Yuan: Big Uses for Big Business

by Ziqin Yuan | 10/26/15 7:58pm

Facebook, in partnership with five other companies, has recently been sponsoring free and low-cost internet service to people in areas around the world without it, particularly regions of India. The project hopes to expand internet access in these under-served communities by bringing together people who “believe in the power of a connected world.”

This is an impressive goal that improves the company’s image and increases its public support, but Facebook would not have started this initiative without expecting a large, future benefit. As mentioned in an Oct. 25 New York Times article, Facebook has a clear incentive to provide better internet in rural India — the people who gain access to it will likely sign up for Facebook and WhatsApp, a Facebook-owned web service.

In light of Facebook’s example to build technological infrastructure for those who cannot afford it, the United States government should emphasize how development could benefit large companies. Government policy should provide incentives and rewards for companies to undertake projects with a public benefit, thereby enhancing both entities’ relations and influence.

Facebook’s case is just one example of how much private investment can accomplish. The American government needs to tap in to corporate power and ensure that companies can recognize and accrue the benefits of philanthropic work. Rather than administering welfare largely through government programs and direct taxpayer contributions, the government could transform public investment and projects into opportunities for companies to generate advertisements and a new audience. Some private projects already do this — many sports stadiums, such as the New York Mets’ Citi Field, bear the name of the corporate sponsor that funded the construction in exchange for advertising that is more or less permanent. The publicity that comes with sponsorship of philanthropic or public-minded initiatives may make it financially attractive for companies to collaborate with the government.

A reputation for benevolence can be a valuable corporate asset. Companies have spent hundreds of millions on charity for the sake of advertisement. In 1999, tobacco company Philip Morris spent $75 million on charitable donations and then another $100 million to advertise their generosity. This phenomenon even has a name — strategic philanthropy, the practice of tailoring charitable efforts to issues that provide direct benefits to the company and advance its business objectives.

Critics may note the conflict between philanthropy and self-interest — companies helping other groups to boost their own revenues do not sound very altruistic or charitable. The arrangement is pragmatic, however, and it is ultimately a win-win situation. In Facebook’s example, it benefits from additional users and thus higher revenue, while the rural villages they help gain complimentary internet and other services that facilitate upward mobility. And philanthropy in general is designed to give back to donors, providing them with personal satisfaction or a good conscience — excluding the cases where this deteriorates into sense of moral superiority. Strategic philanthropy is simply a more frank acknowledgement of the reward system that guides all of our actions — when we give, we usually want to gain something in return.

Others may fear that greater corporate involvement will cause countries to become even more consumerist. In regions lacking electricity or consistent plumbing, however, upward mobility and quality goods and services are much more important considerations. In any event, many of the larger consumer brands have already saturated this country and many others. Consumerism and big business are facts of American life, but we have the opportunity to harness these trends for the public good.

Companies already spend billions each year in advertising. It is clear that they have the funds and are willing to spend them — as long as they see a potential return. The federal government should solicit corporate sponsorship on its projects. Just as Facebook is leading the push to provide internet service to countries throughout the world, other large companies could work to improve services in areas at home.