CSR and Philanthropy: Same or Different?

Abstract

Throughout history,business has accepted that in addition to its prime function of creating wealth for itself, it also has a social obligation to give some of the wealth so created for the good of society as a whole. This altruistic giving has been variously described as charity, philanthropy or corporate social responsibility(CSR). The terms are used interchangeably but in fact each has a different nuance since they evolved at different times and in different contexts. It is important to understand these nuances since mandatory CSR has added a new paradigm to business engagement with society, which is at once based on the old concepts and yet different from them. The term used since the earliest times for altruistic giving is charity, defined as the voluntary giving of money to those in need. It applies equally to individual giving as well as business giving. Business entities such as family business firms and merchants, as much as individuals give money to the poor, and to victims of calamity, natural or man made, to alleviate their immediate distress and need. In the West, charity mainly referred to almsgiving for relief of poverty, but the Indian term for charity, viz 'daanam ', had a broader scope, and included social needs such as care of the environment, education, needs of travellers and of whole communities, in times of famine, floods or fire. In general charity was not expected to or used to remove conditions which caused the distress. Contemporary examples of corporate charity would be random and ad hoc donations given on request for a particular cause which could be relief for earthquake or war victims, or for a school, or a charity show. Normally these would be one time donations and comparatively small, with no commitment to continue giving. With capitalist development the concept of charity or altruistic giving evolved into the concept of philanthropy or planned use of wealth for transforming society for the good of all.