibility because, in most cases, they are actions separate from the business strategy in relation to its strategic stakeholders and about which there is usually no rigorous ‘accounting’. Philanthropy must be guided by criteria of transparency and good governance in order to assess its validity and timeliness and avoid discretion.

The philanthropic activity of giving by companies to non-profit organizations or causes, including through the creation of their own foundations, has often been seen as the flag of responsibility. However, this is not the basis of your responsibility and donations will always be of a discretionary nature. However, this philanthropic activity often seeks to divert the public’s attention from a behavior that is often not very responsible in the area of ​​the company’s “core business”. Donations or foundations, in many cases, limit their impact to a minority but without transcending global society, no matter how interesting their initiatives are. Minorities capture the benefits of business contributions and society or clients, even shareholders are oblivious to these practices, if not contrary, by estimating that the money allocated for these purposes is subtracted from dividends, salaries or of other social purposes. Donations are, at times, missed opportunities to integrate the public into the company’s goals, aligning them with the company’s vision.

The responsibility of companies is evidenced in corporate behavior and therefore is directly related to the business strategy and how it is managed, encompassing all audiences or stakeholders, whose demands the company must know how to listen and try to satisfy through their operations.

Philanthropy is highly commendable socially, but it does not generate reputation, although it is frequently confused with corporate responsibility, which is one of the reputational components. Authentic corporate responsibility, which generates reputational value, assumes the multistakeholder -not only the societal stakeholder- and dialogic perspective and is based on strategic commitments. Long-term, explicit, voluntary, and verifiable. Social responsibility must be part of a company’s code of values ​​and must be experienced by all audiences, especially internal ones. What is the use of the company singing songs about its responsibility in its public discourse, if this is not lived by the thousands of company employees who, through thousands of daily actions, interact with critical audiences such as customers, small shareholders and public opinion ?.

That is the vision that companies have to assume, from the understanding of the mutual benefits of a relationship based on trust, which is linked with its stakeholders voluntarily and out of conviction. Responsibility is not a brilliant statement, it is a conduct, a commitment to values, the recognition by the management that the company is a project shared by its audiences and that its social legitimacy, today so much questioned, rests on emotional ties and in solidarity with society and its agents.