Coke Rethinks Philanthropy
By Tom Ryan
The Coca-Cola Co. is reorganizing its main charitable department and fundamentally reshaping how it gives locally, nationally and internationally. The change not only promises to spread more of the philanthropic giant’s donations outside the U.S., but more closely aligns its giving to its core businesses.
Under the proposed change, Coca-Cola will refocus on three nonprofit areas: water cleanliness and supply, recycling with an emphasis on sustainable packaging, and fitness, according to the Atlanta Business Chronicle. Education, its biggest cause over the last century, as well as other major causes such as diversity, will no longer be explicit priorities for giving company-wide.
Coca-Cola will also replace its long-standing corporate external affairs department with a new oversight division named Global Community Connections (GCC). While Corporate External Affairs primarily focused on North America, GSC will manage the donations and philanthropic work of Coca-Cola’s six worldwide operating regions.
Each global operating region can specify two local initiatives to support beyond the three primary goals of water, recycling and health.
The move to the oversight division also de-centralizes the grant process. Instead of dealing with nonprofits directly, GCC will coordinate with Coca-Cola’s various subsidiaries in making grant and strategy decisions. Documents from the company state that Coca-Cola money will be distributed “to the operating groups based upon their community engagement plans,” instead of a geographical location.
Some believe the moves will push Coca-Cola to make more investments internationally. For instance, clean water, local nonprofit observers said, isn’t a concern locally, but is a dire need in some Third World regions.
Dennis Young, Georgia State University’s director of the nonprofit studies program, told the Atlanta Business Chronicle that Coca-Cola’s philanthropic reorganization follows what other large public companies have done — closely aligning their nonprofit work with the for-profit company’s main business.
“Companies have found it really works,” he said. “They’re thinking about that whole area less as gift-giving and more like a partnership. It’s an effective corporate strategy.”
The reorganization of Coca-Cola’s charitable arm comes after a year of internal restructuring throughout the company as part of CEO Neville Isdell’s “Manifesto for Growth” initiative aimed at becoming more global and diversified.
Coca-Cola funds several foundations at operating subsidiaries across the world, and philanthropic initiatives directly from The Coca-Cola Foundation. As of April 3, the foundation had $145 million in total assets, but the group is given funds by the company as needed.
Mr. Young said the philanthropic reorganization is a constant struggle for large, visible companies.
“They have to find a balance that is not seen as completely self-serving,” he said.
Discussion Questions: Does the obvious linkage between Coke’s business challenges (water, recycling, health/fitness) and its non-profit giving serve as a model for how companies should approach this issue? What do you think of Coca-Cola’s greater global approach to charity?
Coca-Cola’s new Global Community Connections (GCC) division is a very valuable idea. Companies should involve their charitable efforts in ways and means that will closely serve their core customers, as well as their marketing position and image.
This is very interesting and I do hope that it’s well intentioned rather than an opportunistic response to the increasing consumer interest in social responsibility. They certainly chose the three areas that are most emotionally charged (and that they’ve not always been the most responsible about). Regardless of the driver, at least the outcome is for the good of all.
Coincidentally, I was at a lecture last night by one of the founders of an organisation called We Are What We Do (www.wearewhatwedo.org). One point that he made was that they turned down an early offer of funding from Coke because they felt that accepting it would mean that people saw their efforts as shaped and influenced by Coke. They also felt that Coke would like it that way no matter how hands off they promised that they would be. Those perceptions are important. Whatever Coke says they will do, and whatever reasons they give, there is no getting away from the fact that they have investors to please. However much good they may try to do, somewhere along the line they will also be keeping a sharp watch out for the impact that it will have on the brand and its profitability.
Both Dan and Mark make good points. A lot of strong business thinkers (Milton Friedman, for example) do in fact believe a business’ only responsibility is to produce a profit, and they make a good case as to why this focus actually does more social good than philanthropy. On the other hand, if you’re going to be involved, why not leverage it to your marketing and PR exposure, especially if you are a public company?
I understand what Coke is doing, and there are a lot of strong business thinkers and academics who would absolutely agree (many think corporations have no business being in the “social good” arena to begin with), but I think it is somewhat a shame that companies will now even scrutinize charitable giving for business benefit.
The smartest giving program is run by Target, because every Target customer sees exactly who the local target charities are (schools) at every checkout lane. The second smartest program: Ronald McDonald House, because the collection boxes are at every register and the charity’s name is a character owned by McDonald’s. Coke’s charitable program is terrific, but Coke consumers are unlikely to be connected to it on a daily basis, compared to those at Target and McDonald’s.