Gold star for Starbucks?

Corporate philanthropy is rapidly evolving. As we argue in the book, what has traditionally been a discretionary activity typically in the gift of the chief executive, and of uncertain value to shareholders, is turning into a corporate citizenship programme designed to advance a company’s core for-profit strategy.

If we are right, companies will be far less likely to cut these activities at the first sign of economic difficulty – unlike traditional corporate philanthropy, which has often been top of the list for budget cuts in a downturn. Instead, firms will view their corporate citizenship spending as akin to their investment in research and development – that is, something to be cut only as a last resort.  (Matthew recently wrote a piece for CFO magazine setting out three rules for smart corporate citizenship.)

So, now we will find out the truth, thanks to the current downturn. Happily, there are some encouraging signs. This week, Starbucks announced that it will be continuing to invest in communities where its coffee is grown. “During this time of economic uncertainty we realize that we have the opportunity and the responsibility to keep our focus on our commitment to keep our communities strong, and I’m proud of what we’re doing to live up to the guiding principles of this company,” said Howard Schultz, the firm’s chief executive, at Starbuck’s Leadership Conference this week.

True, it remains to be seen if the coffee giant’s behaviour matches these words, but Starbucks is off to a good start. Here’s hoping other companies follow suit.