Reputation laundering? The communications challenge for philanthropists

Looking back on the past year, 2022 may end up being seen as a watershed moment for the philanthropic agenda, thanks to the actions of one eco-conscious clothing brand.

Throughout history, philanthropy and reputation have been somewhat uneasy bedfellows.

For example, wealthy individuals may pursue a philanthropic strategy in order to create, curate and leave behind a lasting legacy which establishes or enhances their ‘personal brand’ – the narrative of their life, its purpose and, as Deloitte puts it, the family identity.

Uncomfortable truths

This motivational factor has been central to some of the criticism of certain types and sources of philanthropy – right up to the modern day – with accusations that much of philanthropy is actually a sleight of hand trick. A dazzling gesture over here to distract from a murky reality over there. Reputation laundering, according to Chatham House.

We only have to look back a couple of years (and this debate is still raging) to consider the lasting negative effects that this can have.

British philanthropists of the 18^th and 19^th centuries played a vital role in the establishment and funding of structures and services that provided for the poor and contributed to the development of the welfare state. But scrutiny of the source(s) of the wealth that fuelled these, albeit positive, activities raises some highly uncomfortable truths.

Statues have subsequently tumbled. Business schools have changed their names.

In the case of charitable entities in particular, being associated with such a problematic past poses substantial, even existential, brand and reputation risk.

Brand risk for charities

But this is not just about history. The world of corporate philanthropy, especially, is equally as concerned about new sources of funding.

Many charitable causes are now facing an extraordinarily tough decision over whether to accept corporate donations, perhaps from companies which do not fully align with their own values (real or assumed by their stakeholders), or face the prospect of financial distress.

London’s Science Museum, for instance, faced public and media backlash last year for ‘doubling down’ on its decision to accept funding for its climate change exhibits from fossil fuel companies. The British Museum has faced similar challenges.

Rising scrutiny of wealth and the wealthy

Issues including climate change, as well as more imminent threats like the cost-of-living crisis, mean that there is more scrutiny than ever before on wealth, its management, and its use.

This is as true for private individuals as it is for corporates.

A report last month from Oxfam found that just 125 billionaires produced more greenhouse gas emissions than the whole of France. Just a couple of weeks later the chair of the UK’s charity commission “berated” the “super-rich” for a decline in charitable giving.

But the fact remains that private wealth is playing a critical role in addressing social and environmental challenges.

As the Washington Post puts it, wealthy individuals are “stepping into the void” to lend financial and intellectual heft to problems which have become in may ways too big for governments. [NB – even here the Washington Post could not help adding that, in doing so, they would be “burnishing their legacies as planet-savers along the way.”]

In some cases, this will come in the form of philanthropy or charitable giving.

In some cases it will be through new investment strategies focused on accelerating the development and adoption of new technologies that will contribute to a cleaner economy (a $2trn opportunity according to the World Economic Forum).

In still others, it may be through deploying wealth into a whole new type of technology-enabled economics which actively incentivises preservation and regeneration of natural resources and biodiversity, instead of incentivising consumption.

Tax may play a role too, with some groups of wealthy individuals calling on states to push up tax rates to tackle socio-economic challenges.

Profit and purpose

And then there was Patagonia, and its founder Yves Chouinard.

Chouinard’s decision to transfer the family business’s voting stock into a purpose trust caused reverberations. Patagonia will continue to be “unapologetically a for-profit” but that profit will now be deployed, in its entirety, in the fight against climate change.

Clearly, profit and purpose can be entirely aligned and in harmony.

At a time when there is more scrutiny than ever before of wealth, and its use, this move has caught the imagination.

It has also raised the stakes for others. A new yardstick has been established.

Philanthropy has always been a highly public and visible endeavour. But motive, or the perception thereof, matters more than ever.

Despite calling on ‘the rich’ to do more, according to the Charity Commission the tendency to cynically assume philanthropy only has self-interested motivations, including to “whitewash a bad reputation”, is misguided.

But it is also a reality.

Scrutiny is increasing, including from the next generation of wealth inheritors. Effective communications will be key in order to demonstrate authenticity and navigate risks to legacy.

Philanthropy and reputation, then. Always bedfellows, uneasy or otherwise.