Women make companies more generous

courtesy flickr user denise carbonell http://www.flickr.com/photos/denisecarbonell/

In July, Harvard researchers released a working paper showing that companies with more women on their boards of directors and in senior positions tended to have more active corporate philanthropy efforts, and to give more money, than those with fewer women at high levels. Now, additional analysis by the nonprofit group Catalyst shows just how powerful the influence of women at high levels in a company can be.

According to Catalyst's analysis, which was done in conjunction with Christopher Marquis, an associate professor at Harvard, and Matthew Lee, a doctoral candidate there:

-- In 2007, companies with three or more women board directors gave 28 times more money to philanthropic initiatives than companies without any women directors. On average, companies without any women board directors gave $969,000 to philanthropic efforts. Companies with three or more women directors gave an average of $27.1 million.

-- Between 1997 and 2007, companies with more women board members donated significantly more money than companies with fewer women in on their board. Each additional woman director represented an increase of about $2.3 million.

-- In 2007, companies where at least 25% of the corporate officers were women made annual contributions that were on average 13 times higher than those made by companies without any female corporate officers. The average company without any female corporate officers gave $965,000 to philanthropic causes. Those companies where at least 25% of the corporate officers were female gave an average of $12.8 million.

-- As in the director role, each additional woman who served as a corporate officer made a big difference. Each percentage point gain in the share of corporate officers who were women was linked to a $5.7 million dollar increase in the amount of money the company devoted to philanthropy.

The researchers say that in general, their findings still held even after they accounted for variations in company size, industry, and financial performance. More women equals more money devoted to philanthropy.

The researchers also acknowledge they have discovered a correlation: They don't have evidence of a causal relationship. In other words, it is theoretically possible that companies that give a lot of money to charity may be more attractive to high-powered women. The researchers don't think this is the case, however. As they write:

Research suggests that people define fairness differently, and that this may lead them to approach [corporate social responsibility] in distinct ways. Operating with gender-inclusive leadership can provide diverse perspectives on fairness, which may broaden the company's understanding of [corporate social responsibility] and generate a higher level of philanthropic activities.

This explanation suggests to me that women give boards (and companies) a different perspective, which in turn leads them to look at corporate social responsibility differently. Do you think this is the case? Or do you think women simply push for more philanthropy and manage to get it?

[DrBillToth]

Oh my the chicken or the egg...which came first women on the board or companies that give attracting more women to their board? Matters not. What matters is that any company and more companies can and should be better stewards. What started America - and what saved America after the 1929 crash - and what will save America this time - is a work ethic driven by a need to serve God with our nation's gifts. Among these gifts is charity, and it radiates from close-knit families and neighborhoods determined to persevere with what they have and prosper with what they can create. Live with Intention, DrBillTothCom/blog

[joanoverlock]

I find this astounding and hard to believe except that maybe the causal relationship is that companies that hire and promote women, and boards that recruit women are more open to a diversity of points of view. and maybe just more open and engaged with the world around them in general.

Whereas i agree that boards must act on behalf of the shareholders, that is not limited to ROI. A board must also make sure that the company is behaving as a responsible corporate citizen. Giving back to society has been an important component of capitalism in America.

thank you, Kimberly for sharing this incredible finding.

[JulieannPina]

In my interaction with angel investor network members, the prevailing opinion is that adding women to membership improves the process. Formal research was recently published showing that investment returns to the network are higher if female membership is over 10%. I've also heard anecdotally that female board members improve the board dynamic.

From all this it sounds like Joan's notion of the mechanism is accurate but possibly not complete.

[ibsteve2u]

So "companies with more women on their boards of directors and in senior positions tended to have more active corporate philanthropy efforts"?

Probably a good thing for - if HP's former CEO Carly Fiorina's layoffs of over 15,000 HP employees is any example - they can be daggone good at creating a need for charity.

[StephenSWilliams]

The purpose of company directors is to serve the interests of the shareholders.

Generosity with the company's resources muddies this primary role of director.

If directors want to be generous they should use their own money.

The result would be a cleaner separation of responsibilities.

[ibsteve2u]

Is great how a person can use a couple of shares to transform a corporation into their proxy for ensuring the continuation - and even inflicting - suffering, ain't it?