CEOs and philanthropy have a long and rich history, from industrialist Andrew Carnegie, whose legacy of generosity includes public libraries across the English-speaking world and New York City’s majestic Carnegie Hall, to Facebook founder Mark Zuckerberg, who plans to make education and health-related causes top giving priorities. The Internet billionaire has also joined the ranks of such mega-rich moguls as Bill Gates, Warren Buffett and Reed Hastings in pledging half his fortune to charity.
Scores of CEOs from companies of all sizes commit to just as significant, if less publicly recognized, involvement in philanthropic endeavors. What prompts these business leaders to give? Reasons range from tax benefits and the hope of burnishing one’s reputation to a sense of moral responsibility and the urge to make a difference. Unquestionably, most CEOs are in a financial position to do so, even if they are giving at a more “modest” level than those who donate a large portion of their wealth.
As admirable as the pledges made by the Buffetts of the world are, the focus on the vast sums of money CEOs give to charity misses a large part of the CEO-philanthropy story. “After a while, the wealth won’t make a difference in their lives—either making more of it or giving it away,” says Marshall Goldsmith, an executive coach who has worked with hundreds of CEOs. “Their jobs are meaningful in that they are running companies and providing employment, but the actual output of their jobs may not be particularly meaningful.” That motivates CEOs to give more than money, for reasons more nuanced and complex than naming rights or noblesse oblige or even the satisfaction of having done the “right thing.” Philanthropy can be a calling of its own.
Steering a Solution
Bob Nardelli, who spent some 30 years at GE before becoming CEO of Home Depot and then Chrysler and, more recently, finding investment advisory firm XLR-8, describes the Savannah College of Art and Design (SCAD)—where he serves on the board of trustees and chairs the board of visitors—as a “magnetic true north, because it always pulls me to it.” Nardelli first became acquainted with the school when his oldest son was looking at colleges. His son was smitten by the array of academic offerings; the father was drawn by SCAD’s commitment to preparing students for careers in the arts.
In SCAD, the serial CEO saw an opportunity to leverage his business acumen and extensive contacts to help solve what he sees as a fundamental problem in American business: a lack of innovation and too narrow an understanding of what it means. He points out that innovation goes beyond thinking and making products. “There’s process innovation, organizational-design innovation [and] service design innovation,” he explains. “It’s about how you design a store, a product or a service and the experience people have with it. SCAD is now the center of design-based innovation, attracting increasing numbers of major corporations, entrepreneurs and retail business consulting.”
Continues Nardelli, “I saw design programs that have a real-world application to businesses that I’m in or am aware of. The energizing idea was advancing business by bringing connectivity between design and major corporations and retailers.” Nardelli says he gained a “tremendous appreciation” for the importance of design during his tenure at GE. “Items such as gas turbines and locomotives were designed in such a way that they could not only be built efficiently but easily maintained over a 30-year span. Design with maintenance in mind made it possible for GE to have a consistent revenue stream from long-term service agreements, which was a differentiator that allowed us to crush the competition.”
Nardelli is especially passionate about the College’s Collaborative Learning Center. The Center gives corporations and nonprofits the opportunity to have business challenges solved by teams of design students, often from multiple disciplines, who are led by professors with real-world business experience. “This helps businesses understand the benefit of design-based innovation, and it’s very gratifying to see the value these students are bringing to Corporate America,” says Nardelli. “This is not something you will learn at business school by going over spreadsheets. CEOs now have to be multidimensional.”
He hopes that his involvement and that of other business people through such programs as SCAD’s Collaborative Learning Center can help to bridge the innovation gap in Corporate America.
While Nardelli’s efforts focus on one of Corporate America’s fundamental business problems, Stephen Roell, CEO of Johnson Controls, is looking to solve critical problems at a more local level, namely, the Milwaukee area that serves as headquarters for the auto supplier, which had revenues of some $42 billion in 2012. Among the charities he is or has recently been involved in are Boys and Girls Club, Hunger Task Force, United Negro College Fund, Wheaton Franciscan Health Board and United Way, which he chairs.