Philanthropy, understood as an altruistic endeavor to deliver social and environmental good, is inherent and integral to Islam. And, while practiced for centuries, the notion of philanthropy is at the foreground of positive discussions surrounding its role and relationship to CSR.

The IRI understands CSR as broadly having four dimensions; economic, legal, ethical and philanthropic. There is consensus that the current, mainstream reporting frameworks are largely informed by Western literature and practice (Bruton and Lau, 2008: 636) leaving many context-sensitive factors, such as philanthropy, untouched (Barkemeyer, 2009). Such frameworks tend to recognize the first two or three dimensions and fewer recognize the role of philanthropy in CSR despite their compatibility. Subsequently, with an increase in CSR reporting, the ethical and philanthropic responsibilities of a business are attracting and encouraging a rethink of how we – as businesses, reporting bodies and societies – understand the contributions of philanthropy to CSR.

“Goodness is the only investment that never fails”

“By integrating the values of philanthropy into strategic CSR practices, businesses can play a valuable role in creating healthy and prosperous societies. The IRI recognizes the complementary relationship between CSR and philanthropy”

WHY IS THIS IMPORTANT?

The IRI is premised on this very discussion;

• Why do particular social activities become organized in different ways with different outcomes as a result of being carried out in different institutional contexts? (Al Rifai, 2013)
• Mainstream reporting frameworks are widely applied to businesses around the world, but why do we think a ‘one-size-fits-all’ approach is the most suitable?
• When we consider Islamic business, where philanthropy is integral to practice, is a mainstream framework which distinguishes CSR and philanthropy as parallel and unconnected lines of though, best?

An extensive body of literature recognizes that differences between cultures are a factor in the mobilizing of stakeholders; these are largely contextual factors including, religious beliefs, values and norms (Rowley and Moldoveanu, 2003). In businesses across the Islamic world, Islam is one of the main roots of ethics and corporate moral responsibilities, embodying both a charity and stewardship principle. Such traditional values remain strong in Islamic businesses due to the preservation of family ties, and so remain influential in the actions taken by shareholders and managers. This same body of literature indicates that while philanthropy is considered a high responsibility in Islamic businesses, it is considered less important in many mainstream frameworks (Carroll, 1979; Visser, 2006). This demonstrates a gap within business culture and the information that can be captured in a reporting framework.

HOW WE ARE USING THIS OBSERVATION TO INFORM A HOLISTIC APPROACH…

The IRI recognizes that Islamic beliefs, values and norms continue to shape the contributions of businesses to society in the philanthropic sense. With pressing socio-economic and environmental concerns, businesses are recognizing their capacity to contribute in a more strategic way and subsequently, are advancing on their philanthropic duties to implement impact-oriented ‘strategic philanthropic’ ventures. Such measures are seen as having the two-way dynamic common to CSR, and defined by McAlister and Ferrell (2002: 690) as “the synergistic use of organizational core competencies and resources to address key stakeholder’s interests and to achieve both organizational and social benefits”.

PHILANTHROPY AND CSR ARE COMPLEMENTARY PRACTICES

The IRI sees philanthropy as an integral part of CSR. Islamic business practice rationalizes this because of the long-term approach attributed to acts of philanthropy (BNP Paribas, 2015). While CSR is often understood to relate to the economics of the day-to-day running of a business, be that the wellness of its employees, the ethics of its supply chain, or its consumption of non-renewable energy, a long-term philanthropic approach can also serve a dual purpose. A strategic act of philanthropy serves to support a community or environment, for example through education or conservation, which in turn, warrants, maintains and strengthens a business’s license to operate.

While the motivations, channel of delivery and disclosure of philanthropy and CSR may differ, the IRI, unique in its ambition to be a culturally-relevant reporting framework, embraces cultural nuances, such as philanthropy, to ensure that CSR is relevant, accessible and meaningful.

References

Al Rifai, Aroub, A.Y (2013): Stakeholders and Corporate Philanthropy of Non-Economic Nature in a Developing Country of Intense Islamic Beliefs, Values and Norms: An Institutional Framework. Ph.D thesis, Brunel University, UK.

Barkemeyer, R. (2009). Beyond compliance–below expectations? CSR in the context of international development. Business Ethics: A European Review, 18(3), 273-289.

Bruton, G. D., and Lau, C. M. (2008). Asian management research: Status today and future outlook. Journal of Management Studies, 45(3), 636-659.

Carroll, A. B. (1979). A three-dimensional conceptual model of corporate performance. Academy of Management Review, 497-505.

McAlister, D., and Ferrell, L. (2002). The role of strategic corporate philanthropy in marketing strategy. European Journal of Marketing, 36(5), 689-708.

Rowley, T., and Berman, S. (2000). A brand new brand of corporate social performance. Business and Society, 39(4), 397-418.

Visser, W. (2006). Revisiting Carroll’s CSR pyramid. Corporate Citizenship in Developing Countries, 29-56.

 

Page: Philanthropy and CSR