Corporations have been supporting worthy causes for more than 100 years but have finally acknowledged that the results aren't good enough and the ways in which they support social issues are changing quickly.

Last week the Irish Times reported a 27% drop in corporate donations to charities during the Christmas period from the previous year. In Canada, according to Statistics Canada, corporate deductions for charitable and other contributions reached $2.45bn in 2008 before dropping 21% to $1.92bn in 2009. They began to recover in 2010, but haven't gone back to pre-recession levels.

The degree to which corporations allocate cash and other resources to communities is based primarily on profitability. Simply put, in good years corporations give more; in bad years donations are reduced. However, economic constraints have become chronic, and corporate social responsibilty managers are facing questions that have been anathema in this area such as: how can we contribute less and derive more value?

The newest thinking about the relationship between corporations and social change discounts the value of corporate philanthropy in favour of the ways in which the business of business can also make a social difference. This is illustrated by the latest findings from the 2012 Corporate Giving Standard Survey, which show that non-cash giving is defining the new corporate societal engagement.

"This has major implications for NGOs all over the world. From employees coming in to solve efficiency challenges, to product donations that enable important capacity upgrades, community partners and businesses around the world are working smarter, together," said Daryl Brewster chief executive of CECP, the organisation that galvanises senior executives of the world's leading companies to tackle societal challenges while driving business performance.

This isn't a new idea. During the late 1800s and early 1900s, corporate founders such as Alexander Graham Bell combined their personal values with business savvy to foster social change. Bell taught the hearing impaired lip-reading and speech, and his experiments with sound waves and their transmission led directly to the invention of the telephone.

More recently, Telus International, a global leader in business process outsourcing, is improving the socio-economic conditions in the countries where it operates, not by altruism but by investing in employees in ways that translate into a better quality of life and increased retention – a key measure of success in this industry.

New approaches to corporate social change aren't just for large corporations. Since 1987, the Indian Business Corporation, an Aboriginal financial institution based in Calgary, has been helping First Nations peoples in Alberta improve their standard of living by becoming entrepreneurs. The company provides developmental lending to First Nations people who can't access capital from mainstream financial institutions.

According to Jon Spector, president and chief executive of the Conference Board, "The trends we're seeing in the numbers are aligning with the way companies are doing business in this post-recession economy.

"Companies today are striving to be sustainable and efficient in their daily operations, and they are doing no less in their efforts to solve some of society's toughest challenges. They are applying the best of their businesses' assets to tackle these tough issues."

The bottom line is that corporate philanthropy and social change are growing farther apart. "Increasingly, global corporations are rethinking their approach to corporate responsibility, evolving towards a model in which traditional donations are supplemented by innovative programmes and initiatives that tap into the core strengths of the business," Peter Scher, head of corporate responsibility at JP Morgan Chase & Co, has written.

Business has recognised that social change is good for business and business is good for social change. Getting serious about social change means reducing annual philanthropy budgets, re-allocating money and time to support more robust business and social outcomes in other parts of the business, and measuring and evaluating performance. As Michael Porter, a Harvard Business School professor, has said: "Philanthropy is decades behind business in applying rigorous thinking to the use of money."

Paul Klein is the president and founder of Impakt, which helps corporations and civil society organisations become social purpose leaders. He was included in the Toronto Globe and Mail's 2011 Leading Thinkers Series and serves on the advisory council of the centre of excellence in responsible business at the Schulich School of Business.

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