Corporate Philanthropy and the Importance of Giving Back
Proponents of corporate philanthropy sometimes face an uphill struggle in helping board members, stockholders, and other interested parties understand the sound strategic value of giving back.
In some cases, those with an eye on profits may even view corporate giving as a negative thing since it seemingly removes money from the bottom line. With the right information, however, it becomes apparent to those same people that philanthropy is actually a sound investment in the long-term financial success of the business.
Corporate philanthropy programs can create a powerful competitive advantage if they are planned strategically – with a meaningful focus on the organization’s core business and target market – and carried out effectively. This advantage can even translate to profits very quickly.
For example, within months of distributing a supply of gift cards to their customers through the Donors Choose campaign to benefit education, Crate and Barrel noted a 16% increase in sales among those who received the cards.
By developing their corporate philanthropy programs with the secondary business goals in mind, CSR managers can achieve greater success with demonstrating the value of giving back to the senior company leadership. Here are a few benefits to consider when developing a philanthropy program:
Boosting Branding and Name Recognition
Charitable contributions and high profile volunteering efforts can increase brand recognition in a competitive marketplace more effectively than advertising (which most consumers tend to tune out.)
Even more importantly, the reputation built in the consumer’s mind is connected to positive things that, in many cases, have a direct impact on the individual or someone they know and care about. This makes the impact of the branding even more effective as it promotes goodwill.
Improving the Quality of Life
By getting involved in causes that directly impact members of the local community – whether near the corporate headquarters, or in all the various communities where a large organization does business – the company can actually improve the quality of life of those who make up the bulk of their consumer base and their workforce, both current and future.
Improving Relationships with Government Officials and Community Leaders
Donating to worthy causes in strategic geographic areas can help organizations build valuable relationships with government officials and community leaders that can prove very helpful when regulatory issues arise or complicated legislative landscapes need to be negotiated.
These same officials and community leaders who become positively disposed toward an organization due to philanthropic efforts can assist with getting their constituents on board as well, lending their verbal and moral support to company initiatives as appropriate.
Building an Improved Customer Base
By improving the economic, social, or educational conditions in areas that could use help now, a company with a long-term strategic outlook can build a customer base where none currently exists. This is especially effective when the organization chooses a cause that aligns directly with their core business.
For example, a publisher may get involved in community efforts to reduce or eliminate illiteracy among inner-city youth. By doing so, that company can bring thousands of people who otherwise would never have become customers into a position where they can take advantage of what the company has to offer and the desire to do something to support the company that helped make it possible.
Driving Recruitment and Retention
A commitment to corporate philanthropy over the long term bolsters efforts to recruit and retain and engage talented employees.
In most cases, especially among Millennials, employees want to feel like their company shares their own personal values. Giving back to the community through company efforts motivates them just as much as (or even more than) the financial rewards of their paychecks.
Building Greater Opportunities for Innovation
Finally, corporate philanthropy can actually stimulate innovation. For example, by giving grants to universities and other educational facilities and foundations, companies can gain access to new ideas, technical expertise, and valuable research they may otherwise have never had access to. In many cases, this kind of alignment with research institutions through charitable giving can assist with recruiting the talented graduates of these programs to work for the company.
By building a strategic corporate philanthropy program around core business objectives, companies can be more successful in proving the value of giving back.