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Choosing Causes With Caution

Mukit Hossain never expected his charity work to impede his business career. For months he spent his days trying to launch a new Internet phone company, and his nights trying to raise support to build centers for day laborers in Herndon.

But when his name started popping up in newspapers as an advocate of the day laborers, the venture capital firm that was about to invest $1.5 million in his start-up company suddenly backed out of the deal, he said.

"I was very surprised," Hossain said. "They [implied] my involvement with the day laborer issue was not terribly good for business."

Hossain's experience -- along with those of corporations such as Microsoft Inc., which took heat when it withdrew its endorsement of a gay rights bill in Washington state, and The Washington Post Co., which was criticized for its initial sponsorship of a Pentagon-backed Freedom Walk -- reflects the increasing scrutiny businesses and their leaders are facing for the social causes and philanthropies they choose to support.

Corporate giving experts say that more than ever before, companies are being forced to weigh the political correctness of each social issue or charitable effort they take on. And those that make waves with their causes -- intentionally or not -- can quickly find themselves in the center of an unflattering spotlight that could affect their bottom lines.

The shift has also forced organizations that back issues with any hint of controversy -- from gay rights to the promotion of condom use -- to alter their approach to fundraising.

"In the last five or six years, there's been a sharper focus on contributions that apply to the interest of the business -- many corporations now have a philosophy of, 'When in doubt, leave it out,' " said Curt Weeden, president of the Association for Corporate Contributions Professionals.

Weeden said the heightened sensitivity on corporate causes dates to the early 1990s, when AT&T Corp. came under fire from conservative groups for its support of Planned Parenthood. The company first amended its relationship with the organization and then ended it altogether. The rise of the Internet exacerbated the scrutiny, experts say, as bloggers and Web sites began to publicly track corporate contributions, offering millions of people a new platform for protests.

The shift prompted the creation of a new cottage industry of philanthropic consulting firms that aim to help companies devise giving programs that can further the company's goals and avoid controversy.

Eric Kessler founded District-based Arabella Philanthropic Investment Advisors LLC last year to help families with foundations distribute their money wisely. But he found he was increasingly called on to help corporations do the same.

"They want to pass the 'front page test,' as I call it," Kessler said. "The last thing they want is to find out that they're giving to an organization that's getting in trouble."

Kessler says his firm does research on nonprofits the same way a mutual fund would investigate a potential investment -- evaluating the strength of the management team, its fiscal controls and the efficacy of the organization. It also looks for any signs of trouble that could lead to negative press.