Floodgates of philanthropy

Last week, Microsoft Chairman Bill Gates announced that he would step down from his day-to-day management role in the company from 2008 to work full-time in philanthropy through the Bill & Melinda Gates Foundation. Nearer home, N R Narayana Murthy will soon relinquish his position as executive chairman of Infosys Technologies. An area that could see him devote more time would be in the social field. A few weeks back, Sunil Bharti Mittal announced increased infusion of funding into the non-profit Bharti Foundation, particularly with a view to promoting education.

Corporate involvement in social enterprise is not new. But what is new is that today CEOs in India and overseas are increasingly taking leadership roles in social activity. Further, many of the CEOs are not doing this just as a post-retirement, lip-service exercise. Indeed, some like Mr Gates have done this even as they have many years to go before they retire. All of these throw up two key challenges""for the CEO and the corporate that he is involved with. One, many of them, like in the case of Mr Gates, Mr Narayana Murthy and Mr Mittal, have had a key role in building their businesses. The question: what will be the impact on their companies as they spend more time in the social field? Second, work in philanthropy and running a business are entirely different ballgames. The mistake that many CEOs make is that they assume the shoe fits well in both instances. How then can these successful corporate CEOs make a difference in the social field as well?

First, many of the non-profit organisations, particularly in India, have very little management systems and processes. If corporate leaders can help bring in best practices and a strategic direction to non-profit organisations, they would be able to make a difference. This will include setting up professional boards for non-profit bodies with improved governance mechanisms, hiring professionals to run non-profit organisations and improving their performance. In fact, a common problem that many non-profit ventures face is the inability to create greater value for every buck that they get and distribute. Great CEOs should be able to bring into non-profit organisations their lessons of rewarding various corporate stakeholders to create more value in non-profit activities. Second, with increased corporate interface, non-profit organisations will be able to scale up their operations. Very few non-profit bodies think big, have the ability to scale up operations and have the mobility to operate in multiple locations. New CEO involvement in the social sector could change the way it could work on these various parameters. Finally, CEOs could help pull in greater professional talent, stronger networks and corporate partnerships to improve the performance of the social sector. When they do these, not only will the non-profit foundations have greater impact on society but they will also be able to spearhead a cultural mindset change in foundations from being a limited change agent of conscience fulfilment to a full-fledged, professional organisation.

However, even as CEOs shift their focus to the social sector, a question arises over the impact their decision will have on the corporations that they are involved with. Bill Gates' latest decision has particularly made this question pertinent at a time when Microsoft is facing increasing challenges across the world in its line of business. There is no easy answer and only time will tell whether the succession planned in various corporations will balance the void that some of these CEOs will leave with their greater involvement in doing good.