Five Screens for Strategic Philanthropy

The “cola wars” between Coke and Pepsi in the 1970s were all about tasting good.  Visiting newly built shopping malls, consumers would take a blind taste test of Coke and Pepsi—then state their preference.  Who won?  Both sides enjoyed annual double-digit sales growth for the next three decades. 

Their next skirmishes involved celebrity endorsements.  Pepsi had Michael Jackson on its side and later Britney Spears.  Coke countered with Paula Abdul and then Jennifer Lopez.  Given that Jackson’s hair caught on fire during a commercial and Spears headed off to rehab, perhaps Coke had the edge here but by 2005 the two had captured 75 percent of the market. 

Today, with annual growth and market shares declining, the new cola war is about doing good.  And what better venue than the 2010 Super Bowl to have at it!

Coke’s gridiron campaign invited social mediaphiles to “open happiness” in a virtual mall and spread it around. The soft drink giant pledged $1 to the Boys and Girls Clubs of America for each person who previewed its Super Bowl ads on its “live positively” Facebook page (up to a maximum of $250,000). 

Pepsi, in a clever counter-measure, announced that instead of spending $20 million on Super Bowl ads, it would donate those funds to people who had “refreshing ideas to change the world.”  Applicants could make their pitch on its “refresh everything” web site and the public could vote on their ideas. 

Who won?  Everybody! So why is our hair (what little we have) on fire?

Strategic Corporate Philanthropy

In this new iteration of the cola wars, Coke and Pepsi are practicing what has come to be called strategic corporate philanthropy.  In prior decades, companies typically “gave back” to the community through the United Way or via donations to the arts, social services, and education.  Employees were supported in their volunteerism through matching gifts or dollars for doers programs. 

While this checkbook philanthropy was (and continues to be) significant it has had its detractors.  On the social side, Rosabeth Moss Kanter questioned “Can’t companies do more and do better for society?” She chronicled how select social innovators were moving from “spare change” to “real change” by focusing their philanthropy on business-related issues.  IBM’s Reinventing Education campaign was an early leader in applying monies, technology, and brainpower to a business relevant social problem.  Now companies like Dow Chemical (green chemistry) and Unilever (inner beauty) are using social innovation and campaigns to deliver products that are good for society.   

On the commercial side, Michael Porter and Mark Kramer wondered “Can’t companies get more out of their philanthropy?”  Until recently, most corporate charity was done quietly and often anonymously.  Today, its trumpeted and an integral part of the corporate reputation building platform.   Meanwhile, employees “volunteer” via company sponsored (and branded) service days.

The result of this dual-purpose strategic philanthropy is, in theory, good for society and the business.  What’s not to like about Pepsi and Coke in this context?

5 Screens for Strategic Philanthropy

Investors typically apply multiple screens to evaluate how and where to spend their money.  So, let’s put these programs through five screens we use to judge corporate investments in society:

Asset Based.  Companies that want to make a real contribution to society apply their talent and treasure.  At IBM, for example, you are welcome to volunteer for, say, the little league or a soup kitchen.  But if you want to help the league teach kids about sportsmanship or set up an accounting system for the kitchen, you’ve got full access to IBM’s tools and resources.   What corporate assets (knowledge, technology, human capital) are Pepsi and Coke using in their Super Bowl promotions?  Mostly money; and in Coke’s case, not much of it.

Stakeholder Relevant.  There is no doubt that the Boys and Girls clubs and the many projects proposed by Pepsi supplicants are “worthy causes.”  And reaching out to customers is surely relevant to the business.  But if you ask consumers which issues matter to them about Coke and Pepsi, items like “junk food,” “obesity,” “advertising in schools,” and “water use” pop out.  So why doesn’t Coke work with the Boys and Girls Club to help youngsters learn more about a healthy diet?  And why doesn’t Pepsi solicit and fund ideas from science students on taking the junk out of snack food?

Partnerships.  An important aim of strategic philanthropy today is capacity building – this has a company partner with, rather than just donate to, nonprofits to improve their operations and to together “change the world.”   We like Coke’s idea of asking customers to give the Boys and Girls Club a “virtual” coke ($1), but why not mobilize them to offer a “live” hand to clubs in their local area?  And, while marketers mine the Facebook data, why not encourage postings and chatter about how Coke customers live positively through their volunteerism and social entrepreneurship?  Pepsi’s refresh blog will show you how!

Social Impact.  Coke has done a great job working with other businesses to address water shortages and contamination around the world.  Pepsi is moving forward on this, too.  So why don’t you two join forces and lift this to an even higher level?  There are some wonderful examples of multiple businesses working together, such as The Global Business Coalition on HIV/AIDS, TB, and malaria, to address the roots of big problems. IT competitors are sharing knowledge and resources to green their industry.  So join Nestlé and others to do something significant and worthwhile on water shortages.

Authenticity.  Finally, philanthropy that works for business and society has to be authentic: motivated by a genuine desire to make a difference and representing the true identity and culture of a company.  The Coke and Pepsi campaigns show their marketing acumen and creative sizzle in reaching the public (as compared to the bogus Tiger Woods/Nike ad that cries out for sympathy and sales through the voice-over of his deceased father).  Building on two great brands, what other skills could these two soft-drink companies—consumer innovation, logistical expertise, highly skilled and motivated workforces—incorporate into their outreach to society?

Making a Difference

Corporate philanthropy is an important part of a company’s overall CSR agenda.  But these are by many standards radically different and momentous times for corporate involvement in society, and engaging in cola wars through philanthropy seems, well, rather frivolous.  Wal-Mart made a massive contribution to victims of Hurricane Katrina through its people power and expertise in logistics.  That success experience was then a springboard to launch it’s far more expansive and significant green campaign that engages its customers, suppliers, and staff in a war on waste and global warming. 

Both Coke and Pepsi are members of the “healthy weight commitment” foundation and support Michelle Obama’s efforts to reduce childhood obesity.  Their removal of full sugar soft drinks from schools--as part of the Alliance for a Healthier Generation--is a great beginning on doing something good for society.  But it is just a start.

Time to think bigger!   Imagine if the two waged a war on the twin problems of sugar abuse and snack foods to kick off Super Bowl XLV.  That would be a game changer!  Moreover, a sustained campaign that engages the customers, suppliers, and staff of both companies might, dare we say, yield a truce.