Corporate social responsibility, also referred to as CSR, can be described as a process with the aim to embrace responsibility for a company's actions and to encourage a positive impact through a company's activities toward the environment, societies, consumers, employees, communities, and other stakeholders. That said, there are various types of CSR, one of which is philanthropic giving.
Corporate philanthropy has roots going back to the rise of industry in the United States, including a number of philanthropic foundations established by pioneering industrial businessmen such as Henry Ford and John D. Rockefeller. The act of philanthropy as a component of corporate social responsibility represents an internalization of the gifting of funds, goods, or services from the corporation itself, sometimes serving as a type of advertising for the firm. For example, the local branch of a bank might donate money to fund uniforms for a school sports team or a health care company might donate to the city opera (Figure 1).
Some critique the philanthropic type of corporate social responsibility for, in many cases, not incorporating the CSR strategy directly into the core business of the organization. Philanthropic aspects of CSR are not always tracked from a social accounting perspective, making it difficult for these efforts to be audited or held accountable to external benchmarks.
Recently a new practice of high impact philanthropy has developed, involving the practice of making charitable contributions with the intention of maximizing social good in measurable ways. Philanthropy following this goal of maximizing social return often uses metrics to determine social impact, asking how specific kinds of success will be measured and how much actual changes or results will cost.