December 19, 2016

What is Corporate Social Responsibility?

outline of a dozen people in black and white
Related post: Six Pillars of Effective Corporate Giving

A business’s job is to make money right?

Yes, and . . .

Research shows the consumers expect businesses to make money and help the community. Read further to learn about this second expectation, known as corporate social responsibility, or CSR. Before looking at CSR as a dynamic whole, we explore each of the three words.


While many assume corporate social responsibility applies solely to businesses and corporations, in truth any incorporated organization falls under the CSR umbrella. The far-reaching umbrella covers businesses, firms, enterprises, nonprofits, and associations. For simplicity sake, let’s call all entities firms. Just like people are assigned a Social Security number, firms receive corporate social responsibility expectations. In other words, expectations come with the territory.


Firms covered by the CSR umbrella encounter expectations in four arenas:

  1. Economic: To fulfill economic expectations, your firm generates economic value for owners, employees, and the community. (You were right. One job of a business, whether for-profit or not, is to make money.)
  2. Legal: To compete in the legal arena, your firm meets its legal obligations. Your firm follows all applicable rules and laws.
  3. Ethical: Success in the ethical arena means that, even if it’s legal, your firm stands firm in honoring the community’s ethical values, i.e., you don’t throw raw sewage in a river.
  4. Philanthropic: Philanthropy is the concept of taking private resources, money, and time, to help others. Win in this arena by investing some of your firm’s resources (time and money–not just your customer’s money, i.e., donations at the register) to improve the community.


As a business, society assigns responsibilities to your firm. Whether or not you like the assignment, you’re still tasked. Just as teens face consequences and rewards for failing or successfully meeting curfews, so your organization will receive rewards and punishments for the way you fulfill your responsibilities.

All Together: What Does Corporate Social Responsibility Mean?

Corporate social responsibilities mean that firms encounter obligations to look and act outward, not just inward, as they operate. Key obligations include meeting economic, legal, ethical, and philanthropic expectations. Failing to fulfill these obligations triggers negative consequences. Fulfilling your obligations brings rewards. Effective corporate social responsibility increases profits. One specific example? The Reputation Institute found that for every five points a company’s CSR reputation goes up, recommendations from customers increase by nine percent.

For more, download a copy our new e-book,  Can Philanthropy Actually Help Your Bottom Line?


Karen Eber Davis

Karen Eber Davis provides customized advising and coaching around nonprofit strategy and board development. People leaders hire her to bring clarity to sticky situations, break through barriers that seem insurmountable, and align people for better futures. She is the author of 7 Nonprofit Income Streams and Let's Raise Nonprofit Millions Together.


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