The Business Case for Corporate Philanthropy: Beyond “Goodwill” to Good Investment

Author:
Leslie Pine
Theme:
Strategic Philanthropy
strategic corporate philanthropy
Thursday, July 19, 2018

A change is underway in the world of corporate philanthropy on the question of “why.” A decade or so ago, the question was simpler: Why philanthropy? Today, however, many C-suite executives find themselves with the sense they are not achieving the full benefits they expected. If this sounds familiar to you, your organization could be on the cusp of something truly exciting, because the question you are really asking is, “Why strategic corporate philanthropy?”

The answer lies in that old quote, “Doing well by doing good,” and clearly there is a lot of good being done. In 2001, corporate giving stood at $9.05 billion. As recently reported by Giving USA, 2017 corporate giving reached $20.77 billion, in a year when the U.S. GDP and pre-tax profits increased 4.1%. While companies overall give a median of 1% of pre-tax profits annually, that percentage is increasing, and per Forbes, those giving more than 3% or even 5% are industry leaders like Target, Walmart, General Mills, Coca-Cola, Kroger, and Bank of America, to name a few.

Let’s be honest. No company is ever in a position to tell shareholders and board members it gives generously simply because it “feels good” to do so. If you are going to put 5% of pre-tax profits in an annual report, there is a much bigger “why” you need answered. I’d like to offer five ways strategic philanthropy delivers to your bottom line, with insights from executives along the way.

Strategic Philanthropy is Authentic

TPI’s conversations with corporate leaders make it crystal clear that authentic actions are of utmost importance to all stakeholders. Employees, customers, and others become skeptical if they think a company is supporting philanthropic causes purely for good optics. On the other hand, stakeholders have particularly positive feelings about companies whose corporate leaders are genuine in their concern about the community and the world. One senior leader with whom we spoke said corporate philanthropy “is in our DNA,” as the company’s founder was philanthropic from day one, and this legacy continues decades later. Another CEO described his company as “a profitable philanthropy,” and instilled this idea in the company’s mission statement, values, and actions. Many TPI clients, in creating or updating programs, engage their most valuable stakeholders – their employees – in defining their most authentic missions.

Strategic Philanthropy is Integrated

If you “really think through it and get a smart start,” notes one CEO, you avoid the scenario of a disjointed program, with marketing, human resources, product development, and customer service each heading off in different directions. A strategic program gives you a solid foundation from which to build, to assign tasks, and to streamline the resources you plan to invest. It also means that each employee knows the value of his or her contribution, and the company can increase training in the areas of teamwork and leadership productively and in ways that dovetail with employees’ passions, in turn.

Strategic Philanthropy is Multi-Layered

Giving is more than handing over a check, and corporations have multiple tools to leverage that reinforce progress on the issues of concern. Supporting volunteerism and the events employees participate in on their own time, or matching donations, multiplies their impact and yours in turn. In-kind donations can range from products, to real estate, to supplies needed in disaster recovery. Anheuser-Busch donated water in cans to hurricane-hit regions, while others opened their doors or delivered food and support to rescue teams and victims taking shelter. Strategic philanthropy also means your company knows in advance what can be done, so that procedures are in place and action can be immediate.

Strategic Philanthropy is Open-Minded and Creative

Strategic philanthropy requires companies to “start talking to people who don’t look like you and start talking with those who are on the receiving end.” This applies not only to charitable dollars and in-kind resources, but to product lines and customer support. Research and development tied to philanthropic programs is not-so-coincidentally in place in many companies that give greater percentages of their pre-tax profits. A competitor’s new SKUs on the shelves, an upgraded app, or that award-winning marketing campaign are more likely to be the result of personal and direct engagement with customers and communities on issues of mutual concern than the brainchild of some genius hidden away in an office.

Strategic Philanthropy is Transparent

A company needs to be authentic in its philanthropy in order to be transparent. Transparency, in turn, will make or break you in difficult times. Companies evolve and issues arise, and a company’s character and track record on honest, thoughtful, and clear communication with stakeholders is often measured by how it manages its philanthropic programming. Reputation management and the ability to maintain consumer, employee, community, and business partner trust is more important now than ever.

As any good leader will tell you, the better the question, the more impact an answer can deliver. So if it’s no longer “why philanthropy,” but rather “why strategic philanthropy” that seems to be worthy of discussion, congratulations, and don’t worry. “You don’t need to reinvent the wheel,” as one CEO with whom we’ve worked confirms. Knowing a strategic philanthropic giving program is what your company needs means you have taken the first step in the best possible direction your company can take. You are on your way to achieving both social impact and benefits to your company’s operations, employees, and brand health across stakeholder communities, and of course, its bottom line.

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