Business and society relationships and impacts

Stockholders understandably might resist a program of strategic philanthropy, seeing it as a dilution of stock value and a diversion of funds from a form that the company can use to one where the company is simply giving these funds to others. There are a number of good reasons for a program of strategic philanthropy, or a program to assure that the philanthropic donation of the company is handled properly and reaches the target set by the company or the foundation created by the company.

One argument is simply that such an action redounds to the credit of the company, serving as a public relations action that polishes the image of the company now and into the future.

This element can be seen in the foundations created by companies facing a public relations crisis, and a foundation before a crisis erupts can give the company more credence for the public in case a problem does occur.

Another rationale can be found in the tax savings that may accrue from such a donation of funds or stocks, and depending on how the foundation is formed and funded, such a benefit may continue over a period of several years. Such tax breaks can enhance the value of the stock.

These and other reasons can be given and can show stockholders that a strategic philanthropy can benefit the company, increase the value of the stock, enhance the image of the company, and benefit the community in a way that serves the interests of the company, improves business, and itself becomes a competitive advantage over others in the same field.

Corporate responsibility should identify corporations which control the use of socially important assets and show that they have the responsibility to use those assets in a way which makes social sense. This is quite different from the need merely to maximize profits, which has been the usual view of what corporations should do. In this newer conception, decisions are to be made in a way that fulfills the social responsibility of the corporation, utilizing the assets it controls for the benefit of society at large and not merely for itself. What we do as corporate managers has more social significance than what we do in our private lives. Profits can still be maximized, but this must occur within a socially responsible framework.

Business ethics must be considered in terms of the social responsibility of business and not simply by seeing business as different from other sorts of social transactions. Too often, of course, the latter is precisely the way business is viewed, as if the rules for business were inherently different. What is being suggested here is what is called the commonweal approach to business decision-making, which elevates the idea of social responsibility. The corporation serves as a major resource for our society, emphasizing the benefits that accrue to society rather than on the rights and needs of the corporation or its owners.

This view of the corporation is in keeping with my own view of personal responsibility, extending this idea to the faceless corporation. Such a view allows individuals within the corporation to see a clear match between what they do as individuals and what they do as part of a corporation, and this is all to the good.

Stockholders are only one of the stakeholders in a company. The major stakeholders include stockholders, executives, workers, and customers. So long as the company makes a profit and continues to grow, management is serving the needs of the stockholders by giving them a profit. Executives and workers alike are served by this as well because their compensation is tied to the success of the company in some degree. However, a company that demands too much and sees value only in the job is failing its workers and creating a situation that can be damaging in the long run, contributing to job dissatisfaction, tension, stress, and high turnover rates. Stockholders influence a company in several ways, including serving as a sort of conscience by their very existence.