BCIF :: Philanthropy Program :: Basic Terms and Concepts

Basic Terms and Concepts

Socially responsible management: basic terms and concepts

Bearing in mind that questions of philanthropy, socially responsible management and corporate philanthropy are relatively new in our society, and ever more often present in public focus, we thought that it is useful to confine basic terms and to add in that way to the more adequate defining of terminology. The article explains the terms of:

- Socially responsible management
- Sponsorship
- Philanthropy
- Corporate philanthropy

As well as the differences between different terms.

Socially responsible management

It describes broadly understood concept of company management which „ reflects the balance between economical and social goals“, with the goal to „establish higher standard of living, with maintaining company’s profitability, for people in and out of company“. Simply speaking, socially responsible management helps a company to be responsible towards the community, from which it gains profit, treating all social actors in the community and company in socially responsible and ethical manner. From the perspective of socially responsible management, interest groups of a company include numerous actors: from customers, over the employed and stockholders to communities and societies in which the company operates (which additionally entails the responsibility towards environment protection, education and other areas which are of vital importance for the development of the community).

Socially responsible companies are those which are responsible towards::

 - Market they operate in, their suppliers and others.


Sponsorship

is one of the methods which companies use in the scope of their communication and marketing strategies, that is public relation strategies, in order to connect their products and services with the positive image. Sponsorship usually means a service or an action in exchange for money or some other resource. Sponsorship brings direct marketing benefit, so it is in that way directly connected with gaining profit.

The difference between sponsorship and socially responsible management

While socially responsible management includes ethical questions, sponsorship is a pure business relation between a company and other subject, which entails the exchange for the sake of direct benefit for both sides. This, of course, does not mean that sponsorship cannot be of general welfare (there are many examples like the campaign against HIV or campaign against children abuse), but general welfare is not a prerequisite for sponsorship.

Most frequent examples of sponsorship are:

 - Sponsorship for TV and radio programs: Sponsoring media houses for a certain program

  - Sponsorship in sports: Big sport events are visited and, more importantly, watched by a great number of people. Those types of event attract big media interest.
 
  - Sponsorship in culture: Although cultural events are not as massively visited as sport events, they are usually considered to be favorable for the positive image of a company or brand

Additional examples include:

 - Sponsorship by media for the campaigns which are launched by organizations (like 2005 campaign against violence against women, which was supported by more than 100 media announcements)

 - Company sponsorship for different initiatives in society in exchange for the rendering of company’s logo

Philanthropy

In the broadest sense of the word philanthropy means giving money for different charity activities. It is most often perceived as the way to have a direct influence on positive changes without wasting time and resources in complicated bureaucratic mechanisms, such are for example the state ones. At the beginning was the term philanthropy used to describe benevolence towards the community (the original meaning is „benevolence“). However, the meaning of the word has been changing during the course of history, and it is today relatively widely accepted that „philanthropy is a term for the voluntary action towards the general welfare“.


Philanthropy and benefaction – is there a difference?

The term philanthropy is today most often used to describe giving by an organization (either profit or nonprofit one), while giving by individuals is called „individual philanthropy“. The other term which appears is „benefaction“, which is often used instead of the term philanthropy. In order to distinguish the difference between the two, benefaction is described primarily as humanitarian help, while the term philanthropy is used to describe giving which includes broader and developmental needs, such as support to culture, science, environment protection or civil society and the development of democracy. Philanthropy is, both organizational and individual, the biggest source of income for the nonprofit sector throughout the world.


The difference between philanthropy and sponsorship

The basic difference between sponsorship and philanthropy lies in the level of expected publicity. That does not mean that those who give philanthropically do not expect any publicity whatsoever, but it is not the principal motivating factor. Regular notion on the source of income is often enough to completely satisfy the donor.

Corporate philanthropy

Corporate philanthropy is giving support to nonprofit organizations by companies, in money, products or services. Corporate philanthropy makes the intersection between the field of philanthropy and socially responsible management. It could be shown graphically in the following manner

Corporate philanthropy is not a simple tool for the PR, which will automatically secure sales increase or have an influence on the profit in short term. Corporate philanthropy is more of a long term investment in the image of the company, which will connect their brand/brands with general welfare.