88. Corporate Social Responsibility or Philanthropy?


Corporate social responsibility (CSR) and philanthropy are often misconstrued as the idea behind both the concept seems identical. But, there is a huge difference that one must understand.

So, what is CSR? And how is it different from Philanthropy?
CSR is the responsibility of a corporation towards the society. While it may sound synonymous to Philanthropy, it is not done with the same intention. As per Section 135 of the Indian Companies Act, it is mandatory for all companies meeting a financial threshold to spend 2% of their net profit for CSR. The regulation is to get corporate resources for the community’s benefit and betterment.


While the practice is compulsory, some companies through unique ideas and communication manage to leverage CSR for their business benefit.

Philanthropy on the other hand, is when an individual or an organisation desire to promote the welfare of others and takes action by donating resources for the same. This is done with the sole purpose of others benefit and is a choice that the benefactor makes. It may lead to goodwill and better reputation but should not be promoted.

Distinct from Philanthropy, CSR always has a purpose that aligns with the business objective. Every organisation has a set of stakeholders that they cater to, communication with. It may be the customers, employees, shareholders, government, or unions. The stakeholders are identified based on the business objective and operations. Every CSR activity that a company engages in should tab at least one of these stakeholders.

The stakeholders need not necessarily be the beneficiary but the plan should resonate with them and their expectation from the organisation. This will further strengthen the relations and will help achieve the business objective. CSR is one of the best ways to communicate what the company stands for and how it is of help to the community.

While philanthropy may lead to goodwill and a better reputation, CSR aims at it. It is a tool of corporate communication. Now, customers are becoming conscious of what they consume, CSR can be a way to ensure that they believe in the company’s offering without directly promoting the product/service. It also helps in gaining and sustaining the existing or potential investors trust.

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