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RESEARCH BRIEF: Organization of a firm can influence the amount of philanthropic contributions
Takeaway: Corporate philanthropy can benefit firms, potentially driving their reputation, consumer support, and even employee loyalty. The organizational structure at the top levels of firms can impact corporate philanthropic contributions. Certain characteristics of large U.S. firms reduce the impact of some contributions.
Suggested audience: Top management, boards of directors, top management of foundations, professionals/managers in corporate philanthropy
Corporate philanthropy has the potential to impact important business outcomes such as reputation, consumer loyalty, and employee engagement. In this study, researchers sought to better understand how the organizational structure at the higher levels of U.S. firms impacts how and how much a company gives.
The researchers studied data from Fortune 500 companies for the even-numbered years between 1996 and 2006. They looked at each company’s corporate philanthropy total dollar amount and analyzed differences when factoring in the following variables:
- Foundation assets
- CEO tenure
- Percentage of women who are senior managers
- Total number of directors
- Percentage of female directors
- Degree of board centrality (the number of other boards that directors of public companies sit on)
Approximately 70 percent of the companies in the sample had a corporate foundation. The researchers controlled for several variables that could affect philanthropic contributions, including financial performance, industry types, percentage of women employed in a particular industry, and the company size.
- Corporations with higher contributions in philanthropy were more likely to have:
- CEOs with shorter tenures
- larger boards
- boards of directors that were more centrally positioned in the director network
- more women serving on the board
- a greater proportion of women acting as senior managers
- Higher corporate foundation assets—indicating a more developed foundation structure—reduced the impact that board size and centrality, as well as the presence of female directors, had on corporate philanthropy contributions.
- Higher foundation assets did not alter the positive impacts that greater numbers of female senior managers or shorter CEO tenures had on contributions.
Thus, the presence of corporate foundations appears to limit the influence that directors have on philanthropy, but not the influence of senior managers.
If citing, please refer to the original article: “Who is governing whom? Senior managers, governance, and the structure of generosity in large U.S. firms”, Strategic Management Journal (forthcoming), Christopher Marquis, Harvard Business School, and Matthew Lee, Harvard Business School