Corporate Philanthropy Comes of Age
The benefits of doing well by doing good.

by Ann D. Getman, APR and Martin Cohn

Corporate philanthropy, once the domain of Fortune 100 companies, is taking on new shapes and new meaning as companies small and large, public and private, learn more about the business value of philanthropy and how to do well by doing good.

From employee newsletters and community weeklies to The Chronicle of Philanthropy and Harvard Business Review, and from Business Ethics to The Boston Business Journal, examples of philanthropy are cropping up all over and inspiring more companies to evaluate what philanthropy ~ giving money, resources, people, in-kind donations and time for a social cause or a helping hand ~ can do for them, not just in the boardroom or in the press, but in the community, among employees and in the public’s perception of value added to the brand.

An Associated Press article in July 2003 reported that philanthropic giving had increased to $12.2 Billion in 2002, a ten percent increase from 2001.

Corporate philanthropy can benefit your company in a number of ways:

With the business community

• create a source of pride for investors and stockholders

• create interest and empathy with analysts

• improve credibility by demonstrating that your company is about more than selling
a product and turning a profit

• enhance brand image and impact sales

With your management team and employees

• become a source of pride and goodwill in the community

• attract new employees who share your values

• keep employees invested in the community and more likely to stay with the company

• provide a more positive environment for employees at a more personal level

With members of the local community

• make a real difference in the quality of life for your community

• become a source and resource to community leaders

• put a face and personality to your company as a good neighbor

• create relationships with opinion leaders, community and civic leaders

• bring the community and your employees together for better understanding
Strategic Benefits of Corporate Philanthropy

Strategic corporate philanthropy creates a win-win-win situation across your company’s strategic mission, your employees engagement with your company and the community, as well as the community’s benefit and engagement with you.

Enhanced Brand Image and reputation

Customers are drawn to brands they associate with generosity, commitment to social causes, and regularly giving back to society through programs.

According to a 1999 study1,

• 80% of Americans have a more positive image of companies who support a cause about which they care

• almost 66% of Americans report having greater trust in companies that are aligned with a social issue

• almost 2/3 of Americans say they would switch brands or retailers to one associated with a good cause, when prices and quality are equal

Ben & Jerry, for example, makes the causes it supports a part of its brand packaging and labeling, as well as its public relations outreach. A percentage of its profits from ice cream sales support the Ben & Jerry’s Foundation, which in turn supports such causes as the Environmental Justice Coalition for Water (CA), Concerned Citizens of Cape Charles (VA), San Luis Valley Welfare Association (CO), and the What’s UP Youth Info Line (MN). 2

Tom’s of Maine is noted for its association with product purity and environmental wholesomeness. Philanthropically, Tom’s focuses its efforts on clean water, through its National Rivers Awareness Program, a foundation to support groups and provide tools to a variety of national and locally based river groups, from American Rivers to small regional watershed groups.3

In a crowded food and toiletries market, these two stand out because they are so strongly associated with social causes. And it’s not just environmentalists and liberals who value a cause-related brand: it’s also a key evaluation measure of Fortune Magazine as well. A 1997 study by Boston College professors found that “excellent employee, customer and community relations are more important than strong shareholder returns in earning companies a place on Fortune Magazine’s annual Most Admired Companies.” 4

Customer Loyalty

While businesses must first satisfy a customer’s primary need for a solution, studies show that the public is increasingly drawn to companies whose products and services are associated with other social values. For example, a corporation that buys books for inner city kids, a retailer of child-labor-free clothing, a home improvement chain that offers lumber from sustainable forests, or companies that contribute to the fight against breast cancer all gain esteem in customers’ eyes.

According to a consumer study in 1994,5

• 84% said they had a more positive image of a company if it is doing something to make the world better

• 78% said they would be more likely to buy a product associated with a cause they care about

• 66% said they would switch brands to support a cause they care about

• 62% said they would switch retail stores to support a cause

In a more recent study, 82 percent of customers of businesses with philanthropic programs said it was “extremely likely they would continue to do business with” the company; and among customers of companies with high philanthropic programs, the response was even more favorable, at 95 percent. 6

Working Assets Long Distance (WALD), a membership long distance telephone carrier, is renowned for socially responsible investing as well as giving, and engages its members in an annual vote to identify the organizations or causes to which it contributes. To keep members engaged, WALD’s regular monthly bills include a newsletter insert identifying new causes, updating members on the activities of organizations they are supporting, and engages members in direct action on behalf of those causes.

Employee Recruitment and Retention
Companies with a good reputation attract more qualified applicants, and companies with a reputation for philanthropic giving attract and retain people who are not only qualified, but share the company’s values.

According to a 1999 survey7

• 90% of workers whose companies have a cause feel proud of their company’s values compared to 56% whose companies are not committed to a cause

• 87% of employees feel a strong sense of loyalty to companies with cause programs, compared to 67% whose employers do not

• more than 50% of all workers wish their employers would do more to support a social cause

Companies committed to and open about their philanthropic principles consistently rank among the lists of “best places to work” – nationally and locally. In The Boston Business Journal’s first call for the “50 Best Places to Work in Massachusetts” all of the top ten employee-rated companies were noted for their commitment to giving back to the community and encouraging community involvement. These programs can take the form of direct giving, partnerships in the community, release time for volunteering in the community, or creating a corporate foundation.

Employees are more engaged and more likely to stay with a company that encourages volunteerism and provides an opportunity to learn teamwork skills off site that return benefits on the job. From small companies to international ones, employee retention is improved by engaging with the community in philanthropy.

For example, Whirlpool Corporation concentrates its giving on education, with a variety of programs designed to help children at risk in the community. It supports a Partners in Education program to develop and provide after school programs in reading; parenting classes and adult education; programs to help parents prepare their kids to enter school with better reading and learning skills; and provides computer and hi-tech training for youth. 8

Alabama Power Company started a foundation in 1989; in 2001 it gave $200,000 in teacher grants for reading and math programs and 50,000 refurbished science kits, as part of its “Science Suitcase Program.” “We are vitally interested in our communities,” foundation president Bill Johnson was quoted as saying. President and CEO Charles McCrary notes, “You can’t have a successful company unless you have satisfied customers- and that requires satisfied employees.” 9

Even at international financial institutions, philanthropy adds a cachet that appeals to employees. “Employees come to Charles Schwab for something more than the bottom line,” says Chief Administrative Officer Beth Sawi.10

Growth

Corporate philanthropy programs attract new customers who choose their services and products based on shared values, such as cosmetics companies who don’t test products on animals, or clothing manufacturers who use only organic, dye-free cotton.

Customers who are value-driven contribute to corporate growth in two important ways: they actively seek out products and services from like-minded companies, and they talk about their values with others, creating positive buzz for those companies who support the community or contribute to a positive social impact. Buzz is the no-cost word of mouth endorsement that spreads like wildfire, often outperforming advertising and marketing to shorten the distance between companies and their customers.

Improved Relationships with the Community

When businesses focus on giving back to the community where they are based, where their employees live and work, they not only become part of the social fabric of the community, they create a reservoir of goodwill. As a good corporate neighbor, a company has better access to local opinion leaders and officials; open opportunities to develop advisory boards to counsel the company on potentially contentious issues such as expansion, permitting and regulation; and a positive balance to help offset any negative situations that may arise.

For example, when Sea Chain bought the abandoned Bethlehem Steel shipyard in Hingham, MA in 1997, it wanted to redevelop the property for mixed use including retail, commercial and residential space, and faced a long process of permitting and zoning applications and winning community approval for the changes. The company created a Foundation to collect and preserve artifacts from the shipyard’s founding and production of warships from 1942-1945. The foundation involved opinion leaders and others directly by asking residents who had worked in the shipyard during the war years to share their memories, stories and photos for the foundation’s small museum. It also created a 30-minute broadcast quality videotape about the shipyard featuring these personal reminiscences, which was used to raise funds for the foundation and used by a local Public Broadcasting System station during its own pledge week.

Best Practices

There are many ways companies can develop philanthropic programs, including direct giving; giving through a consolidated program, choosing a charity or service organization in its own community, creating a foundation, or involving employees directly in providing a service.

In deciding what works best for your company, consider these best practices for creating a giving platform.

The most effective giving is values-based.

Giving for the sake of giving – or only for the sake of good publicity - does not have as much power, engagement or impact as giving based on your company’s core values and mission. It comes directly from the corporate ethos: what human and social values does your company have? For example, work-life balance, community involvement, employee growth, commitment to giving back? Look for or start programs that reflect those values.

Strategic giving benefits your brand and your bottom line.

What does your company offer or make? How can your giving be related to the strategy of creating awareness and needs for the service or product? For example, if your company makes children’s clothing, a philanthropic program for kids, from supporting a day care center to creating a reading program at a library to starting a scholarship fund – relates to your core business, and reinforce the association. If your company creates intellectual capital, look for opportunities to support knowledge through science or the arts.

Local giving is more immediate and often more rewarding.

Employees generally live near where they work and shop, socialize, browse and entertain in their own communities, and spend a lot of their waking hours at businesses in the same community. While sponsoring a national service or charity is a terrific thing, local giving is more visible, more engaging and more relevant to your employees, as they can see the results on a regular basis.

Interactive giving has more impact on employees and the community.

Involving your management and employees in taking a local action has a deeper impact on employees, and puts a face on the company for the community. Any philanthropic program that is two-way creates a groundswell of community support for your company and ambassadors for its services or products. Interactive giving might include sending your senior scientists to teach at local schools; helping build affordable housing; creating an after-school program at a local library or community center, or a senior care facility for the aging parents of working families in the community.

Getting Started

Business guru Charles Handy, writing in Harvard Business Review, summarizes the value of philanthropic businesses by saying, “A good business is a community with a purpose.”11

Values audit.

Start from your values base. Most corporations begin with an audit or evaluation of their values, bringing together leadership and a representation of the staff to identify and articulate the company’s ethos and how it relates to the company’s mission and values.

What does your company care about: kids, shelter, health, education, environment, affordable housing, domestic violence? For example, Polaroid created a foundation, managed by a committee of employees, to increase self-sufficiency among the disadvantaged by building their business skills with computers, literacy, and business comportment. Pitney Bowes focused its commitment on local economic development in Stamford, CT, by keeping its corporate headquarters in downtown Stamford to provide an anchor, and works with grassroots organizations to improve the community.

Engage directly.

Increasingly, company employees look for ways to have an intense, short term impact rather than a sustained, lower-effort commitment. For example, Volunteers of America has found over the last 5 years that corporations often prefer an all-day or weekend-long group project, such as painting a women’s shelter, serving at a soup kitchen or repairing a playground at a low-income housing development to the longer-term individual commitments such as being a big sister, volunteering to coach at the Y, or being a literacy tutor.

Hi tech company geoView relies on its employees to bring the company into things in which they are excited, “focusing on blood sweat and tears,” says Barbara Gail Warden, VP of marketing. “We don’t get involved in giving cold, hard cash, because we’d rather give services that really help people out”12

Explore partnerships.

Partner with a foundation or social cause already established and visible in the community, such as a human services organization, symphony, senior center or a science or arts museum. Look for an organization that aligns with your interests, and consider how broad its reach is, who it serves, and its reputation. For example, if your employees value community service, look for an organization that will find a role for them teaching, building, or improving something in the community rather than just giving donations.

For example, Cisco Systems has been a partner with City Year, a youth service corps, since its inception, as a founding partner providing both funding and technical support. Cisco has helped harness the Internet to build a model of capacity-building which can be replicated in other communities, allowing City Year to grow from one to 14 communities.

Get beyond fund-raising events.

Many corporations participate in events that benefit a specific charity, such as a walk for breast cancer, a bicycle ride for brain tumor research, or a ballgame to benefit children with cancer. While these are all good causes, your company might get more strategic value from something locally based that engages employees. Employees are the best ambassadors a company has, and their heightened participation and visibility in the community speaks well about and reflects well on your company.

Edgewater Technology, for example, partners with Angel Flight New England, a nonprofit organization providing air transportation services to medical patients unable to pay for commercial flights. Edgewater loaned six employees for a four-month job to get Angel Flight’s scheduling system integrated and on-line to improve their services.

Institute polices and practices.

The most effect corporate philanthropy programs are well thought-through and formalized, with written guidelines to keep them focused; objectives to quantify the desired results; and specific policies and practices to keep them objective and transparent. Of these, the most effective philanthropy programs tie this package together with corporate business goals and decision-making.

Kellogg’s has a values statement which includes becoming “an asset in each community, region, and country in which we operate”, and details how in a 4-point statement including quality control of its products through investment in the community; practice good citizenship; and protect the environment. 13

Starbucks Coffee has formalized a statement of its beliefs in human rights, diversity and the environment and its mission and principles of social responsibility, as well as short- and long-term goals for industry leadership on these issues; and specific objectives for annual review. 14

Track and review outcomes.

Measures of effectiveness are an important part of your corporate philanthropy program, to know whether and how it has made a difference and met its goals. Measures are of two kinds: corporate impact and community impact.

Corporate impact measures may include, depending on your program, the number of employees involved in community service; changes in employee recruitment or retention results; positive feedback from employees and shareholders; benchmarked changes in the community’s perception and opinions of the company; more inquiries from media or analyst community about the company; or awards received by an organization in recognition of your program.

Community impact measures might include, for example, how a partner program has grown because of your actions; numbers of people helped by the direct giving or giving through a nonprofit; cleaner parks and watersheds; benchmarked changes such as improved literacy, higher math scores, lower incidence of low-birth-weight babies; cleaner, safer city streets; changes in the capacity of an organization to serve more people by what they have learned from your company.

In summary

There are a variety of ways that corporations can create philanthropy programs that benefit their employees, their brand and business, and make a difference in the community. The most effective programs start from a values base and move out to the community for a positive impact on issues and people that make up the social fabric and the marketplace in which businesses operate.


Ann D, Getman, APR, is principal of Getman Strategic Communications in Cambridge MA, a public relations counseling firm focusing on helping organizations build reputation and improve relationships through effective communications. She works both with nonprofit organizations and corporations. She can be reached at 617-576-1847 or Ann@GetmanPR.com

Martin Cohn is president of Cohn Public Relations Inc., a public relations firm in Needham, MA, that for the past six years has concentrated on the promotion of philanthropy. He can be reached at 781-449-5600 or by e-mail to martin@cohnpr.com.


1 1999 Cone/Roper Cause related Trends Report
2 www.benandjerry.com
3 http://www.tomsofmaine.com/toms/community/rivers2003
4 Business for Social Responsibility
5 Cone/Roper Benchmark Survey… 1993/94
6 Council on Foundations/Walker survey 2001
7 Cone/Roper Cause Related Trends Report 1999
8 Domini 400 Social Index 2003
9 Study Says Philanthropy has Corporate Rewards,
Leslie Zganjar, ; ePhilathropy eZine, 6/29/02
10 Quoted in Business Ethics, Spring 2000
11 Harvard Business Review, December, 2002
12 Mass High Tech Citizenship issue, Technology
Giving in New England
13 Business for Social Responsibility
14 Business for Social Responsibility