Azim Premji, a business tycoon and founder of Wipro, giving away more than half of his stake to charity has created a buzz in the business world. He is the first indian to sign ‘Giving Pledge’ sponsred by billionaires like Warren Buffet and Bill GatesThe act is not only generous and but a smart move to add more goodwill to the company.
In this era, philonthropic activities are appreciated by corporate houses while earlier the argument was ‘profit oriented’ organisations shouldn’t indulge in soccial activities as it kills the baasic purpose of earning profit. With change in viewpoint, many known business houses are now indulged in charitable work. Most of them own several foundations and NGOs.
Let us get the basic understanding of corporate philonthrophy. It is the act of indulging in charitable activities by offering some of the profits or resources. It is different from Corporate Social Responsibility (CSR).
CSR is a broader term and includes things beyond monetary offerings. It includes obedience to law, following international standards, binding to a codee of conduct and preaching ethical standards. CSR observes the betterment of society, environment and stakeholders.
For example, the video on ‘Silent National Anthem’ is a Relaince initiative on social cause for children with special abilities. Also they have their foundation which works for unpriveleged children. Necessary efforts from ITC to help farmers all across India not only ensure social development but economic development as well. These activities are for a social cause.Offering ESOPs to employees is a beneficiary steps for stakeholders. Lately, employees at Infosys had great profits when the market price of its share rose.
This is the new trend of earning profits while maintaing harmony with everyone around. There are various reasons for which corporate philonthrophy or CSRs are appreciated commonly-
- Helps in equal distribution of wealth. It is a well known fact that 80% of the wealth is accumulated with 20% of people; the major portion lacks basic financial assistance. This way, money or resources can be distributed to the needy.
- Corporate houses form the part of society. It serves the basic principle of give and take. Society is well paid for all the resources drawn from it.
- Businesses are often influential. Acts undertaken by big business houses influence the society (the way advertisement influence us), thus, a wise action taken by them spreads a good message for the society and in the society.
- It complements the work of the government. It is assumed that government should take care of the public affair; with support from such organisations, the growth is faster and easier.
- Working for the betterment of stakeholders ensures less employee turnover, their loyalty, easy attitude from government and other institutes, trust from shareholders and loyalty from customers. All this again pushes the goodwill and performance of the company, yielding in higher profits.