Is strategic CSI dead... or just evolving?

The concept of aligning corporate social investments with business strategy first gained traction in 2002, when Michael Porter and Mark Kramer argued in Harvard Business Review that corporate philanthropy could advance business interests and societal goals simultaneously. Their idea of creating shared value – addressing societal needs while generating economic benefits – reshaped how companies approached social investment. By leveraging their resources and capabilities, businesses could amplify their impact while enhancing their competitive edge.

Porter and Kramer went on to expand this vision to include systemic change through “collective impact”, emphasising cross-sector collaboration. However, the ideals of strategic philanthropy have come under fire recently as large-scale societal improvements haven’t materialised as expected.

In 2024, Kramer and co-author Steve Phillips had a change of heart. In an article titled ‘Where Strategic Philanthropy Went Wrong’ published in the Stanford Social Innovation Review (SSIR), they argued strategic philanthropy has not brought about significant improvements in any social indicators. They said it often falls short as it relies on funding non-profit organisations, which are simply too small to bring about systemic change or address deeply rooted social inequities alone. In addition, global challenges such as inequality and climate change have continued to worsen despite years of philanthropic investment.

The authors argue philanthropists should pivot to “empowerment philosophy” – direct interventions such as cash transfers or voter education, which genuinely empower communities and influence governance.

Refuting the argument

Philanthropists were quick to point out that strategic philanthropy can be highly effective and is evolving to meet different needs in different contexts.

Phil Buchanan of the Center for Effective Philanthropy noted that funding communities directly, or supporting voter engagement, is still part of strategic philanthropy. Philanthropy commentator Rhodri Davies raised the point that there are multiple approaches to philanthropy, and trust-based philanthropy – where funders provide unrestricted, flexible funding and reduce administrative burdens on grantees – is inspiring others to adopt more equitable approaches, too. High-profile philanthropists MacKenzie Scott and Melinda French Gates lead the way in this regard.

In their SSIR article ‘Strategic Philanthropy is Alive and Well’, Jodi Nelson and Faye Twersky argue that philanthropy has indeed shifted systems, citing efforts such as virtually eradicating polio globally, ending apartheid in South Africa, and establishing universal 911 service in the United States, most of which were supported by some form of philanthropy. These successes were not solely the result of direct funding but also of leveraging resources, knowledge, and partnerships to amplify impact.

Poor government policy and action have a much vaster influence on social conditions than philanthropy can ever have. This is obvious, based not only on the relative amounts spent but on the fact that philanthropic programmes operate out of the system, without any direct social mandate. Showing that social conditions do not respond to philanthropic spending is not surprising to us, or indeed any foundation or company. It certainly does not mean that philanthropy is ineffective.

However, we agree with the authors that solely funding nonprofit projects is not going to change things at scale, and to the extent possible philanthropy (or CSI) should try to influence government systems and leverage government funds. This can be done not only through advocacy and voter education but also by innovating and testing solutions, conducting research, then using the knowledge to influence policy and practice more broadly. Another approach could be directly supporting research and policy work, or indeed working in/with the system on collective impact approaches.

Strategic CSI is very much alive

Strategic CSI is a fundamentally different proposition from what is defined as strategic philanthropy in the article discussed above. It is integral to business and a means of reinforcing the organisation’s overall social impact.

For CSI to be strategic, it must be aligned with the company and create value that goes further than mere reputational benefits, either through enhanced stakeholder relations with key business stakeholders (suppliers, customers, consumers, employees) or through mechanisms that lead to competitive advantage (lower costs, access to scarce skills, or new markets).

A telecommunications company could provide free connectivity to underserved schools, improving educational access and strengthening its brand equity, or a logistics company could use its networks to distribute social products at a much lower cost than a funder who does not have the competencies or internal assets. This dual value creation ensures that strategic CSI is viewed not as an expendable cost but as an integral component of business strategy.

The evolution to leveraged CSI

Trialogue positions CSI programmes broadly across three categories, namely charitable CSI (CSI 1.0), strategic CSI (CSI 2.0) and leveraged CSI (CSI 3.0). There is space for all three types of CSI within a company’s portfolio, and the combination will depend on the company’s business strategy, stakeholders and context, appetite for risk and approach to development among others. Leveraged CSI builds on a strategic approach by seeking to influence a broader developmental landscape. This can be achieved by funding research, advocacy, or through collaborative and collective impact investments.

The approach requires a shift from a symptomatic project-focused mindset to investing in structures and processes that aim to solve longer-term systemic or structural deficiencies. It requires investment in collaboration itself, which may not always show immediate or obvious outcomes, as well as a consideration of longer-term and more flexible styles of giving.

Initial interest in this approach is coming from companies with larger budgets that have ambitions for more substantive change. The downside is that this approach is complex and takes a long time, with positive outcomes for beneficiaries not immediately visible. This means it will not be a preferred approach for companies with shorter funding cycles, which are under pressure to demonstrate immediate results.

The future of CSI

As the world grapples with complex challenges, the need for strategic corporate engagement has never been greater. Whether through direct interventions, policy advocacy, or collective action, companies have a vital role to play in shaping a more equitable and sustainable future. Strategic CSI is not dead – it is evolving, expanding its scope, and deepening its impact.

By embracing this evolution, businesses can reaffirm their commitment to creating shared value. In doing so, they will not only enhance their own resilience but also contribute to a legacy of positive change.

• For more information to help you shape your CSI strategies, read the 2024 Trialogue Business in Society Handbook for the latest CSI and development sector research. The Handbook can be downloaded for free at  https://trialogue.co.za/businessinsocietyhandbook/.
  
• Trialogue and its partners will be discussing the latest developments and thinking impacting the CSI sector at the Business in Society Conference in May. You can register and find about more on the programme, masterclasses and speakers on the conference page: https://trialogue.co.za/trialogue-business-in-society-conference-2025/.
  
• Trialogue supports companies with their CSI strategies by means of its CSI Positioning Matrix, which enables companies to determine with which of the four approaches to CSI their projects fit: charitable, developmental, commercial or strategic CSI.