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The Philanthropic Contract : Building Social Capital Through Corporate Social Investment

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The Philanthropic Contract : Building Social Capital Through Corporate Social Investment Please do not remove this page The philanthropic contract : building social capital through corporate social investment Cooke, David https://researchportal.scu.edu.au/discovery/delivery/61SCU_INST:ResearchRepository/1267103790002368?l#1367367920002368 Cooke, D. (2008). The philanthropic contract: building social capital through corporate social investment [Southern Cross University]. https://researchportal.scu.edu.au/discovery/fulldisplay/alma991012821497002368/61SCU_INST:Research Repository Southern Cross University Research Portal: https://researchportal.scu.edu.au/discovery/search?vid=61SCU_INST:ResearchRepository [email protected] Open Downloaded On 2021/10/02 09:19:11 +1000 Please do not remove this page The Philanthropic Contract: Building Social Capital Through Corporate Social Investment ii The Philanthropic Contract: Building Social Capital Through Corporate Social Investment A Dissertation Presented by David Cooke Submitted to Southern Cross University, Australia, Graduate College of Management for the degree of Doctor of Business Administration Submission Date: June 2008 iii iv Dedication To my beautiful daughters Beth and Nina and wonderful grandson Lucky. Thank you for the inspiration which you provide me with each day. v Acknowledgements Firstly I would like to thank my Doctoral Supervisor, Professor Alexander Kouzmin. When first approaching him he announced that he only took on students who ‘had a twitch in their eye’ indicating a passion for their subject. I am pleased he saw the twitch and then persevered with me over the ensuing months. He continually sought to stretch my boundaries and direct me toward the work of esteemed authors, whose earlier writings would inform my work. He never hesitated to take my calls or promptly return emails and in fact on many occasions hosted me on the verandah of his home to listen to the latest musings of a novice student. I have been privileged to be guided by such an eminent author and academic. I would also like to acknowledge the direction provided to me by a different type of mentor, namely Swami Chandrasekharanand Saraswati, an Indian monk who I first met in the Himalayas in December 2003, who upon meeting me said ‘you should undertake a PhD and write about the positive things that companies do’. This conversation, along with subsequent ones, have allowed me to maintain a conviction that the months of reading, researching and writing were being wisely invested. I believe it is also important to acknowledge another academic influence on my life, namely that of Marcus Cohen. Marcus was my first lecturer at the UNSW AGSM when I commenced an Executive MBA in late 1996. Not having been to university previously, and hence not having attained an undergraduate degree, I was understandably concerned about my ability to work at a Masters level. Upon handing me the subject results for my first unit, which he had graded as a distinction, he said ‘now that you have got your first subject out of the way there is no reason why you can’t go on and complete a PhD’. Marcus was himself writing a doctoral thesis on Volunteering in Australia, however, regrettably passed away before he could complete his work. His attitude of constant encouragement and willingness to give freely of his time and energy to all his students has no doubt inspired many toward greater achievement in their lives. Finally I would like to acknowledge another source of inspiration who has also recently passed away. That is Dr Rodney Seaborn AO OBE who was born in 1912 and died on 17th May 2008. I first met “Dr Seaborn” as a young boy and had contact intermittently throughout teenage years and in my early twenties. Upon successful completion of a law degree he decided that his future lay in medicine and worked to pay his way through medical school in London, eventually obtaining a degree in psychiatry. Not content with giving via his knowledge, skill and service to patients, the community and medical and government boards he also embarked on giving away the financial and real estate assets that he had accumulated through the establishment of the Seaborn, Walford & Broughton Foundation. His constant desire to give and support the artistic endeavours of others made Rodney one of the most generous philanthropists in Sydney greatly assisting the work of NIDA, the Australian Elizabethan Theatre Trust, the Griffin Theatre Company to name just a few. “…his sunny personality and enthusiasm, his leadership by example and his boundless philanthropy were so outstanding we can truly ask ourselves: Will we ever see his like again?” – The Hon Justice Lloyd Waddy RFD. vi Abstract This study investigates the relationship between profit-making corporations and the not-for-profit sector within Australia. The broad field of corporate social responsibility, or CSR, is discussed, narrowing to the activity of corporate philanthropy and corporate social investment. The latter is defined as being philanthropy with strategic intent, in order to build capacity within the recipient organisation which in most cases will produce beneficial outcomes for the donor as well (Tracey, 2003). The title of this study has used the term ‘philanthropic contract’ (Broadbent, 2001; Kouzmin, 2007) to describe the relationship between commercial organisations and charitable ones and the unwritten societal expectation, that the corporate sector will support the work of members of the not-for-profit sector. This study also uses the term ‘social capital’ (Putnam, 1995) to describe one of the principle areas of benefit for companies who participate. The aspect of the relationship between the two sectors that formed the focus of this study is defined as being the interaction between the two that involves financial contributions and those of goods and services as well as expertise, information and influence flowing from profit-making companies to not-for-profit organisations. The direction of the research is to advance toward an understanding of why corporations engage in this practice and toward a conclusion as to whether corporate social investing is a mutually beneficial exchange. Finally, the study highlights examples of engagement processes, and advice from those participating. The inclusion of these in the study is designed to provide valuable learning for other corporations, and not-for-profit organisations, contemplating entering into their own philanthropic partnerships. Through ten qualitative interviews this inquiry investigated the attitudes toward this relationship of various stakeholders including the management of not-for-profit organisations, representatives of relevant associations and social commentators. It became apparent that the previously well-publicised opposition to publicly listed companies supporting the not-for-profit sector, proffered by organisations such as the Australian Shareholders’ Association, had largely evaporated. Case studies involving five profit-making corporations, operating within Australia, were then undertaken and the views of their senior management sought as regards their motivations, aims, and outcomes. Overwhelmingly their experiences were positive for the corporation, the organisations they were funding, and the members of the community that the recipients were in turn supporting. Corporate benefits reported included increased ability to attract quality staff, enhanced ability to retain staff, significant development for staff that actively participated, improved corporate culture and the building of social capital leading to enhanced reputation which supported the corporations licence to operate, future objectives and long term sustainability. It is hoped that these insights along with the advice offered up by those individuals and organisations that participated in the study will benefit others and promote greater participation in corporate philanthropy and social investment within Australia. vii Table of Contents Dedication iii Acknowledgements iv Abstract v Chapter 1: Introduction 1 1.1 Background 1 1.2 Purpose of this Study 4 1.3 Contribution of the Study 5 1.4 Scope of the Research 5 1.5 Research Methodology 7 1.6 Preliminary Concept Model 8 1.7 Conclusion 9 Chapter 2: Literature Review 11 2.1 Introduction 11 2.2 Parent Discipline 1: The Profit-Making Corporation 11 2.2.1 History of the Corporate Structure 11 2.2.2 Taxonomy—Comparative Perspectives of Organisations 12 2.2.3 What Drives the Corporation? 13 2.2.4 The Pathological Pursuit of Profit and Power 14 2.2.5 Managing Domains 17 2.2.6 Domain Consensus 18 2.2.7 Domain Strategies 18 2.2.8 Introducing the Principle of Corporate Social Responsibility 19 2.2.9 Corporate Responsibility within an Australian Context 21 2.2.10 Managing Public Expectations 22 2.2.11 Stakeholder Responsibilities 24 2.2.12 Companies Exist to Make Profits 25 2.3 Parent Discipline 2: The Not-for-Profit Organisation 26 2.3.1 Background 26 2.3.2 Charitable Giving: An Historical Overview 26 2.3.3 Defining Philanthropy 29 2.3.4 Philanthropic Traditions 31 2.3.5 Personal Philanthropy Versus Corporate Philanthropy 32 viii 2.3.6 Religious-Based Philanthropy 34 2.3.7 Financial Dependencies of the Not-for-Profit Sector and Related Concerns 34 2.3.8 Current Levels of Giving in Australia 36 2.3.9 Public Cynicism 37 2.3.10 Green Philanthropy 40 2.3.11 Is There a Case for Not Taking the Corporate Dollar 41 2.4 Intermediate Discipline: The Relationship Between For-Profit and Not-for-Profit 42 2.4.1 The Corporate Paradox 42 2.4.2 Corporate Morality 44 2.4.3 Defining the Company’s Values
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