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Strategic philanthropy: exploitation or key to emerging markets?

Related tags Developing country

When a company 'gives back' to the world through charitable
donations, should we wholeheartedly commend it for being a good egg
or sniff cynically at the profit potential that underlies every
business decision?

Philanthropyn​. 1.​ practice of doing good to one's fellow men 2.​ love of mankind (Collins Shorter​).

Strategic​ philanthropy, then: doing good to one's fellow men but with a secondary motive of develop business opportunities.

Most multinationals have a division that is responsible for corporate responsibility, be it sustainable sourcing, charitable donations, health and education projects or enterprise initiatives.

Some are becoming actively involved in community projects where they see that the products they produce could do some good - even though the recipients cannot afford to pay for them.

But to the suspicious-minded liberal, such programmes may smack of an attempt by big, bad business to divert attention from less altruistic practices.

Rightly or wrongly, multinationals have a reputation of chasing profits at the expense of all else, and take the flack for being major contributors to the fug of noxious emissions that is smothering Planet Earth.

Such programmes, then, can feed into successful public relations campaigns that can mitigate this image. But there is a lot more to strategic philanthropy than relating just to the public of the Western world.

DSM has launched the Nutrition Improvement Program, through which it provides technical and scientific support for supplementation programs and for the fortification of staple foods with vitamins and minerals in Africa, India and China.

It makes no bones about its aim: to serve these developing markets now whilst setting up a sustainable business for its own future.

Likewise Johnson & Johnson, which made cash gifts and project contributions of $528.7m to world causes in 2004, regards India as one of the biggest developing markets in the next 20 years. One of its worthy projects is facilitating the administration of vitamin A and anti-parasitic tablets to 250,000 children in the country, in partnership with the Vitamin Angel Alliance.

By making an early entry into developing markets, companies can start to build awareness of their brands and products.

When a company notches up 10 figures in annual turnover, they can afford to gamble a few million on a weakling foal that could grow up to be a racehorse.

But in doing so, are they exploiting the vulnerable for their own future gain?

If they were dishing out addictive substances with a view to raking in the profits once they start to charge - now that would be scurrilous.

For more than a decade, Nestle has been the butt of a campaign over aggressive marketing of its baby milk formulas. It was alleged to encourage mothers in developing countries to use its formulas instead of breastfeeding, by doling them out free of charge at hospitals.

When the mothers left hospital and had to pay for the formulas, they tended to over dilute them to save money, leading to incidence of malnutrition. Moreover the water they used may have been unclean, causing the babies, with their unformed immune systems, to sicken.

Nestle says it no longer has a part in such questionable marketing antics; yet the campaigners are unconvinced and student unions are still persuading their members to forgo Kit Kats and Smarties in the name of Baby Milk Action.

But it would take a cynic indeed to find blame in doling out two high-dose vitamin A tablets a year to children in India - all that is required to stop them going blind from deficiency.

Sure, by providing the poor with vitamins that could save their lives now, companies are laying the foundations for a paying customer base later on.

But the fortunes of developing countries are dependent on innumerable factors - politics, economics, war, climate, and any number of disasters, both natural and man made.

If a company has the products and the wherewithal to save even one life now, irrespective of whether it sees financial return on its investment - immediately or in the future - it is entirely to be commended.

Jess Halliday is editor of NutraIngredients.com and NutraIngredients-USA.com. Over the last decade she has worked in print, broadcast and online media in both Europe and the United States.

If you would like to comment on this article, please contact Jess Halliday​.

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