Toughening up corporate philanthropy

From remarks by the chairman and chief executive officer of Borg-Warner Corporation to the Chicago Community Trust, a philanthropic steering organization.m

Corporations today feel an absolute obligation both to help the economically underprivileged and to aid a wide range of activities that we hope will advance our society. Although the amounts of money and time contributed by business in the last decade have risen sharply, business can probably afford more than it has been giving.

Willie Sutton used to say he robbed banks "because that's where the money is." With the probable cutbacks in the government funding, organizations of all kinds are deluging business with requests because they think that's where the money is.

But even if everybody contributed a fair share, there is no way that business can replace even a tiny fraction of the social support that may be cut back by government.

The public sector, the so-called profit sector, and the nonprofit sector all have the same real goal -to see that the resources of the community are used effectively for the benefit of the entire community. But it may be time for business to better define its own philanthropic goals.

Giving a little bit to each of a great many "worthy" petitioners, is probably not the answer. Perhaps we need to concentrate our resources to assure measurable results.

The problem is not really availabilitym of money. Even with the proposed cutbacks, government on all levels all still be pouring billions and billions into social activities. Contributions from business and individuals alike are still rising. Last year about $45 billion was claimed on tax returns as "contributions." The problem is to determine what is being done with the money.

Businessmen understand that philanthopy is not expected to show a profit.

However, we also know that even philanthropy is supposed to have results. We know that inefficiency and unclear purpose can develop in both profit and nonprofit sectors. But in business we are held to account; if less money is available, we must cut costs and do things better.

In the future, business will be asking for similar accountability from philanthropy.

In the new flood of requests, we hear a great deal about how the federal cutbacks will hurt organizations. We have heard remarkably little about what organizations plan to do to compensate so that they can achieve as much as ever with less money.

Businessmen assume that the donated money will be used for direct assistance to the needy, not for the preservation of the transmission channel. More and more of us feel that if our donations are to mean anything, they must be subject to efficiency tests similar to those we demand of our own operations.

Most grant-seeking organizations can offer audited statements. But an audit simply certifies that money was spent the way somebody said it was spent. It does not, and cannot, certify that the way it was spent did any good.

Over the past four years, there has been considerable improvement in reporting of results by grantees. There remains a very long way to go.

If organized philanthropy does not indicate a willingness to achieve results even with reduced funds, if it cannot assure greater concem for those they serve than for the organization, then business will become far more selective.

Business does not seek that role. It is far easier to spread lots of small grants around to many organizations and ask no questions.

Decisions as to how, or even whether, to concentrate resources would be admittedly difficult. Some risk is necessary in philanthropy as well as business. The new approach to a special ned may be a much better bet than the established old-line cause. We know that no matter which direction one goes, some mistakes will be made, some funds will be wasted.

But frankly, the more we are asked for, the harder we must look at the requests. Grantseekers must go beyond simply asking in the name of a good cause.

Business wants to be socially responsible; our own long-range survival depends on how strong our society can remain. The challenge of need remains; we are willing to help with more funds to the extent that we can afford them.

Every US company knows that, given the intense new world-wide competition, it must become more productive, or it will lose out.

In the philanthropic arena, the competition is also going to become more intense. Philanthropic or business organization, we must face the same rule: become individually more productive or be prepared to fade away.

We all need what only private philanthropy can offer. We need its compassion. We need its understanding of human frailty; its availability in times of stress, of danger, and of deprivation. We need its concem for the poor, the weak, the uncertain, the frightened.

But above all, we need philanthropy to be useful, not simply to be there.

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