On Competition

CHAPTER 13

The Competitive Advantage of Corporate Philanthropy

Michael E. Porter

Mark R. Kramer

CORPORATE PHILANTHROPY IS in decline. Charitable contributions by U.S. companies fell 14.5% in real dollars last year, and over the last 15 years, corporate giving as a percentage of profits has dropped by 50%. The reasons are not hard to understand. Executives increasingly see themselves in a no-win situation, caught between critics demanding ever higher levels of “corporate social responsibility” and investors applying relentless pressure to maximize short-term profits. Giving more does not satisfy the critics—the more companies donate, the more is expected of them. And executives find it hard, if not impossible, to justify charitable expenditures ...