Research team leader Professor Tony Ciro, Deputy Head of ACU’s School of Business in Melbourne Photo: Sara Coen
A research team is discovering that corporate donations aren’t always as altruistic as they appear. Margie Dimech spoke to Professor Tony Ciro about why Australia’s top companies give big.
Westpac has a life-saving helicopter, Telstra runs mentoring programs and Bank of Queensland sponsors Brisbane’s AFL team. What compels these multimillion dollar corporations to give away their money? And how much do they really give?
A team of academics, aptly named The Philanthropists, are trying to answer these questions. The two-year research project kicked off in January and has been supported with a research grant from ACU.
“There has obviously been a lot of research undertaken looking at philanthropic behaviour for private or government agencies in the not-for-profit sector, but there hasn’t been a lot of research undertaken looking at corporate philanthropy,” said Professor Tony Ciro, Deputy Head of ACU’s School of Business in Melbourne and research team leader.
The Philanthropists compiled a database of Australia’s highest earning companies, and looked at the frequency of philanthropic activity within the top 100 firms as listed in the Australian Securities Exchange. “Examining the company’s annual reports, websites and other literature we found out information about their corporate philanthropic activity,” Professor Ciro said.
The team soon found a problem with the way the companies were reporting their philanthropic activity. “Curiously we found that there was no standard definition of philanthropy and what an organisation would define as being philanthropy may in fact not be so,” he said.
“For example a major bank might sponsor a sporting event. They would say that is a donation, but really it’s a masked marketing venture as well, because they are receiving a lot of publicity for sponsoring the event.”
Professor Ciro said the same was occurring with Westpac’s sponsorship of the Life Saver Rescue Helicopter Service. While the company reports this as being philanthropic, the helicopter is branded with a large logo which also works as advertising.
“This showed us that there was a merge occurring between what the organisation was saying was philanthropic and what was marketing.”
However, the process wasn’t about corporations trying to deceive the community; in fact donations could potentially be an illegal activity for the company.
“Sponsorship and marketing aren’t mutually exclusive,” Professor Ciro said. “If companies are making large donations they have the right to publicise them. As a company there are a lot of restrictions as to what you can donate, as a donation of company profit is really a donation of shareholder funds.
“Shareholders may not be completely agreeable if an organisation is expending large amounts of their capital to philanthropic activities, because ultimately a shareholder will want the company to generate a return on their investment.
“Unfortunately the law, as it currently stands, does not allow a lot of philanthropic activity to take place, as corporate law states that a company has an obligation to generate returns for their shareholders. There is no legal obligation, even if there is a sound moral obligation, for a company to donate money or other resources back into the community.”
The Philanthropists found that in order for companies to try to support the communities they serve, they rely on taxation law, which allows deductions for corporations who donate.
“There may be a moral obligation for companies to donate money, but legally there is none. In fact companies that donate shareholders funds outside their mission may actually be in breach of corporate law.”
The research team – consisting of Faculty of Business staff Dr Elsie Chan, Dr Geoff Speight, Dr Bulend Terzioglu, Luigi Belmonte, research assistant Dr Tunyarputt Kiaterittinun, and team mentor Professor Lynne Bennington – now aims to find out how much these big companies are putting back into the community.
“It is fine for corporations to say we’re doing x or y – but we want to know how much they are investing,” Professor Ciro said. “Particularly, we want to quantify contribution in terms of their total turnover and revenue.
“There are some companies that have very little philanthropic activity and some companies have none at all, but overall we have noticed that over time the incidence of philanthropic activity has actually increased not decreased.
“Organisations are realising that if they are active in the community they generate more goodwill and improve their standing in the community, and ultimately enhance their brand value.
“Companies can go ahead and spend bucket loads of money on marketing, but if there is some substance to the marketing rather than just a glossy spin you tend to have a satisfied customer.”
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