Majority of the times when Corporate Social Responsibility is mentioned, it is mainly in reference to the philanthropic initiatives of a company. CSR and Philanthropy has been always misconstrued as synonymous. However, there is a significant difference between the two.
Philanthropy is defined as promoting and attempting to bring about social change by majorly making generous financial contributions. A philanthropist is someone who decides to invest in a social sector a portion of their wealth, time or knowledge for a cause that they believe in.
For a cause, the involvement of Philanthropists can vary. However, majority of times, the philanthropists are happy to support a cause from distance. They would likely follow up and would seek to know the impact created by their contribution. However, they would not want to get involved beyond that.
CSR on the contrary goes beyond that. CSR is about making the core business functions of a company more sustainable. A CSR program does not only benefit the community, but also the business in form of improved morale, increased staff retention, status as an employer of choice, attracting new business, and differentiation from competitors. This is because a CSR program requires involvement from all the stakeholders including employees as well as the community.
Philanthropic work done by a company does not require to change its business practice. However, a CSR program might need to change certain important business practices in order to make it into a responsible business.
Publicising the philanthropic work done by a company has a chance of backfiring. Especially since the execution of CSR legislation, the philanthropic work done by a company can be viewed as buying their way out from fulfilling a social responsibility. On the other hand, publicising CSR efforts can make a business look socially responsible. It can build a goodwill among its stakeholders which can build loyal customers and positive brand recognition.
Neither of the two are wrong and one is not better than the other, but if a business engages in a more engaged form of giving with clear objectives in terms of KPIs and ROI from the program, all of those involved benefits.
