Executives and Charity: One CEO's Approach

How much should executives contribute to charity, either personally or by setting policies for their company?

The figures of corporate performance tend to be rather bleak. According to a recent study by the Committee Encouraging Corporate Philanthropy, only about one percent of corporate profits goes to charity, although the nation's 81 largest companies have increased their giving by 6 percent since 2006. The Committee is made up of 165 firms and was begun by actor Paul Newman, whose non-profit firm makes pasta sauce and popcorn products designed to generate money for the needy.

CEOs debate whether it is more effective for their firms to focus on selling products more efficiently that contribute to the social good rather than merely giving money away.

Extracting the corporate bureaucracy from the process is another approach. But it can be very time consuming for CEOs should they become personally involved.

I know of one recent case involving Richard D. Parsons, former CEO and now chairman of Time Warner. Parsons, one of the most prominent African-American business leaders in the country, took up his own personal time to help Howard University, one of the most noteworthy historically black colleges and universities (HBUCs) in the nation, to dramatically increase its endowment.

HBCUs typically raise less money than conventional colleges. That was the case at Howard and its administrators wanted to break the trend. So in 2001, a brain trust held a meeting which Parsons attended. They set a goal of raising $250 million that would take Howard's endowment to $532 million in several years.

Parsons brought business discipline and energy to the cause. Howard started doing things they hadn't done before, such as greatly expanding their e-mail outreach to alumni, who had before shunned most solicitations. They also held regional alumni meetings across the country, including one for New York area alum at Time Warner's shiny headquarters, thanks to Parsons. And they clarified their marketing to make sure that their stated goals were clear and broad-based.

The strategies worked and Howard raised the target $250 million last year and then surpassed it by $22 million. Howard now will share its experience with other HBCUs and launch a new campaign to take their endowment to $1 billion.

Parsons has shown what a CEO can do personally. But it takes serious time and effort.

Of course, CEOs will have to assess whether such major allotments of time and effort are worth it for their firm and their own career advancement. Parsons' endeavor is unusual given the time demands of most CEOs. But it shows a commitment and earns corporate good will that millions in expensive public relations can't come close to matching.