- Federal sentencing guidelines for organizations - Voluntary responsibilities - Cause-related marketing - Strategic philanthropy - Social entrepreneurship [SLIDE 1] The Federal Sentencing Guidelines for Organizations (FSGO) were passed by Congress in 1991 to incentivize organizations to implement programs that encourage ethical and legal compliance. The guidelines apply to all class A misdemeanors and felonies committed by employees while working. The FSGO offers an incentive to organizations to develop employee compliance programs that discourage illegal or unethical conduct. The incentive is reduced penalties to the organization if an employee commits a crime. Organizations are given flexibility in the types of programs they create -- they primarily need to demonstrate due diligence in the creation of these programs. During 2007 to 2008, the Federal Sentencing Guidelines for Organizations were amended to require ethics training for an organization's board of directors, executive management, and the organization's agents. The amendment required ethics training for all levels of the organization. [SLIDE 2] There are several core or best practices that organizations can focus on to develop a structurally sound organization. Four benefits to society, of businesses that address their voluntary responsibilities include:
  1. Improving people's quality of life and making communities better places to live.
  2. Providing assistance to stakeholders to reduce government involvement.
  3. Developing employee leadership skills.
  4. Creating an ethical culture that discourages misconduct
One of the most common ways that businesses address their voluntary responsibilities is by donating to charities. For example, Campbell's Soup Company made over $60 million in charitable donations in 2017. [SLIDE 3] Organizations' first attempts to match their company goals with philanthropy occurred during the early 1980s in the form of cause-related marketing. This is when a company uses a marketing program to tie together its products with a social concern. With cause-related marketing, a certain percentage of a company's profits are donated to a cause that the company believes will appeal to its target market. For example, Pampers has formed a partnership with UNICEF to fund vaccines. The company's marketing message is simple: "1 pack equals 1 vaccine." For a cause-related marketing campaign to be successful, consumers must care about the cause. It is not enough to donate to ANY nonprofit organization. The cause must have meaning to the consumer, and consumers must be able to associate their feelings about the cause with the company. If consumers cannot understand the link between a company and a specific cause, they might perceive it as a publicity stunt. Because of this, it is vitally important that companies make sure the causes they choose are ones that consumers care about and that they are a good match for the company's business practices. [SLIDE 4] Strategic philanthropy is when a company combines its marketing goals with the desire to increase the well-being of mankind. For example, Goldman Sachs partnered with more than 30 schools throughout the world to provide 10,000 women with education, mentoring, and networking opportunities to increase their business opportunities. Strategic philanthropy initiatives are mutually beneficial to both the company and society. Cisco, for example, has established 9,000 academies that teach people how to build and design computer networks. In addition to teaching a valuable job skill, the company is also creating a pool of qualified candidates that it can hire from. Strategic philanthropy initiatives can improve a company's image and increase customer loyalty. [SLIDE 5] Social entrepreneurship is when someone founds an organization with the goal of solving social problems or effecting social change. Instead of the organization being focused on earning a profit, the focus is on finding solutions to social problems. These organizations are also known as social enterprises and can be nonprofit, for-profit, government-based, or a hybrid. Social organizations use business strategies to meet their social objectives. These organizations also have business-like organizational structures, values, and norms. Strategic philanthropy and social entrepreneurship are not the same thing. Although both have a focus on social change and philanthropy, companies engaged in strategic philanthropy often partner with other organizations or outsource their philanthropic programs. With social organizations, however, the work they do for social change is directly implemented and is the reason for the organization's existence.