In today’s rapidly evolving development finance landscape of dwindling official development assistance funds, corporate social responsibility has outgrown its original purpose and is expected to play a more important role in the future — especially in so-called “weak states.”
CSR “used to be charity” back in the day when companies didn’t need to worry about the public trust, but now corporations know they can’t afford to lose that and have huge incentives to spend on social good, Motoo Konishi, World Bank country director in the Philippines, said at the CSR Expo 2014 forum hosted by the Philippine League of Corporate Foundations on Thursday in Manila.
Konishi explained that corporate social responsibility is essential to their current country strategy, which envisions rapid and sustainable development for the nation if all stakeholders remain committed to a common goal, government continues to be open, the education system is reformed to become more market-oriented and long-term are put in place to mitigate the effects of climate change. Companies, he noted, are also responsible for ending the culture of corruption that has hindered Philippine development for decades, and urged them to not only spend on CSR but also pay the proper taxes.
Kim Henares, head of the local Bureau of Internal Revenue, welcomed this statement and pointed out that corporate social responsibility is not only the right thing to do — it’s also tax-deductible.
CSR, whether philanthropic in nature or part of a company’s bottom line, is all good as long as it contributes to uplifting the bottom of the pyramid, according to Dr. Raul Fabella, one of the country’s most respected economists. Fabella said he understands why some people are reluctant to pay taxes in the Philippines because there’s a general perception that the funds will either be stolen or wasted by elected officials and their business cronies — and that’s precisely where companies should lead by example in a “quiet revolution” and do their part to end the culture of corruption that benefits a selected few and leaves tens of millions mired in poverty.
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Not only that — he suggested that corporations, through corporate social responsibility programs, could even take over some public programs in “weak states” where governments lack the capacity, funds or willingness to implement social programs in such a way that they truly deliver sustainable development and value for money.
Gloria Steele, U.S. Agency for International Development mission chief in Manila, disagreed and commented that all stakeholders have a role to play in this process.
One role she did think USAID could help with is supervising that companies that benefit from agency grants in the country comply with the local tax code, which became a serious issue in the Philippines in the aftermath of Typhoon Haiyan, when several corporations were alleged to have donated as relief goods items that had already been reported as losses in their tax declarations or lied about the amount of donations they had received from private individuals.
This is a clear example of how the local CSR culture has not yet reached the point that it can lead that “quiet revolution” mentioned by Fabella, admitted Jeffrey Tarayao, president of the One Meralco Foundation and a Devex 40 under 40 development leader in Manila, who complained that many businesses still fail to envision the long-term economic gains that can be derived from doing social good so they are reluctant to spend if they can’t see results fast.
“CSR is a balancing act,” he said. “We need to match risks with results.”
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