Role of Corporate Social Responsibility (CSR) and its Funding

Non-Governmental Organizations (NGOs) and other social organizations depend on funding to support their cause and mission. Most NGOs rely heavily on funding from individuals, corporations, and governments to provide critical services and programs that address social issues in communities around the world. Corporate Social Responsibility (CSR) refers to corporations who take initiatives and actions beyond those required by law to meet the expectations of stakeholders, including their employees, communities in which they operate, and the general public. CSR activities are designed to have an impact on society such as improving working conditions, community health and safety, or conservation efforts.

What is Corporate Social Responsibility (CSR)?

Corporate social responsibility, also known as CSR, covers a company’s involvement with (and impact on) society. For example, it includes how they generate revenue and develop policies; how they manage environmental impacts and build positive relationships with stakeholders; how they create opportunities for employees and introduce technologies that support human rights. Essentially, anything a company does that affects people and their environment can be considered part of a corporation’s social responsibility program.

Non-Governmental Organizations (NGOs):

NGOs are voluntary associations that may be either private or public, international, national or local. They differ from other types of nonprofits because they generally do not engage in a profit-making enterprise. 
The term nonprofit does not mean that the organization cannot charge a fee for its goods and services. Rather, it means that profits would go to a second organization – one such as an educational institution – rather than to shareholders.

When did NGOs start to see CSR as a threat?

Some NGOs began to see CSR as a threat when company executives were looking to increase their level of engagement with and support for their beneficiaries. In 2003, Coca-Cola announced that it would be sponsoring 25 new schools per year over five years (Dublin 2020). Some NGOs saw this as a dangerous move because they feared that this would lead to reduced funding for primary education in developing countries. They believed that these funds should instead go towards helping children grow up healthy and educated. However, many other NGOs welcomed the additional funding from corporate partners because they were able to make more investments in programs thanks to additional contributions from corporates.

The Problem with Corporate Social Responsibility (CSR):

Some believe that providing money to NGOs through a centralized solution such as corporate social responsibility can help address systemic problems. For example, many have argued that this was one way for governments to address climate change. First of all, not all corporations can afford to provide funds to NGOs and therefore only those who do not need donations will do so which means others may be left out.

Role of Corporate Social Responsibility (CSR) in NGO Funding:

The advent of social media has played a pivotal role in this phenomenon, mainly because these organizations have been encouraged to tweet and post on Facebook. However, it has also led to some corporations pushing for self-promotion without any interest in doing anything charitable. This reflects a potential contradiction between personal corporate agendas and values. NGOs must be wary about accepting CSR funds from companies that might use their donations as an advertisement rather than donating from the heart. Corporations need to recognize that there is a fine line between engaging in good publicity and blatantly exploiting an organization for profit, which often falls flat when it comes time to dole out funds.

Role of Corporate Social Responsibility

How NGOs started Accepting Funds from Corporations:

It started back when many NGOs were having a hard time getting money for their causes. As a result, they turned to private and corporate donors for assistance. This trend has been on the rise over the past ten years as companies become more socially responsible, too. Some corporations may not have philanthropic objectives, but still want to do something good in the world. Corporations donate by matching funds or providing additional funding after fundraising events like walk-a-thons or bike rides. There are two main reasons why this type of fundraising is problematic: 1) Companies can wield power against an organization because they provide much-needed funds 2) If a company’s values don’t align with an organization’s it may cause problems.

How NGOs can Benefit from Corporate Funds:

As budgets have shrunk, NGOs have turned to private donations. To get those funds, they need a way to show that they will use them effectively. Thus, it has become more and more necessary for NGOs to work in partnership with companies and establish some measure of social responsibility. This makes corporate donors want to provide funds because they can see that their donations will be going toward good causes.

Funding Problems Faced by NGOs:

Research has shown that across sectors and countries, philanthropic giving fell off dramatically during and after the 2008 financial crisis. NGOs have traditionally relied on grants from wealthy donors who typically give significant sums to just a few organizations at a time, but those gifts have plummeted. As wealth continues to accrue among the top one percent of the global population, philanthropic giving by that segment has been growing – however, their level of giving still falls short when compared to what these wealthy donors did before 2008.

Criticism of Corporate Social Responsibility:

Corporate social responsibility has been a key focus for many companies, especially over the last decade. The goal is to ensure that it contributes positively to the community and environment in which it operates. This funding has, however, faced criticism from some NGOs. One area of complaint, for example, would be that not all corporations undertake due diligence or actively engage with their local communities as they claim to do. NGOs have also raised concerns about these companies infringing on their fundraising activities and discouraging people from donating money to them. For instance, some feel that by partnering with companies like Walmart and ExxonMobil, NGOs can reduce their costs while achieving more tangible outcomes. There is also an issue of transparency when such partnerships happen as often little information is shared publicly about how donations were spent. In response to these complaints, new guidelines have been put in place for organizations seeking CSR funds to help address these challenges such as requiring organizations to report on what proportion of funds went towards programme work rather than administrative costs.

Conclusion:

Corporate social responsibility has become a big focus for NGOs, and it’s for good reason. With foundations focusing on local grassroots charities and organizations, many NGOs are getting stuck without the necessary funds because their goals go against certain companies’ bottom lines. This new focus by foundations will ensure that each organization gets its fair share of help.