The purpose of risk in corporate philanthropy

Management of reputation risk is increasingly a driving force within responsible business.  Deloitte’s 2014 global survey on risk reputation noted that 88% of executives are focusing on reputation risk as a key business challenge and that reputational issues can have the biggest impact on revenue and brand value.

Within the world of corporate philanthropy, considering risk is crucial.  Increasingly businesses are seeking to create a credible ‘halo’ effect by improving perceptions of their corporate brands through association with a philanthropic effort. Charitable giving is often seen as a credible way for companies to demonstrate a genuine connection with communities and build positive public association.

However, this type of credibility  only succeeds when the issues of transparency and trust are treated as paramount. Our 2016 research into giving by the FTSE 100 discovered that three quarters of the British public felt that businesses should be open and transparent about their charitable giving.

RISK - THE HALO EFFECT

Ultimately, in philanthropy, the advantage of focusing on risk is not what it will limit but what it can enable and strengthen. By prioritising risk, businesses can instil the same rigour and discipline in their corporate philanthropy as they would in their core business and, by doing so,  achieve  credibility.  For in creating a positive ‘halo’, the  intentions and behaviours of a company’s philanthropic activity will often  inform or confirm our perception of who they are and what they stand for.