Corporate philanthropy in the era of climate shocks
With companies’ environmental, social and governance initiatives largely focused on mitigation and adaptation, the lines are blurring between corporate sustainability and philanthropy.
Welcome to the climate crisis, where once-extreme weather events have gone mainstream. Australia’s raging bushfires are a stark reminder of our "new normal," with images befitting an apocalyptic Roland Emmerich flick. In Australia, the fires burned more than 27 million acres — an area about the size of Maine — and killed at least 30 people and more than 1 billion animals.
Wildfires are increasing, wildfire season is getting longer and climate change is playing a significant role, says the Union of Concerned Scientists. Meanwhile, we’re seeing hurricanes, typhoons, droughts and other natural disasters occurring with increasing frequency and intensity.
With companies’ environmental, social and governance (ESG) initiatives largely focused on mitigation and adaptation, the lines are blurring between corporate sustainability and philanthropy. Helping communities cope with climate-connected disasters has become an increasingly strategic pillar of corporate citizenship.
Authenticity in corporate giving
Donating directly to relief organizations is one of the most popular ways for companies to support communities in the wake of extreme weather events. Yet doing so isn’t always so simple.
Corporate giving is, of course, motivated by a mix of altruism and self-interest. Most companies focus on supporting nonprofits in locations where they operate to improve these communities. Additionally, this is a way for companies to support organizations or causes that employees support with their own time and money.
Many companies elect to support relief organizations such as the American Red Cross, given its reputation and global reach. Of the nearly $1.5 million in total contributions the American Red Cross received in FY18, some 83 percent was from corporations, foundations and individual giving.
Donations made in support of a specific disaster will be used for that extreme weather event, the American Red Cross said in an email.
"This includes providing food, shelter, relief supplies, emotional support, recovery planning and other assistance, as well as supporting the vehicles, warehouses and people that make this help possible," the organization wrote. "Any designated funds that we raise beyond what is needed for emergency relief will go toward providing longer-term support in affected communities."
Salesforce, for example, supported the Australian Red Cross during the recent bushfires. "We are committed to supporting the communities where we live and work in times of crisis and have been watching the impact of the Australian bushfires with deep concern and sadness," said Ebony Beckwith, chief philanthropy officer at Salesforce. "To assist those displaced and impacted, we made a $250,000 USD donation to the Australian Red Cross Disaster Relief and Recovery Fund. Marc and Lynne Benioff matched this and Salesforce will match donations from employees."
This effort by Salesforce largely flew under the radar, given the company’s strong corporate sustainability reputation and the Benioffs’ long track record of civic-mindedness. However, others were not so lucky. Amazon received public backlash after Jeff Bezos announced the company would donate 1 million Australian dollars ($690,000 USD) to Australian wildfire relief. Some claimed this to be a miserly offering, given Amazon’s $1 billion market cap and Bezos' immense personal wealth, while others criticized the company’s climate record. Interestingly, Bezos this week announced a $10 billion "climate fund" to help scientists, activists, NGOs and "any effort that offers a real possibility" to help address the climate crisis.
While donating to disaster relief is always commendable, it can seem inauthentic if it doesn’t fit into the company’s broader brand narrative and track record for ESG. To come across as authentic, corporate giving needs to be part of a comprehensive and clearly communicated sustainability strategy.
Engaging employees with matching programs
Companies are made up of people who may wish to help communities affected by climate shocks. While many might donate independently to the causes they care about, knowing that they have the support of their employer creates a multitude of positive effects.
Creating employee matching programs to raise money for global disaster relief can galvanize employees into giving while creating opportunities to raise even more support for those in need. However, there can be challenges with creating these programs to support foreign charities due to tax codes.
Businesses or their foundations must complete an equivalency determination, a process by which a U.S. grantmaker evaluates whether an intended foreign grantee is the equivalent of a 501(c)3 public charity, according to NGO Source. The grantmaker must collect a set of detailed information about the grantee's operations and finances and make a reasonable determination of its equivalency.
If companies lack the ability to do a 501(c)3 equivalency determination, they are limited to making grants to existing 501(c)3 organizations in order to also support their employee donations through employee engagement platforms such as Benevity or Your Cause, according to Kara DeVita, senior director of Social Impact at Fossil Group.
"Or [companies] can make a contribution instead of a charitable grant, and encourage employees to donate on their own. It can actually be quite tricky for each company and each disaster has different rules and considerations," DeVita added.
Some companies in the United States have found it difficult to create employee matching programs to support local Australian nonprofits that lack equivalency. This means that it’s easier for corporates to create matching schemes that support global nonprofits such as Red Cross and WWF rather than local nonprofits. With many employees wishing to support local nonprofits, this can be frustrating.
Yet employee matching programs remain a great option for amplifying impact. Companies can work with local team members to identify nonprofits on the ground responding as well as consider other ways to support recovery and relief efforts that employees can support.
Making customers part of the cause
Customers can be a major source of philanthropic power, and companies are leveraging their platforms to encourage donations. Customers want a shared purpose with corporations, not to be bystanders, says Harvard Business Review.
United Airlines found a simple but clever way to involve its customers in Australian wildfire relief. The airline announced it would match (PDF) up to $50,000 in donations from members of its MileagePlus loyalty program. Members who donate $50 or more will receive 1,000 award miles for their contributions. Likewise, Facebook pledged to match up to 1 million Australian dollars (nearly $687,000) in donations made to GlobalGiving via its platform, while also directly donating 250,000 Australian dollars (roughly $171,700) to the Australian Red Cross.
Engaging customers in an authentic way in support of disaster relief is a great way to help communities while building goodwill for a brand.
Some companies in the United States have found it difficult to create employee matching programs to support local Australian nonprofits that lack equivalency.
Offering products or services during disasters
Sometimes companies are in a good position to go beyond the financial to support disaster relief. Airbnb, for example, offered free housing to victims displaced by fires in Australia.
During the 2018 California wildfires, companies such as Google and Facebook customized their tools to keep up with information demands in the affected areas. Google continually updated its Crisis Maps to pinpoint fire boundaries and its navigation app Waze to show issues such as road closures. Likewise, Facebook created crisis response pages and activated "safe" status buttons for people in the area. Salesforce raised hundreds of thousands of dollars and turned the lobbies of its San Francisco offices into drop-off sites for much-needed supplies for first responders.
In the aftermath of Hurricane Maria, a category 5 hurricane which devastated Dominica, St Croix and Puerto Rico in September 2017, AT&T and T-mobile waived cell phone charges in impacted areas, Western Union offered free money transfers to Puerto Rico from the mainland U.S. and JetBlue flew in emergency assistance on its airplanes.
Business as a platform for change
In the coming years and decades, we’ll continue to witness climate disasters in their many forms. Corporate sustainability professionals have an important role to play in steering their organizations and strategic resources in the right direction to create the maximum positive impact.
"Business is the greatest platform for change, and all businesses have the opportunity to make a positive impact on their communities, especially in times of need like after extreme weather events that often cause a devastating loss in life, ecosystems, biodiversity and infrastructure," said Salesforce’s Beckwith.